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Banks indecisive over ATMs as alternative convenience points

automated teller machine
A woman transacts at an automated teller machine. FILE PHOTO | NMG 

Customers are still clinging to automated teller machines (ATMs) despite the entrance of agency, internet and mobile banking, making lenders indecisive on whether to shut or open more.

In age of the smartphone, mobile banking has seen a considerable increase in use because account holders who once depended on brick and mortar branches are increasingly taking up the use mobile phones and laptops for a variety of transactions.

Despite the growing preference for digital account interaction, the convenience of ATMs still continues to drive consumers to use them as a main source of cash and account access.

For many years, consumers' primary use for an ATM had been to withdraw some cash, but this has changed heavily. Today, modern ATMs offer a wider range of services — including cash and cheque deposits and cardless transactions such as M-Pesa withdrawal.

Customers are noticing this and will not let go of the ATMs just yet. Latest industry data confirm that the ATMs are here to stay.

The banking industry last year added 37 new ATMs to close with a network of 2,833. However, Central Bank of Kenya (CBK) data shows there was a fluctuation in the movement in number of ATMs during the months.

Banks for instance cut ATM network in January, May, July, September and November. However, every cut was being compensated with additions in the succeeding month. Some 29 ATMs were for instance shut down in January only for 46 to be opened in February.

“The general increase in ATMs in 2018 reflects the deliberate decision by banks to avail convenience to customers at strategic locations. The increase in use of technology has been driven mainly by stiff competition among the banks,” notes CBK.

The rise defies global trend as was observed by Retail Banking Research that showed the number of ATMs installed worldwide fell by one percent to stand at 3.24 million, impacted by branch closures and increased use of mobile payment platforms.

Kenyan banks have had to adopt multiple cost-effective delivery channels in offering financial services to ensure efficiency and maintain their market shares.

This has meant retaining and enriching the capabilities of ATMs, a channel that was once exclusively used as an alternative to branch services.

ATMs have stood the test of time, just like physical branches, despite the digital banking space growing at an accelerating pace in recent years.

Findings by Infortrak Research and Consulting contained in the Changing Face of Banking report show that four in every five of banked Kenyans are more likely to use ATMs in future. This means that this innovation will remain relevant.

The research further shows that 24 percent of customers consider ATM network when choosing thier bank. This is in contrast with 11 percent who consider mobile phone banking services or two percent who are moved by internet banking.

The CBK observes that since the launch of M-Shwari in 2012, a vast number of platforms offering similar services have emerged. As at last year, the country had over 16 million active mobile phone deposit accounts valued at over Sh105 billion.

But the ATM is fighting back, installing a raft of new technology to take over where street branches are leaving off. ATMs and mobile phones are starting to converge in a positive way. Today, money can be withdrawn from ATMs using channels such as M-Pesa, making it possible to have cardless transactions.

NIC Bank, which has since merged with CBA to form NCBA, last year rolled out smart ATMs called NCR Interactive teller that allow customers to talk to a live remote teller.

The video teller machine augments in-person teller services, allowing customers to speak to a remote live teller and seek their assistance to complete over 90 percent of all branch transactions.

It also rolled out 24 cash recycler ATMs to enable customers to deposit cash or cheques and withdraw cash beyond normal operating hours. Last year, the bank was able to collect Sh9.5 billion through cheque deposits and Sh400 million cash deposits outside banking hours.

The accelerated adoption has caused churn in the existing stock as most banks have moved to replace old machines with new deposit-taking terminals.

The changes in ATMs from just a tool of dispensing cash is in reaction to the changing needs of customers who want convenience but also don’t want to lose human touch in service as is the case with mobile banking.

A September 2018 Customer Service survey by Kenya Bankers Association (KBA) said that many customers were yet to warm up to the idea of robots and artificial intelligence and would rather have humans handle their customer service needs.

Despite the prevailing wave of automation, 54 percent of customers cited human-centric service as their preferred mode of service.

Based on feedback from 6,121 respondents, the research attributed the outcome to Kenyans being accustomed to personal interaction when addressing sensitive matters such as their financials.

“The preference of human interaction could be attributed to the fact that the banking public is accustomed to the traditional human model, which is based on building relationships with customers,” KBA said.