By Babajide Komolafe
Most banks are yet to comply with the March 31stÂ deadline of theÂ Central Bank of Nigeria (CBN)Â on offsite ATMs which elapsed last week Wednesday.
Last year April the Central Bank of Nigeria (CBN) issued a circular which barred banks from deploying ATMs outside their branches and ordered them to redeploy to their branches all ATMs outside their branches ( offsite ATMs) on or before June 30th. The deadline was later extended to August 31st and again to March 31st this year, which was last week Wednesday.
The apex bank limited the deployment of offsite ATMs to ATM Consortia or independent ATM deployers (IADs) and said it would license two more IADs to bring their number to three. Consequently the apex bank, in addition to ATM Consortium, licensed Chamms PLC and Coporeti Support Services (CSS) Nigeria as IADs. The banks, hence have the choice of either relocating their offsite ATMs or hand them over to any of the three IADs.
Investigations reveal that few banks had redeployed or handed over their offsite ATMs any of the three independent ATM deployers (IADs) as at March 31st. Majority of the banks, it was only gathered, had only signed Memorandum of understanding with an IAD while others have decided not to hand over to any IAD adopt the strategy of ATM galleria. It was also gathered that one of the IADs specifically Chamms PLC might have decided to roll out its own network ofÂ ATMs instead of taking over the offsite ATMs of any of the banks.
Investigations revealed that out of the eight owner banks of ATMC, the nations foremost IAD, only six have handed over their offsite ATMs to the company. These areÂ UBAÂ ( 700Â offsite ATMs), First BankÂ (410 offsite ATMs),Â Diamond BankÂ (6 offsite ATMs), Wema Bank (10 offsite ATMs), Ecobank (19 offsite ATMs),Â and AfribankÂ Â (7 offsite ATMs). Consequently, when combined to its existing Quick Cash ATMs,Â ATMC now has over 1500 ATMs.
The remaining two owner banks namely Intercontinental Bank and Fidelity Bank,Â it was gathered,Â had dumped ATMC for CSS.The two banks alongside four other banks namelyÂ Â Bank PHB, Access Bank, FCMB, Stanbic IBTC, Zenith Bank and GTBank have signed MoU with the novel IAD to manage their offsite ATM.
Last year, in an attempt to comply with the directive of the CBN,Â the eightÂ owner banks ofÂ ATMCÂ at a board meeting agreed to hand overÂ their offsite ATMs to the company. The banks agreed to make their offsite ATMs as equity contributions to the ATMC so as to increase the capital base of the company.
ATMC was established by the eight banks and licensedÂ by the CBN to deploy ATMs in offsite locations. The establishment of the company was aimed at overcoming a number of factors militating against massive roll out of ATMs across the country. These include high cost of procuring an ATM and infrastructural bottleneck. But with the consolidation exercise which empowered the banks with huge capital base the banks found themselves with enough funds to individually embark on massive roll out of ATMs hence they abandon the ATMC mission.
In the circular banning banks from deploying offsite ATMs, the CBN noted, â€œThe banks are now competingÂ Â Â with ATMCÂ in the deployment of ATMs in public places. A more worrisome trend is the number of ATMs at the airport and hotel lobbies, which if unchecked would soon, congest these public spaces.â€
While the decision of the CBN to ban offsite ATMs did not go down well with the banks, Chief Executive,Â SparkATM System, second largest off-site ATM management company in South Africa, Mr. Mark Sternberg however noted that the decision is a boost to IAD business model in Africa.
Sternberg, whose company deployed and manage the second largest off_banking site ATM network in South Africa with installed capacity of over 1,000 cash machines, made this assertion at the just concluded AITEC Banking & Mobile Money Conference in Nairobi, Kenya. â€œI have been watching the situation in Nigeria very closely. It is the best boost to the business of ISO and IAD in Africa. I really commend the regulatory authority, CBN, for this boldness.â€
Sternberg said SparkATM is ready to provide both infrastructure and technical assistance to IADs in Nigeria, noting that experience has shown that consumers prefer ATMs to access cash 8 to 1 over any other method. He, however, advised the IADs not to ignore in-stores and rural areas when growing their networks. â€œExtend your reach into rural parts of the country and offer your business customers an in-store ATM to help the business grow.â€
He also identified wrong cash replenishment model as one of the factors that makes off-site ATM network management un-profitable in most African countries. He specifically advised IADs to settle for merchant_filled cash replenishment model, arguing that the Cash-In-Transit (CIT) replenishment model commonly adopted by most IADs is not cost effective.
â€œIt requires establishment of CIT firm, accurate cash forecasting, high transaction volume and first line maintenance only done by ATM custodian who leads to longer downtime.â€ According to him, the merchant-filled model is becoming very popular because it significantly lowers the cost of operation. It is also an effective way for host merchant to bank his cash, as it requires little cash forecasting and first line maintenance done by the merchant, thus increasing uptime whilst lowering the break-even no of transactions needed for each ATM.