Nearly half the number of ATMs in India will be outsourced by 2015, according to an article in The Economic Times. Hit by thin profit margins and slow credit take-off, opportunities to cut costs and increase efficiency are more and more attractive to banks.
Industry estimates say about 50 percent of the ATMs will outsource services such as site identification, deployment, installation, ownership and management to independent vendors in the next 4-5 years.
Currently, about 20,000 ATMs are outsourced, including managed services where the bank owns the ATM but maintenance is done by the outside agency. However, the number of fully-outsourced ATMs is expected to grow to 90,000 in the next 4-5 years, according to the article.
"Many banks want to double their ATM count in the next 3-5 years. For banks, it is a time-consuming process as it may take them months to install an ATM, while we may be able to do it in a few days," said Sunil R Udupa, president and chief executive officer of AGS Transact Technologies.
Increased activity has resulted in some private equity in the sector. Global private equity investor TPG Group recently acquired a 20 percent stake in AGS Transact Technologies, one of the leading outsourcers of ATMs in India.
"Service providers manage the ATMs, provide logistical support and also handle the back-end processes," said Paul Abraham, chief operating officer of IndusInd Bank. "This helps standardize the systems and processes across locations and leads to marginal cost advantage though the bank gives fees to the service provider."
Other ATM outsourcing companies include Euronet, Fidelity National Information Services, Prizm Payments and First Data.
