Broadly, the journey of the ATM can be divided into five phases
In the initial stage, ATMs used to provide limited banking facility in addition to cash distribution. Within two years, ATMs were established in many European nations, including Japan, and America. The first ATM network was launched in Switzerland. By the middle of the 1970s, ATMs having with transaction services were developed. In this order, in 1972, Lloyds Bank established the first online ATM.
The time between 1970 and 1980 is considered as the second phase of the ATM. During this period microcomputer technology was used in ATMs, thereby improved the functioning of ATMs.
Modular ATM was developed during the mid-1980s, with the help of which banks were able to upgrade the ATM according to customer’s need.
In this period, ATMs were built based on the operating system, so that its capacity was developed and it was able to provide various services.
After this, the banks were installed ATMs in premises (on-site) and outside (Off-site) across the country.
The present time is known as the fifth phase of ATMs. Presently, web-based ATMs are being provided to the customers, which is the best in terms of technology and convenience.
Facilities related to ATM
Deposit cash in Cash Deposit Machine (CDM) & withdrawing the cash through ATM & CDM from overdraft, KCC, CC, Current & saving accounts etc. are the most important features of ATMs/CDMs. Besides, other non-financial transaction like bill payment, account inquiry, mini statement, mobile recharge, payment of credit card etc. are being done by the help of ATMs. The customer has also other advantages, for example, guarantee of banking facility available for 365 days and 24 hours, saving time and money, managing the account, reducing social crimes, techno-savvy (Helpful in motivating you to increase your interest in the use of technology), develop financial discipline in implementing financial inclusion etc.
The purpose of ATM
The invention of the ATM was originally intended to give customers banking facility outside the bank premises because the transactions in the bank branch were a loss deal for the bank. A few years ago, customers usually used to go bank for withdrawal and transfer of money, account inquiries, statements etc. Due to the transactions done by the customers in the bank premises, the bank employees could function only on daily basis in the branches, owing to which the other important functions of the bank, such as business of insurance and mutual funds, other fee-based services, marketing, loan recovery etc. were not being done smoothly. The debut of ATMs was seen as a solution to these problems.
Increasing costs of ATMs: Today, ATM has become a white elephant for banks. Their maintenance costs on an average of 75,000 to 100,000 rupees per month. This expenditure can be reimbursed only when an ATM machine has 200 transactions per day or 6000 transactions per month, while average 125 to 130 transactions in ATMs are being made per day. This is causing a loss for the banks. In such a case, the burden of the proposed interbank fee charged on ATMs and the burden of the cost of bringing hardware and software changes is not easy to bear for the banks. Banks are in need of huge funds to make provisions for mounting non-performing assets (NPA) and to implement international standard like Basel III. It is clear; it will be difficult for the banks to bear any additional expenditure in the current situation.
It can be said that by the end of March 2019 nearly half the ATMs shutdown could make a negative impact on the government’s digital and financial inclusion campaign. The biggest problem is the possibility of an increasing problem in rural areas because most ATMs are likely to be closed in rural areas. Today, most rural people withdraw money from ATMs. Actually, the dependence of villagers has increased on ATMs in recent years due to the less number of branches in the rural areas. In such a situation, the difficulty of the villagers will increase due to shutting down of ATMs.
As a whole, we can say that the responsibility of bank, for example, deposit, withdrawal and other non-financial transactions has now been shifted entirely at the ATMs/CDMs. In such a situation, the closure of the ATM can increase the mobility of the customers in the bank’s branches for fulfilling their day to day financial need. In the case, the banker will not do other important tasks, such as the business of insurance and mutual funds, other fee-based services, loan marketing, recovery of debt etc. In such circumstances, the bank’s profitability may have negative implications. Therefore, the bank should analyze the burden of ATM’s proposed cost meticulously. The government should also intervene in the matter by assessing the negative impact of digital and financial inclusion campaigns and on Prime Minister Janhan Yojana. Before adopting new rule or law, the Reserve Bank should look at all the aspects related to it, so that there is no harm to people on a wider scale due to the wrong decision.
-Satish Kumar Singh
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