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Thinking big in a big world

ATMIA International Director Michael Lee says those who are deploying ATMs in Africa are a lot like the ancient Egyptian pyramid builders who 'thought like people who were a hundred feet tall.'

July 2, 2002

The man who finally cracked deciphering hieroglyphics, Jean-Francois Champollion (1791-1832), when contemplating the scale of the pyramids and other monuments of ancient Egyptian civilization, exclaimed in admiration: "They thought like people who were a hundred feet tall."

For 4,000 years the Great Pyramid at Giza, near Cairo, held the record as the tallest man-made structure in the world. Two million blocks, each up to 50 tons, were required to build it.

ATM International Director Mike Lee

Champollion's words about an ancient civilization that thought big resonate for today's globalized society for the world is getting bigger, not smaller. Although globalization, satellite technology, the Internet, and increased speed of travel all appear to make the world "smaller" by enabling people and nations to be highly accessible to one another, what this increased trade, travel and communication ultimately does is make us realize just how vast and diverse the world really is.

The bigness of the world was brought home to me yet again in traveling to Australia and South Africa recently to open the two newest chapters of the ATM Industry Association, ATMIA Australasia and ATMIA Africa.

Africa and Australia, like North and South America, are sublime in their sheer size as you see when you sail in an airplane for hours on end over these magnificent continents. The more I see of the world, the more of it there seems to be out there.

Going global

The ATM world is big and diverse, too, as I keep on finding out -- and getting bigger and more diverse all the time. It is growing at a significant speed. Every five minutes a new ATM is installed somewhere in the world, according to Retail Bank Research.

And ATMIA is spreading out across the world, to emerging regions like Australasia and Africa, with its mission to help the ATM industry to become stronger, better and more unified.

More crucially, though, the ATM industry is increasing not only in size but in importance to today's consumer. Hot on the heels of Pulse's excellent consumer survey of December 2001, which showed that U.S. consumers see their ATM card as more important to their lifestyles than the PC, the Internet and cell (mobile) phone, comes a study which reveals that Germany has decided it simply cannot live without its ATMs.

Deutsche Presse-Agentur reported on June 24 that the ATM is the one technological device most Germans say they cannot live without. According to a survey of 2,089 people in Germany by the Allensbach institute, 72 percent of respondents ranked cash points as the most beneficial example of new technology in recent years. ATMs outranked microwave ovens, mobile phones and home computers in importance.

The ATM industry is becoming more important to the 24/7 consumer society it helped create. The growth curve for ATMs is not anywhere near its peak.

Expanding our theme of a big world, certainly both Africa and Australia, where ATMIA has set up chapters, are big continents. Australia is the only country that is itself a continent and it stretches out over an area of just under 3 million square miles. Africa is the world's second largest continent, with an area of well over 11 million square miles.

ATMs in Africa

To illustrate Africa's immensity, consider that it contains: the earth's largest desert, the Sahara; some of its longest rivers, such as the Nile; the second largest freshwater lake in the world, Lake Victoria; the second largest canyon after the Grand Canyon, the Fish River Canyon; and the largest waterfall, Victoria Falls. Today, Africa is home to some 689 million people. It is BIG.

It is also home to ancient civilizations, like the early Egyptians who "thought like people who were a hundred feet tall." Some of the earliest human remains ever discovered, from up to 2 million years ago, were found in Africa's Rift Valley. A very old Roman maxim from the era just after Christ's life looks to Africa as a place from which new things come: "Always something new out of Africa," wrote Pliny the Elder (AD 23-79), a Roman statesman and scholar.

New things are indeed happening in the ATM industry in Africa.

Its biggest market is in South Africa, which introduced ATMs in the early 1980s and now has about 9,000 machines. South Africa has its Big Five in wildlife: namely, the lion, the elephant, the leopard, the rhino and the water buffalo. But it also has its Big Five in ATM deployment: financial institutions First National Bank, Standard Bank, ABSA Bank and Nedcor, and independent deployer ATM Solutions.

Of these five, four (First National Bank, Standard Bank, ABSA Bank and ATM Solutions) have either joined or expressed their intention to join ATMIA, which is a strong start for ATMIA Africa. Nigeria's biggest independent deployer, SmartPay Nigeria, has also joined.

Wide open spaces

In a big country like South Africa, banks and ATM deployers have to think about big distances separating cities, towns and villages and about how to take banking and cash dispensing to remote areas.

First National Bank has mobile ATMs. The bank recently installed high-tech GSM cell phone-based alarms and monitoring systems in all its ATMs countrywide, beefing up ATM security to stay one step ahead of criminals. If an attempt is made to tamper with or break into an ATM, an alarm will be recorded at a central control center by means of an SMS message and a reaction unit dispatched to the site. There are plenty of similar new technological developments in this growing and well-established ATM market, illustrating the ancient saying: "Always something new out of Africa."

This ATM in South Africa's Mbazwana, Kwazulu-Natal, installed by independent deployer ATM Solutions, gives new meaning to the term "off premise"

ATM Solutions is installing ATMs in remote areas accessible only by sand or gravel roads, where four-wheel-drive vehicles are required for replenishment and maintenance services. One such truly remote ATM in a rural area has been installed at Mbazwana, Kwazulu-Natal, a province in the sub-tropical region of South Africa. In the picture, the ATM is situated in the left corner of the building which also provides petrol pumps and post boxes. This village ATM gives new meaning to the term "off-premise."

ATM Solutions, a board member of ATMIA Africa, is the largest independent deployer of ATMs in South Africa with four branches, in Johannesburg, Cape Town, Durban and Port Elizabeth, and with ambitious international plans. Their ATM network ranges from petroleum retail, cinema, healthcare and gaming to most chain stores.

ATM Solutions offers a full turnkey solution, which includes installation, maintenance, service, monitoring and cash loading. At their ATMs, they offer transaction rebates, on-screen advertising and redeemable coupons, as well as traditional cash dispensing. Its business philosophy is to control the whole ATM lifecycle and to effect best practices throughout each stage of the lifecycle.

The company, run by successful entrepreneur Steve Kark and director Rowan Swartz, recently won ATMIA's global security award for Best Practice, decided by three judges. Another South African deployer, Standard Bank, won the international Best Practice runners-up award, bringing further credit to the country's ATM market.

ABSA Bank, the largest banking group in Africa, has developed a multi-channel distribution strategy with some innovative physical and electronic channels to effectively and seamlessly serve the diverse needs of its customer base that is spread across this big country. With a 670-strong branch network of five different outlet types and a 2,700-strong ATM network, ABSA is South Africa's biggest deployer, followed by Standard Bank and then First National Bank.

ABSA has introduced mobile branches and mobile ATMs for its rural customers. Other distribution channels include internet banking, cell phones and personal digital assistants (PDAs).

It is not only necessary to reach remote areas but to cater to customers who range in levels of sophistication. As an example of using the ATM for people with minimal literacy, ATMmarketplace.com reported in May that the South African government is considering using ATMs for payment of benefits and monies held on trust, such as alimony payments for divorced women, which could be withdrawn at ATMs installed at magistrate's courts across the country. In this scenario, biometric devices like fingerprint readers, such as are used extensively at ATMs in Korea, would be used in place of a PIN.

Beyond South Africa

At the launch of ATMIA Africa last month, I met with Jan de Villiers, general manager of Self Service for ABSA. Jan's team installed 500 ATMs in 2001 alone. He told me the South African ATM industry is reaching out to the rest of the continent in countries like Namibia, Botswana, Zimbabwe, Mozambique, Tanzania and Nigeria.

In Tanzania, for example, 29 ATMs have been installed at an ABSA-owned bank switched and driven by the host system in Johannesburg. The system is not on the mainframe at ABSA but is operated separately for separate management.

"We run separate business entities so we can understand the different cost factors for different environments," he explained.

The bank uses a propensity model to ensure that profitability is maintained. The propensity model determines the price of the customer relationship based on the customers' risk and need profile, and their channel behavior.

"There are two ways of looking at your business: either you view it as a service extension arm and discard costing items, or you run it profitably as a business," De Villiers told me.

One problem beyond South Africa is that in many African countries where there are ATMs, there isn't the card base to drive growth. Nor is there the interoperability of ATM networks that is necessary for cost efficiency.

"Some bank branches in Africa end up using their ATMs solely for their own customers," De Villiers said.

At the launch of ATMIA Africa, ATMIA Board member Alexander Nwuba, chief executive officer of SmartPay Nigeria, requested guidance on setting up a unified switch capability for an ATM network in Nigeria. Alex also called in the long term for links across the African continent to be established, including a communications infrastructure.

One sign that the ATM industry is young in Nigeria is SmartPay's ATM customer education program. On its Web site, for example, there are step-by-step instructions for customers on how to use an ATM. Although the industry is in its early stages, it has huge potential. Nigeria has a population of more than 88 million people (with an adult literacy rate of 52 percent).

SmartPay Nigeria, licensed by the Central Bank of Nigeria, is the first company in the West African country to launch ATMs that accept cards from all member banks. It has amassed a consortium of more than 30 banks. A massive rollout of bank ATMs is expected once the systems and infrastructure are in place.

In many ways, Africa is both an old and a new continent. If its young ATM markets, like Nigeria, inspired by the progress in South Africa, which switches ATM transactions as far afield as Tanzania, can think big, who knows what colossal numbers of ATMs in Africa can be reached by the end of this decade?

For those who dare, in faith, to dream on the scale of the ancient Egyptians, who think like people who are a hundred feet tall, anything is possible.

Included In This Story

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ATM Industry Association (ATMIA)

The ATM Industry Association, founded in 1997, is a global non-profit trade association with over 10,500 members in 65 countries. The membership base covers the full range of this worldwide industry comprising over 2.2 million installed ATMs.

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