In 2009, there were approximately 36,000 ATMs on the African continent — all 11,668,599 square miles of it — giving it the lowest ATM density in the world. And nearly two-thirds of those ATMs were located in one nation — South Africa.
This landscape is changing, though. RBR forecast 94 percent growth in the number of ATMs on the continent from 2009 to 2015. And Wincor Nixdorf predicted in 2009 that the continent would see "a significant increase" from its then annual growth rate of 15 percent. The 2012 ATM Future Trends report found that by 2017, Africa was likely to be the world's fourth most popular deployment market, after China, the U.S. and India.
ATM manufacturers are paying attention to goings-on on the African continent from Cape Town to Tunis. Wincor Nixdorf rolled out its Africa initiative in 2009, beginning with a focus on the busy port of Tangier in Morocco, which lies just seven miles by sea from the southernmost tip of Europe.
At the end of 2011, Wincor bolstered its organization in Africa, appointing Paulo Gomes as president. The company now has operations in Algeria and South Africa in addition to Morocco, as well as business partnerships elsewhere in the Middle East and Africa.
To get a closer look at the African market from the manufacturer's point of view, ATM Marketplace conducted email interviews with Aleksandra Lubavs, director of EMEA marketing, communications and strategy at Diebold, and with GRG's Christopher Holroyd, regional sales director for Africa, and Sean Li of the sales and business development department.
Where in Africa do you do business?
GRG: South Africa, Zimbabwe, Zambia, Tanzania, Mauritius, Sudan, Tunisia, Algeria, Ghana, Nigeria, Senegal, Mali.
Diebold: Diebold is doing business in many African countries through more than 10 strategic partnerships. We are direct in South Africa and Egypt.
How many ATMs do you have in country?
GRG: Totally, 500-plus — less than 1000; mostly bank-owned.
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Diebold: Approximately 20,000 machines installed across the continent; almost half of them located in South Africa alone; all bank-owned
What are some differences to operating in African as compared to the U.S.?
GRG: Africa has much more [growth] potential than the U.S. or other developed markets. It is dynamic and fast growing. Africa is unique compared to other regions. Rather than talking about innovation and advanced technology, here people are looking for how to serve unbanked people. There are huge possibilities. On the other hand, things are moving slowly sometimes and infrastructure is always a challenge here.
Diebold: The most significant difference is security and maintenance, where the crime types are different and more invasive. Indeed, certain hardware and software customizations are needed to face local security challenges. Servicing the ATMs is more difficult outside urban areas compared to the U.S. due to lack of infrastructure and for security reasons.
How is ATM use different?
GRG: Large populations [in Africa] do not even have a bank account, yet banks wish to reach these customers. So ATMs in Africa will be providing more unique services like cardless payment and mobile banking transactions, apart from traditional service. Also, as lots of customers are uneducated, simplicity, ease and high reliability are important.
Diebold: Adoption of deposit automation technology has grown significantly, especially cash-accepting ATMs in South Africa. In addition, banks have been aggressive in introducing third-party payments via the ATM (e.g., paying for traffic fines and any other bills) as a revenue generating initiative.
What accounts for the growth expected in Africa over the next few years?
GRG: 1) China investment, business involvement and financial support boosting local economies; 2) Many countries have become politically stable, [allowing] development.
Diebold: Well, it was a matter of time before this happened, especially taking into account the number of ATMs versus the population. Besides the ATM/population ratio, more than 70 percent of the African population is still unbanked. In many countries, and particularly in the expansive rural areas, the banks are using the ATM channel to transact with these populations (with or without bank account) in order to increase their customer base. In many cases, more ATMs give the possibility to get more customers.
How integral are mobile phones to banking in Africa?
GRG: Mobile phones are becoming a major [method of] access to banking service in a large [part of the] population.
Diebold: Mobile phones have significantly penetrated the market. In the top 15 countries showing potential growth in Africa, 60 percent of the total population has a mobile phone while only 25 percent of the same population has a bank account. Mobile technology, combined with traditional channels, is a fantastic opportunity to bank the unbanked population or at least to transact with these populations.
How do you approach security in Africa, where ATM bombings and counterfeiting are threats?
GRG: ATM bombing is [a serious crime], but we can apply various counter measures against such attacks, like ink injection and sleeping gas. Additionally, GRG is becoming one of the solution providers on anti-counterfeit technology, it may be impossible to prevent someone from printing fake cash, but we are focusing on stopping these counterfeit [notes] in circulation and also enhancing the FI’s ability in tracing the cash in circulation.
Diebold: We work with both our customers and the central bank to ensure that we provide the very best security measures to protect our ATMs from any form of attack or security breach. We … have worked with safe manufacturers to develop explosive resistant safes that are clad onto the ATM safe for extra security.
Do governments in Africa have stated goals about ATM access?
GRG: Some do — Sudan is now launching a campaign introducing banking services to 30 million civilians inhabiting cities, where only 1 million have bank accounts.
Diebold: Governments have stated goals about ensuring that all citizens have access to services … One of the least expensive and more secure ways for banks to provide access in a more affordable way is through ATMs — as traditional brick and mortar facilities are expensive to build, maintain, secure and staff.
How big a factor is deployment of ATMs in bringing Africans into the banking system?
Diebold: It is a very big factor, especially with government’s desire to influence banks to take banking to the people — especially into the rural areas. ATM deployment is one of the important factors to bring Africa into the banking sector. This is as important as issuing cards or deploying POS. The ATM provides proximity to the people who do not necessarily live in urban areas..
For more on this topic, visit the manufacturers research center.