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ATM Deployment: Fintech Expert Calls for Industry Collaborative Approach

Concerned for the gap between current and optimal ATM-to-customer density and the reality that banks will not remain bullish in pushing a loss-making channel (at least based on current accounting methods), a shared-platform approach is mooted as a possible solution.

Nigeria has 18,000 installed cash machines, owned and managed by the banks. Most machines are located in city centres while bank customers often form a long queues on weekends for cash withdrawal, particularly in the suburbs.

CEO at Algorism, Rasheed Adegoke, said the industry should analyze the situation and move from a supply-focused to a demand-management approach.

“I have always believed that a coordinated push anchored around NIBSS, but driven by the banks and other FIs and merchants, is a more pragmatic approach to solve the ATM challenge. Because cash withdrawn at the ATMs is to facilitate payments at merchant points where POS are unavailable,” he said.

He agreed that ATM management practices in individual banks should be improved, adding that an industry collaborative approach would fix the problem.

He argued that the incentive structure around ATMs should encourage the banks to spread ATM deployment to underserved areas rather than compete in already over-served locations.

According to the former First Bank’s CIO, two incentive options can be used: to increase not-us-fees so that the banks are encouraged to deploy more ATMs knowing that they will at least cover their ATM operations costs, and the creation of channel migration incentives (channel-usage fees for branch/ATMs or reward to using other channels).