With their sheer convenience and ease of use, ATMs (Automated Teller Machines) have today secured a comfortable place in the customers mindscape, which few other innovations can replace. Worldwide, ATMs have been the killer solution for the banking sector that has revolutionized the way transactions are carried out. Similarly, in India too, in the last couple of years ATMs have changed the face of banking services.

With the total number of ATMs deployed countrywide having reached close to 25,247 in FY 07, the industry has obviously been upbeat. Though an RBI guideline, directing offsite ATMs to get a specific license, did come as a dampener last year, the industry still managed a 19% growth, with close to 4,100 ATM deployments. In the next two years, the industry is expected to see the deployment of 40,000 ATMs.

SBI held on to its leadership position with 6,473 ATM deployments, way above ICICI Bank with 3,469 ATMs. During FY 07, while SBI deployed 2,000 units, ICICI deployed 300.

The year saw SBI on an expansion spree, announcing plans to launch 3,000 more ATMs. The deployment and maintenance contracts went to NCR for around Rs 150 crore, making it one of the largest ever in India. SBI has a tie-up with thirteen other banks for 9,200 ATM facilities. Typically, setting up an ATM machine requires an investment of to Rs 6 lakh, with 10% annual maintenance cost.

According to some estimates the total cash movement through ATMs across India was around Rs 70,000 crore last year. In terms of increase in transaction volumes, the growth is estimated to be close to 25% (FY 07). Clearly, industry watchers forecast a bright future for ATMs in India. The numbers are likely to see a further climb, as banks look for new solutions and functionalities.

While the ATM is a great service for customers, for the banks it means immense savings on the cost of operations. While a typical cash transaction carried out in a banks branch premise would cost Rs 40, that in an ATM will only cost Rs18translating into a cost saving of Rs 22 per transaction. Industry estimates are that for ATMs to be viable, at least 10,000 transactions a month or 300 a day should be the target.

No wonder that banks are looking at bringing in advanced technologies. As they go forward, multifunctional ATMs will hold the key in the immediate future. ATMs that are capable of offering e-commerce activities, interactive features, or identification of customers through fingerprints or eye scans, may not be a distant reality.

Password based transactions may become pass as equipment vendors work on automated methods for recognizing humans based on one or more physical or behavioral traits instead of passwords. The technology is expected to help penetration of ATMs in the rural areas across the country. Cheque Truncation Solution (CTS), which enables customers to deposit cheques and get credit within 24 hours at the ATM, and Bunch Note Acceptance (BNA) are some other innovations round the corner.