IADs outpacing FIs in rate of ATM fleet expansion
Independent ATM deployers accounted for 1 in 6 ATMs worldwide at the end of 2016. Eighty percent of these are located in five markets — the U.S., Japan, South Korea, Canada and the U.K. — and except for Canada, it is the nonbank ATM sector that is fastest-growing, according to Global ATM Market and Forecasts to 2022, a report by RBR.
According to RBR research, other major markets that saw impressive growth in the number of IAD ATMs include Poland — where smaller banks have sold their ATM fleets to IADs — and Germany, where several banks are reducing both their branch networks and ATM estates.
Tight regulations have historically limited IAD activity — particularly in Asia-Pacific — and IADs are still prohibited in some countries, including Russia.
Nevertheless, banking authorities in developing markets such as India and Argentina see IAD ATMs as part of a wider strategy to facilitate access to financial services.
The largest proportion of nonbank ATMs is in Canada, where they account for 65 percent of all terminals. Israel, Australia, the U.K. and the U.S. are above 50 percent, as well.
In North America, the removal of off-premises bank ATMs and the sale or outsourcing of sections of banks' off-premises ATM fleets will provide further opportunities for IAD expansion, according to the RBR report.
The research found that bilateral and multilateral sharing agreements between deployers are increasingly prevalent. Banks in countries such as Spain and Mexico are offering their customers the same transaction rates at other banks' ATMs as at their own. This improves efficiency by reducing their need to invest in expanding their own ATM fleets.
In Russia, participation in ATM sharing agreements has been driven by falling ATM interchange rates, as reduced profitability means that banks have less incentive to expand their own estates.
Banks sometimes cut costs by cooperating to offer shared off-site ATMs. In Brazil, for example, TecBan operates 20,000 nonbranch ATMs in partnership with six major banks.
In markets where customer demand for cash withdrawals has declined significantly, ATM pooling may be the preferred option. In Finland, banks do not deploy ATMs directly; instead, Automatia (jointly owned by a number of banks) operates the majority of the country's ATMs.
Sweden has moved in the same direction, with three-quarters of bank ATMs shared through a Bankomat ATM pooling arrangement. Banks in the Netherlands plan to pool their ATMs, as well.
"Many markets across the globe have seen increases in IAD deployment, sharing agreements and ATM pooling," Rowan Berridge, who led the RBR research, said in the release. "We expect these trends to be sustained, as banks focus on enhancing the cost efficiency of ATM services."