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N.S. Vageesh

CHENNAI, July 24

ATM sharing is the new wave sweeping the banking industry. In the past couple of days a number of banks have announced their tie-up with other banks for sharing their respective automated teller machines.

UTI Bank has just tied up with ABN-Amro Bank to allow their customers to use their combined network of 575 ATMs. UTI Bank already has a tie-up with BNP Paribas to give its customers access to UTI Bank's ATMs.

The ATM alliance is normally between ATM-have and have-nots.

Foreign banks (barring Citibank and Standard Chartered) make ideal candidates for such alliances since they do not yet have a big retail presence. Confined as they are, to a few branches and a handful of ATMs — which are mainly in the metros, these banks now find it profitable to tie- up with the increasingly aggressive private banks that are pumping money into building vast ATM networks. ICICI Bank, HDFC Bank and UTI Bank have over 2000 ATMs between the three of them. For these private banks, renting out of their networks provides additional fee income — every time their ATM is used by another bank's customer, they stand to gain nearly Rs 50 per transaction.

The trend of sharing ATMs seems to be catching up among old private banks. South Indian Bank has already tied up with Centurion Bank to share its ATM network. Similarly, Lakshmi Vilas Bank is also looking out for partners.

Public sector banks have however been a shade slower in this matter. Except for Corporation Bank, which is in talks with a couple of small public sector banks on this issue, the others have so far preferred to continue on their own. Many of them have announced plans to install between 100 to 200 ATMs during the course of the year.

Why not these banks share their ATMs? That will happen in the long term as the market evolves says, Mr Harish K.Murthi, Chairman HMA Group, a retail banking solutions provider. Banks will also widen their participation, instead of entering into exclusive arrangements, he says.

Pointing to the ATM sharing currently in place under the aegis of Indian Banks Association — the Swadhan network, Mr Murthi says that banks will come together when they do not fear the possibility of customer migration to another bank.

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