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Growing demand for cash boosts global ATM market

September 26, 2013

The installed base of ATMs across the world could grow by 44 percent between 2012 and 2018, according to a new study from London-based strategic research and consulting firm RBR. This will increase the number of ATMs worldwide to 3.7 million by 2018.

Growth will come mainly from Asia-Pacific and the Middle East and Africa; both will see increases of more than 75 percent in their installed bases. In its report, "Global ATM Market and Forecasts to 2018," RBR is forecasts strong growth in central and eastern Europe and Latin America, though not at the exceptional levels expecrted in the first two regions.

By contrast, growth in North America and western Europe remains subdued. This is partly due to the ongoing effects of the financial crisis, which has limited the budgets of many deployers, but also because these markets are more mature.

In these markets, banks have turned their attention from expanding their ATM fleets to other aspects of their ATM operations, such as increasing efficiency, reducing costs, and improving functionality and customer service.

At a country level, China will account for the largest share of growth worldwide, driven by a small number of very large banks. Chinese banks are issuing a million new cards every working day, creating unprecedented demand for ATM services. In particular, demand for quick deposit and cash withdrawal is extremely strong, leading to heavy bank investment in ATM infrastructure.

Consumers need ATMs to access cash

Customer demand for ATMs remains high all around the world, in both mature and developing markets. In more developed regions, ATMs remain popular despite increasing competition from payment cards and alternative payment methods.

There are various reasons for this, including a preference for cash when making low-value payments, personal budgeting, anonymity and segments of the population that mostly operate outside of the traditional banking system.

Not surprisingly, less developed markets experience greater cash use. But even when people in these markets have debit cards that could be used for payment at the point of sale, they often use their cards only for making cash withdrawals, either because of a lack of EFTPOS terminals in the places where they make most of their payments, or because they simply prefer to pay with cash.

The sizeable unbanked populations in many countries present especially strong potential for new ATM users. Banks see ATMs as a way of attracting people who have not so far been able or willing to access traditional financial services.

ATMs can be deployed in a larger number of more convenient locations, and at a much cheaper cost than a branch. Examples of countries where previously unbanked customers are having a particularly notable impact are Bangladesh, India and Nigeria, which are forecast to be the fastest growing markets worldwide, the former two expanding by more than 300 percent by 2018.

While this demand for cash bolsters the business case for deployers to install greater numbers of ATMs, growth in the volume of cash withdrawals is still forecast to outstrip growth in the number of installations.

This is not just because of the number of new cardholders entering the banking system, but also because customers are becoming increasingly comfortable using ATMs, and are therefore making more frequent withdrawals.

Global cash withdrawal volumes are project to increase by 65 percent over the forecast period, compared to growth of 44 percent in the number of ATMs, so as well as expanding their fleets, deployers will also be able to increase the profitability of their existing machines, the report said.

Read more about trends and statistics.