ATM Availabilitiy : Cardholders Face Disproportional ATM Concentration Haile Taddesse, a teacher at a private school around Paulos Hospital, Gulele District, carries an ATM card from the Commercial Bank of Ethiopia (CBE) for his salary and another ATM card from Dashen Bank for his savings account. Confusing one PIN for the other always bothers him. He wishes he could use just one card for all machines, or access all accounts from any ATM, but that remains a thing for the future. However, the latter could be achieved when EthSwitch, a central bank initiative, is launched. While banks are using ATMs for technologically-assisted competitiveness, the effort is leading to queues in certain areas, high rental expenses for each bank, and deprivation of service in others. Except for the few banks that are part of the Premium Switch Solution (PSS), banks ATM’s are only for their own clients. “There are a limited number of ATM machines in the country and you find six to seven ATM machines concentrated at some malls and then none at others, which is a poor resource utilisation,” comments Ermias Eshetu, the marketing and corporate services vice president at Zemen Bank. “The ATM machines are bought for at least half a million Birr and the poor distribution of machines is a waste,” he told Fortune. Currently, there are only a few agreements in place to share ATM resources. The first was the Premium Switch Solution (PSS), which was established by three banks in 2010, with a capital of 165 million Br, and now has six member banks, including: Awash International Bank S.C. (AIB), United Bank S.C., Nib international Bank S.C. (NIB), Berhan International Bank S.C. (BIB), Addis International Bank (ADB) and the Cooperative Bank of Oromia S.C. (CBO). The PSS now has 214 ATMs. Zemen bank attempted to become part of the PSS arrangement, but it was rebuffed largely due to disagreements with its single branch approach at the time. The bank, now with 45 machines of its own, has an agreement with Dashen Bank, which has 230 machines, 60 of them outside Addis Abeba. “We can say that we have more than 200 ATMs, as Dashen’s ATMs are also used by our customers,” says Ermias. The CBE reigns supreme for the sheer number of machines it has, boasting 580, with 50 of them dedicated to ATM services. “The PSS is benefiting us in allowing our customers to access machines that we brought together, bringing us closer to customers through the use of different ATM machines by member banks,” Taye Dibekulu, the president of the United Bank S.C. told Fortune. Out of the 214 ATMs under the PSS, Awash and United banks own 120 and 70 ATMs, respectively, with NIB owning 20 and Berhan just four. The ATM machines generally provide the same services, such as money withdrawal, fund transfer, balance enquiry, mini statement, and money transfer from one account to the other. Interestingly, the cost of installing ATMs is becoming more expensive. Formerly, hotels and market centres were asking for the machines to be installed, but now the rental space for one machine costs as much as 4,000 Br to 5,000 Br per month, according to Estifanos Befekadu, Dashen Bank’s communications and promotions head. “The banks need to discuss and set a specific payment amount for deployment,” he added. At Harmony Hotel alone, there are six machines. The hotel, located behind Edna Mall at Bole, has created an ATM corner at its entrance, where there is space for one more machine. “We have deals with the banks. They pay rent for the place that we provide, together with the cleaning service and electricity and telecom lines that we supply,” says Daniel Gebremeskel, Harmony Hotel’s deputy manager. “The concentration of the ATMs is limited to specific places. If you go to CMC and Ayat, in the outskirts of the city, you will find a limited number of machines,” says Taye. The concentration of the ATM machines is a resource wastage. But there are some methods that can be implemented to effectively use the existing machines, according to Asrat Mulatu, a lecturer at the Addis Abeba Science & Technology University (AASTU) and associate dean of the School of Electrical Engineering & Computing. Asrat holds three cards from three different banks, and feels that it should not be so. The mechanised competition continues. Soon CBE will have 889 ATMs when ongoing installations are completed. It intends to have one machine within a 100 metres of its clients, says Ephrem. Available data on the number and use of ATMs show some interesting points. For example, CBE currently has 1.3 million ATM card holders, with transactions totaling 4.4 billion Br in 2013/14. Admittedly the machines were deployed at different times, as were the ATM cards. CBE data for the last fiscal year shows that it had 1.3 million cardholders who carried out 5.1 million transactions on ATMs, totaling 4.4 billion Br. Dashen Bank, which has 230 machines and access to the 45 Zemen machines, has 303,045 cardholders who conducted 2.79 million transactions, worth 3.5 billion Br. Zemen Bank has 20,000 account holders, all of whom have ATM cards. These clients have conducted 1.3 million transactions, worth 471 million Br. By contrast the 150,000 card holders of the six banks under the PSS have conducted 1.17 million transactions worth 1.11 billion Br through the 214 jointly-owned machines. The CBE had 8,793 transactions per machine, and just 3.9 transactions per card holder throughout the year, with a transaction volume of 3,461 Br per cardholder. The average transaction amounted to 882 Br. Considering the 275 machines Dashen and Zemen have between them, Dashen has had 10,148 transactions per machine (which could be as many as 12,134 if only its 230 machines are considered) and nine transactions per cardholder. Its average transaction was 1,254 Br and transaction volume per card holder was 11,549 Br. It is not clear how such computations factor into the banks’ decisions, but CBE plans to continue expanding on its own, says Ephrem. But when EthSwitch launches, all banks will be linked centrally through the National Bank of Ethiopia (NBE), leading to such transactions at ATMs, POS and clearing cheques becoming integrated and accessible from any bank. “The problem of the concentration of machines at one place will then end and all banks will be obliged to join the central switch and their resources will be utilised in one place,” says Abdulfetah Nuru, the Banking Department Director at the Bank of Abyssinia (BOA). “The individual use of ATMs is a waste of resources, said Abdulfetah, agreeing with other industry leaders. “I hope the EthSwitch will bring a change to the system when it is fully implemented,” he said. EthSwitch will become operational between April and June, 2015. EthSwitch, located at the central bank, will integrate all electronic banking transactions in all banks. The rate banks will charge for transactions from other banks is yet to be negotiated. BY LUCY KASA AND JEMAL ABDU FORTUNE STAFF WRITERS PUBLISHED ON DECEMBER 07, 2014 [ VOL 15 ,NO 762]
Posted on: Fri, 26 Dec 2014 07:18:20 +0000
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