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Don't let China skew the global ATM picture

The number of ATMs worldwide is now in decline, but a big part of that is due to China's rapid adoption of smartphone payment systems. If we take China out of the equation, most countries are actually seeing an increase in ATMs.

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July 25, 2019

By Dominic Hirsch, Managing Director, RBR
 
Last year, London-based research and consulting firm RBR — the company I work for — suggested that the number of ATMs worldwide peaked in 2017, at 3.28 million. Indeed, our latest research into the global ATM market confirmed that this was the case. The number of ATMs worldwide is now in decline, but a closer look at the geography reveals a different story. 

Last year, the overall 1.3% decline in the number of ATMs worldwide was relatively modest. And if we were to exclude the 50,000 drop in the installed base in China, the numbers actually would have gone up. That's how big an impact China has on the overall market. 
 
China's mega market is having the same affect on RBR's forecasts. The number of ATMs installed worldwide is forecast to drop by 0.8% between 2018 and 2024, but if we were to once again remove China from the equation, that number would be forecast to grow by 3.8%.
 
The bursting of China's ATM bubble due to the rapid adoption of non-cash payments, such as Alipay and WeChat Pay, is spectacular. But by focusing too heavily on one country, we risk missing out on what is happening elsewhere in the world. The truth is, ATM numbers have actually grown in most countries. 
 
India, long touted as the next China when it comes to growth in ATMs, had its own wobble last year. Despite coming nowhere near its full ATM potential, the market grew by just 0.3% in 2018 as deployers in the country have began to realize that low ATM interchange fees make profitable ATM operations difficult, especially in the more rural areas. Having resisted pressure to increase interchange fees for some time, the Reserve Bank of India finally announced a review, which it is expected to report on in August. If the interchange fees were to go up, that could mean a lot more ATMs in India. 
 
RBR's research shows that 28 of the 63 largest ATM markets shrank in 2018, mainly in Europe and North America, and generally by low single digit percentages. In more developed ATM markets, a number of factors — in particular, growth of contactless and mobile payments, bank consolidation and branch closures, and changing economics for independent ATM deployers — have led to the withdrawal of ATMs. There is also increasing interest in ATM sharing and pooling, which could put downward pressure on installations going forward.
 
Interestingly, when the list is expanded to include the 110 largest ATM markets, the equivalent figures show that only 37 countries saw a fall in the number of ATMs. In other words, in the vast majority of smaller countries around the world, the number of ATMs continues to increase. It is not that these countries do not also have downward pressure on ATMs — in particular, from digital banking — but that these factors continue to be outweighed by the traditional growth drivers of economic expansion, growing banked populations, bank efficiency and consumer demand for convenience. 
 
Perhaps the one message that stands out from the latest global ATM research more than any other is that you cannot consider the global ATM market as a single market. More than ever, it is a set of surprisingly different markets, each with its own unique set of challenges and opportunities.