With innovative platforms like UPI and BharatQR enabling zero-contact payments even at physical outlets, digitisation is stepping up to meet the changing imperatives of customers and ensuring financial inclusion.
The financial services ecosystem is continuously evolving to meet the changing needs of the end customer. Digital solutions are proving to be a key catalyst for this transformation.
According to recent data released by the retail payments and settlement systems operator National Payments Corporation of India, in October 2020, Unified Payments Interface, or UPI, has crossed the 2-billion transaction mark, with UPI volumes growing 80 percent YoY.
However, even as digital transactions increased, in India and globally, cash resilience in a crisis was evident during the pandemic. As per August 2020 reports, “currency in circulation has risen to 26.9 lakh crore - a hike of 10 percent - since the lockdown began” since 20th March this year.
Further, there has also been a steady increase in ATMs in the country, reaching about 234244 ATMs in September 2020. With India moving swiftly towards digitisation, it is important to note that in 2021 and beyond both digital solutions and cash will co-exist to provide access to all citizens in the country.
For example, when the Government made Aadhaar linked payments to eligible citizens during the pandemic through Direct Benefit Transfer (DBT), the recipient had to visit an ATM to withdraw those funds. Thus, what we now require is not just digital innovation but also the innovation of the ATM.
Recyclers and E-lobbies – Ushering the next-gen of ATMs
The Indian banking industry has offered customers automated teller machine or ATM services since the early 1990s, with foreign banks being the pioneers in the field. Providing hassle-free services and low transaction costs, ATM technology has undergone significant transformation in the last three decades.
For example, using UPI-QR codes, bank-users can now easily do contact-free withdrawals from an ATM. It is faster and more secure than the traditional card-based withdrawal.
With the changing dynamics of digital payments, ATMs, which are now a prominent fixture in every Indian town, are proving insufficient for the transitioning requirements of digitally savvy customers. Accordingly, e-lobbies and cash recyclers have been launched to enhance customer experience, and these services have proved extremely beneficial.
Unlike a cash dispenser, which lets customers withdraw money on demand, the recycler also permits cash deposit. It stores money securely, offers accurate accounts of cash available, and automates the cash cycle to minimise human effort.
Similarly, e-lobbies are designed to improve customer service and ease of doing transactions. The e-lobbies allow banks to offer customers all banking transactions, information, and solutions without standing in a queue, 24*7, 365 days a year.
Some areas where recyclers and e-lobbies can enhance the role of a regular ATM include –
Digital Transactions in the Global Milieu
Global corporations are uniting to pilot newer and more advanced models of cash recyclers and e-lobbies. Financial institutions in more than 13 countries are now piloting innovative machines by a US-based ATM player. These machines can handle functions beyond the purview of basic ATM tasks, including cash recycling and leveraging Big Data analytics and the Internet of Things capabilities.
In India, public and private sector banks are setting up platforms offering value-added services to boost customer satisfaction and loyalty. Some time back, major private lender Axis Bank set up express branches, offering year-round customer service, in malls and office complexes.
Featuring facilities like instant cash and cheque deposits, withdrawal, account opening, etc. the service received strong praise from satisfied customers. A recent study showed that almost 95 percent of ATMs' replacement orders are for cash recyclers, which transform ATMs into virtual branch networks offering multiple services, including remittance channels.
Additionally, the study mentioned that over 14 percent of Indian ATMs are now new-age recyclers, attesting to the service's demand and proliferation.
Digitisation in 2021
As technology is set to zoom ahead in 2021, with the advent of 5G, IoT, AI, and ML, among other disruptive innovations, cash will not go entirely out of circulation. India is still a cash-rich economy, and, in 2021, an optimal amalgamation of cash and digital payments will propel the economy forward.
With innovative platforms like UPI and BharatQR, enabling zero-contact payments even at physical outlets, digitisation is stepping up to meet the changing imperatives of customers and ensuring financial inclusion. Undoubtedly, something as simple as expanding the role of the humble ATM can go a long way in meeting these new imperatives.
—Ravi B Goyal is the Chairman & Managing Director of AGS Transact Technologies. The views expressed are personal.