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New RBR report appraises a booming Chinese ATM market

A new RBR report profiles the Chinese ATM market, including growth opportunities — and government regulations that disadvantage foreign providers.

July 31, 2015

China remained the world's largest ATM market in 2014, with installations increasing by 18 percent, according to a new report by London-based research and consulting firm RBR. "ATMs in China 2015" also notes the significant impact that government regulation and guidance is having on banks' ATM deployment strategies.

Banks continue to expand their fleets to keep up with huge customer demand — China's adult population grew by five million during 2014 — and huge portions of the country still have limited or non-existent access to banking services. Although the four largest banks still account for half of the annual growth in ATM installations, the rural banking sector is showing the fastest growth in the number of ATMs deployed.

Increase in off-site ATMs

The Chinese government restricts the number of new bank branches, resulting in a rapid rise in the number of off-site ATMs — 55,000 during 2014 alone. Larger banks also are investing in alternatives to traditional branches, such as smaller community branches and self-service outlets.

Growth in cash recycling ATMs

A key cost-saving approach for FIs is to migrate cash transactions away from tellers; recyclers are central to this strategy. The recycler market has been further stimulated by a central bank mandate requiring all banks to begin recording all 100 yuan notes dispensed at ATMs.

Additionally, banks have found it easier to build a business case for cash recyclers as prices of these systems have dropped in recent years. The number of ATMs using cash recycling technology grew by 60 percent during 2014.

New state guidelines

Domestic suppliers also had a strong 2014 in the wake of guidance from the China Banking Regulatory Commission regarding "controllable IT"; this means that a machine's parts must be manufactured in China and data must be contained within the country at all times.

The 2014 guidelines state call for banks to increase the share of "controllable" IT equipment by at least 15 percent annually, to comprise at least 75 percent of all IT equipment by 2019.

Room for growth

With ATM density relative to population still well below the global average, further growth is inevitable, as is new legislation in the heavily regulated banking sector. In such a vast and fast-growing ATM market, state guidance and policies will continue to have profound effects on purchasing and deployment plans, the RBR report said.