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EXCLUSIVE: “Time to Share?” – Karolina Rachwol, RBR in ‘The Fintech Magazine’

EXCLUSIVE: "Time to Share?" - Karolina Rachwol, RBR in 'The Fintech Magazine' | Fintech Finance

ATM pooling is taking off in many markets, both cashless and cash-heavy, says Karolina Rachwol, Research Analyst at RBR Karolina Rachwol, RBR | Fintech Finance

The practice of ATM pooling has been around for decades, but it has become more prevalent in recent years, both in countries where ATM sharing agreements have been trialled in the past, as well as those for whom it is a new concept.

The forms that ATM pooling arrangements take vary widely, depending on the market. In some places, deployers prefer to stick to low-scale co-operation where some select aspects of ATM management are shared. Others – typically in more concentrated markets – turn to a more comprehensive pooling agreement, where terminals of the banks involved are, essentially, absorbed into a separate new entity formed by the participants. ATM pooling helps preserve access to cash in countries where cashless payments prevail.

The Netherlands is an example of a mature market which has completed a transition to a wide-scale ATM pooling set-up. Dutch banks ABN AMRO, ING and Rabobank, having already collaborated together through a sharing agreement called equensWorldline, decided to pool all of their ATMs under the brand Geldmaat. With the only other remaining bank deployer, de Volksbank, removing its terminals from the market in 2020, Geldmaat now accounts for all bank ATMs in the Netherlands.

The driving force behind Geldmaat was a desire to rationalise the deployers’ ATM fleets and to save costs of ATM operation; almost 1,000 terminals were removed by the participating Dutch banks in 2021. This restructuring has left no terminals installed inside bank branches, though some machines are available through their external walls. Dutch consumers are moving towards cashless payments as their preferred payment instrument and the removal of surplus terminals was a practical move on their deployers’ part. However, to mitigate the risk of jeopardising cash accessibility, Geldmaat intends to expand its coverage in rural areas, so that almost all residents can have an ATM within five kilometres of their home.

A similar undertaking has been given in neighbouring Belgium, where the Belgian ATM Optimisation Initiative (Batopin) was formed by the country’s four largest banks in 2019. The organisation set itself a goal of ensuring that there is an ATM installed within five kilometres of the home or workplace of 95 per cent of Belgium’s population. In addition, Batopin thought it was important to create a network of bank-neutral ATMs to avoid competition between banks.

To increase its ATM coverage, Batopin has collaborated with the Belgian national rail company, SNCB. This partnership – made official in October 2021 – was formed to increase the number of ATMs deployed at rail stations, with plans to reach a total of 169 ATMs at 79 stations. The widened ATM coverage will be especially useful to people living away from urban centres and the elderly, many of whom remain cash dependent. Cost-cutting is also driving the development of ATM pooling in more cash-heavy markets; it is not limited to those markets where cashless payments are the norm and where deployers need to rationalise their ATM estates.

In cash-heavy Turkey, Türkiye’nin ATM Merkezi (TAM) has been launched in a bid to cut costs of ATM deployment in the country, with TRY 1billion (€51million) expected to be saved as a result. The partnership includes three state-owned banks, three participation (Islamic) banks and the Turkish post office. While there were some ATM sharing agreements in Turkey, these were mostly between a limited number of banks. TAM is set to comprise 19,000 machines upon its completion in 2023, which will correspond to a third of all ATMs in Turkey, and it will be the first wide-ranging agreement encompassing new shared branding as well as uniform software. At the end of 2021, there were 300 terminals piloting the new branding and software in the three largest cities in Turkey, including the capital Ankara.

ATM pooling in Australasia and Japan?

While many markets are yet to see ATM pooling take off, some seem to be prime ground for it, as financial providers strive to universalise banking services to avoid competition between banks. In New Zealand, a joint banking hub trial that lasted a year was piloted by six banks aiming to provide banking services to small regional communities. Each of the four pilot hubs was equipped with an ATM, phone banking facilities and tablets for online banking. Each hub was also manned with support staff, although they could not advise on any financial products or services in order to keep the hubs bank-agnostic.

This joint initiative could potentially lead to wider cooperation between the partner banks, including ATM sharing. In Australia, ATM pooling is also a possibility. Following the large-scale removal of unprofitable terminals by the big four banks since scrapping surcharges in 2017, the Australian central bank stated that it would not be against creating an ‘ATM utility’ equivalent to an ATM pooling network. In Japan, the structure of the ATM network is also conducive to potential sharing arrangements. Some limited ATM agreements are already in place – such as off-site ATM sharing during certain hours between two of Japan’s megabanks, MUFG and SMBC. This may eventually be expanded to all terminals and include joint ATM procurement.

Everyone can benefit

ATM deployers are becoming increasingly aware of the benefits that ATM pooling agreements bring, both from a cost-saving perspective and the consumers’ point of view. Therefore, some may decide that it is ultimately worth making compromises in terms of strategic control, which necessarily comes as part of such partnerships. ATM pooling can be very useful in meeting government targets regarding ATM placements, too, so that, ideally, the vast majority of a country’s population can access an ATM easily.

Such agreements also help solve the problem of ATM overcrowding, as ATMs belonging to different deployers can be redistributed more evenly across the market without disadvantaging any of the deployers involved. All these benefits mean that it is more likely that we will see more widespread rollouts of ATM pooling agreements over the years to come.


 

This article was published in The Fintech Magazine #24, Page 48-49

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