China remained the world’s largest ATM market in 2014, with installations increasing by
18% to reach 615,000 ATMs. The research by RBR also notes the significant impact that government regulation and guidance is having on banks’ ATM deployment strategies.
Bank ATM deployers continue to expand their fleets to keep up with huge customer demand – the adult population grew by five million during 2014 – and there remain huge areas of the country where access to banking services is limited or non-existent. Although the four largest banks still account for half the annual growth in ATM installations, the rural banking sector is showing the fastest growth in the number of ATMs deployed.
Restrictions on new branches push banks towards off-site ATMs
Opening substantial numbers of branches involves considerable bureaucracy. There are restrictions on the number of new branches allowed, and as a result off-site ATM numbers are rising fast – 55,000 were added during 2014. In addition to off-site ATMs, larger banks are investing in alternatives to “full” branches, such as cut-down community branches and self-service outlets.
Self-service strategies encourage recycler growth
As site rental and labour costs continue to soar, banks are embracing new concepts in existing branches in order to cut costs. Self-service lobbies with 24-hour access help banks to extract the maximum value from their ATMs. A key cost-saving approach is migrating cash transactions away from tellers, and recyclers are central to this strategy.
The recycler market has been further stimulated following the central bank’s mandate that all banks should begin recording all CNY 100 notes dispensed at ATMs with an RMB Identity Number. Not only this, but as recycler prices have dropped in recent years, banks have found it easier to build a business case for purchasing recyclers. The number of ATMs using cash recycling technology grew by 60% during 2014 and manufacturers focused on recycler production have benefited from this trend.
New state guidelines influence deployer choices
Domestic suppliers also had a strong year in the wake of guidance from the China Banking Regulatory Commission (CBRC) regarding “controllable IT”. Controllable IT means that a machine’s parts must be manufactured in China and data must be contained within the country at all times. The 2014 guidelines state that banks should increase the share of “controllable” IT equipment by at least 15% annually from 2015, to account for at least 75% of all IT equipment by 2019.
Low densities indicate there is room for growth
As recyclers continue to increase in number and banks work to fulfil the CBRC’s controllable IT quota, we can expect many more changes in the Chinese ATM market. With ATM density relative to population still well below the global average, further growth is inevitable, as is new legislation in the heavily regulated banking sector. In such a vast and fast-growing ATM market, state guidance and policies will continue to have profound effects on purchasing and deployment plans.
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