Companies that provide ATM outsourcing services to India's banks are booming — and achieving valuations comparable to or exceeding those of the country's small nationalized FIs.
An article in the Times of India said that one of the most successful such companies, Financial Software & Systems, is securing investments of around $350 million. FSS has increased its revenue by more than 250 percent since 2010, and epitomizes the expanding market for companies that build and management payments infrastructure.
The growth reflects the goal of India's central bank to expand the reach of financial institutions into rural areas of the nation in order to serve millions of unbanked citizens.
Foreign investors are pumping funds into Indian companies such as AGS Transact, Prizm Payments, and Electronic Payments and Services as these providers stretch to meet the country's burgeoning financial infrastructure demands.
"The growth opportunity has come faster than expected because of the decision by PSU banks to outsource deployment of 62,000 ATMs over next two and half years," Loney Antony, managing director of Prizm Payments told the Times of India.
Internet and mobile banking are also factoring into the companies' growth. The number of Internet banking customers in India is expected to rise threefold by 2015 to 380 million users, due to improving broadband coverage, said the Times, citing a report by Avendus Capital.
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