Regional Market Outlook on ATM services

  • In 2018, the APAC ATM industry market size grew to $6.27 billion at a CAGR of 10–11 percent and is expected to reach above $8 billion by 2021, at a CAGR of 7.9 percent
  • The APAC is the fastest growing market in the industry, with India and China leading, in terms of number of deployments
  • Australia has developed into a matured market, where ATM services have reached a peak stage and consumers have started moving towards  e-payments
  • The market share of the APAC region was recorded above 45% percent of the ATM market in 2018–2019

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 Regional ATM Services Market Maturity

  • Until 2020, APAC is expected to be the fastest growing region, with an average annual growth rate of 10.5 percent
  • There is an increasing rate of technological adoption visible among developing geographies
  • Emerging geographies, such as India, China, and Brazil, are witnessing rapid growth in the deployment of ATMs, hence, the adoption rate of outsourced ATM services is also high
  • The FIs in the developing regions choose single service outsourcing
  • The 15” and below screen-size segment is thrice the size of above 15” segment at present; the above 15” segment is expected to surpass $7.5 billion by 2022, at a CAGR of 8.5 percent$ 7.5 billion by the end of 2022

Porter’s Five Forces Analysis  

  • Buyer power is medium to high, due to high competition, primarily based on pricing among suppliers
  • The buyers looking for a turnkey engagement will have medium buying power, as the number of suppliers capable of offering end-to-end services is less

Supplier Power

  • Most of the service providers do not have the capability to offer end-to-end outsourced ATM services, which pushes the suppliers to lower their cost of services to win contracts

Buyer Power

  • Banks generally leverage on the count of ATMs to have a check on the contract value
  • High competition among suppliers and high levels of M&A activity in the supplier market push the costs downward

Intensity of Rivalry

  • The supplier market is consolidated with few large players, but the ATM business is highly competitive
  • High competition can drive suppliers to reduce the surcharge revenue or pay high merchant fees

Barriers to  New Entrants

  • New entrants, lacking in economies of scale, can have high operating costs
  • Large capital is required to effectively compete against large players

Threat of Substitutes

  • Competition associated with alternative payment mechanisms and emerging payment technologies
  • Cashless transactions are rising significantly, resulting in reduced demand for cash


Global ATM Industry: Drivers and Constraints

Drivers

  • Increasing Competition:

The major factor driving the industry is the competition among banks to provide service to customers’ convenience

  • Increasing Bankable Population:

In developing markets, such as India, China, and Brazil, there has been a significant surge in opening new bank accounts. About 200 million plus new bank accounts were opened in India in the last three years

  • Cost of Building Branches:

Creating presence around city is very important for banks to attract customers. It is not possible nor cost-efficient to set up branches around all the locations. Hence, the ATM industry is driven by this factor, as it does not require heavy real-estates nor other related costs

  • Low-cost ATMs by IADs:

Deployment of low-cost ATMs and cheaper IP-based communication by IADs push the initial investment costs down

  • Proliferation of Off-site ATMs:

Convenient location of ATMs ranks high among the needs of consumers and has propelled the growth of off-site ATMs

Constraints

High operational and maintenance costs (CIT) in developed markets

Security Concerns

–Including embedded cameras, GPS systems, as well as seismic and heat sensors, leading to additional cost for banks

Cost of new technology for updating ATMs has become a large issue in the market today. E.g., upgradation of operating systems from Windows XP to Windows 7 or 10 across all ATMs

Card Skimming:

With card skimming, there is a need for physical security and monitoring of ATMs

Wide Adoption of Cashless Transactions:

The proliferation of payment options other than cash, including credit cards, debit cards, stored-value cards, mobile payments, and online purchase activity, could result in reduced need for cash in the market place