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T. Y. B.M.S.

YEAR 2005-2006


I, Dr. A. A. Rashid, hereby certify that Mr. Hitesh R. Vaswani of

Tolani College of Commerce, T.Y. B.M.S. (Semester V) has completed


INDUSTRY in the academic year 2005-2006. The information submitted

herein is true and original to the best of my knowledge.

Dr. A. Rashid Dr. Sheela Purohit

(Project Guide) (Principal)

I, Hitesh Vaswani, of Tolani College of Commerce, T.Y. B.M.S.

(Semester V) hereby declare that I have completed my project titled


academic year 2005-2006. The information submitted herein is true and

original to the best of my knowledge.

Place: MUMBAI Hitesh R. Vaswani


At the outset I take the privilege to convey my gratitude to those who

have co-operated, supported, helped and suggested me to accomplish the

project work. This project work bear’s imprint, of many persons who are

either directly or indirectly involved in the completion of it.

I am also desirous of placing on record profound indebt ness to my guide

Prof. Dr. A. A. Rashid Tolani College of Commerce, Andheri for the

valuable advice, guidance, precious time and support that he offered.

There is one person who has been a constant source of encouragement

and help, Mrs. Akshata Kadam, I hereby acknowledge all her efforts.
Objective of Project

1) To examine the degree of Automation / Technology required in the banking

industry in India.

2) To study the current trend in banking industry towards adopting the


3) To review the impact of automation on this industry.

4) To study the usefulness of the automation channels used within the banking
industry to successfully survive in the competitive market.

5) Comparative analysis of various banks benefited through the automation


6) To understand the banks effectiveness in performing operations with the help

of various channels to provide customer service.
Table of content

Sr.No Topic Page no.

Section I
01 1 -2
Executive summary
02 Evolution of Banking Automation 3–4
Section II
03 Various automation channel used in the banking 5–7
04 ATM (Automated Teller Machine) 8 – 13
05 Internet Banking 14 - 16
06 Phone Banking 17 – 19

07 Mobile Banking 20 – 23

Section III
08 Functioning of ATM’s 24 – 25
09 Technical Working of ATM’s. 26
Section IV
10 Initial Slow Growth of ATM”s. 27
11 Benefits and Pitfalls of Automation Channels. 28 – 32
12 Frauds and ATM’s. 33
Section V
13 Few Success Stories. 34 - 37
14 Case study on SBI 38 – 39
Section VI
15 Future of Automation Channels 40 – 46
Section VII
16 Analysis of Visits to Various Banks. 47 – 49
17 Conclusion 50 – 51
18 Bibliography 52

With the number of competitors increasing in the banking industry, an approach is to

determine the benefit of automation to the industry. In order to achieve this objective
the following methodology was adopted by me
1. Study of Automation Channels and the current trends in the banking industry.
2. Drawing up a questionnaire in context to advanced technology, interviews etc.
3. Views of various bankers about the automation channels.

Automation techniques are an integral part of banking industry and its scope and
benefits to the Industry.

The banking industry is a growing industry in India. With the study of various
automation channels within the industry more customer value can be created.

This is a research project, which aims to study the automation channels within the
banking industry in India. In an effort to do so I have studied the current trends in
India and future prospects of technology in the banking Industry through secondary
data analysis and views of the bankers through primary data analysis.

1. Current automation channels used in the industry.

2. Impact of the technological changes on this industry.
3. Various Services offered by the bank.

Study of automation channels used in the industry, through secondary data collected
from Magazines, Newspapers and web sites.

Views of the bankers about the automation channels in the industry collected through
primary data viz. questionnaires.

This project is based on personal visit to various banks in Mumbai city to obtain their
views on the technology adopted by the bank & its impact on banks.

As more technology based services are provided, the demand from customers will
keep increasing and banks investments in technology will go on increasing and proper
utilization of these investments is essential for banks to ensure that the systems
deployed are fully integrated with their operations.

Hence Automation in banking Industry is an upcoming Task.

Evolution of Banking Automation

The Rangarajan Committee report in early 1980s was the first step towards
computerization of banks. Banks started exploring the idea of 'Total Bank Automation
(TBA)'. Although titled 'Total Bank Automation,' TBA was in most cases confined to
branch automation.

It was only in the early 1990s that banks started thinking about tying-up disparate
branches together to facilitate information sharing.

At the same time, private banks entered the banking arena with radically different
strategies. Given the huge IT budgets at their disposal and with almost no legacy IT
equipment to worry about; private banks hastened the adoption of technology. The
philosophy for private banks was very clear: to provide a whole new range of
financial products and services at minimal costs. And technology made this possible.
The improved connectivity and falling costs offered by leased lines and VSATs
provided a booster to inter-branch automation.

Waves of change
¾ The first wave in banking technology began with the use of Advanced Ledger
Posting Machines (ALPM) in the 1980s. The RBI advised all banks to go in
for massive computerization at the branch level.

¾ With the second wave of development in late 1980s came Total Bank
Automation (TBA). This automated both the front-end and back-end
operations within the same branch. TBA comprised of total automation of a
particular branch with its own database.

¾ In the third wave, the new private sector banks entered the field. These banks
opted for a different model of having a single centralized database instead of
having multiple databases for all their branches.

¾ The fourth wave started with the evolution of the ATM delivery channel. This
was the first stage of empowerment of the customer for his own transactions.

Traditionally, banking players relied extensively on their reach to effectively put

emerging banks out of competition. This forced new banks develop strategies that
could help them reach out to end-customers cost effectively. The solution came in the
form of a delivery channel known as Automated Teller Machines or ATMs, as they
are more popularly known. This turned out to be one of the biggest growth drivers for
private banks in India. And when new private banks started installing ATMs across
the length and breadth of the country, customers started flocking in droves. A case in
point is ICICI Bank. During the liberalization of the banking sector, ICICI Bank,
which did not have a huge national network, realized that it could use IT to enhance
its value-added offerings.

HDFC Bank is the other big player from the banking industry, which has aggressively
used ATMs to its advantage. Though HDFC Bank has around half the number of
ATMs as compared to ICICI Bank; its ATMs are among the highest transacting ones
in the world.

Various Automation Channels Used in Banking

Automation is key

Automation is the basic thing that banks need to have in place. It involves a
combination of centralized networks, operations, and a core banking application.
Automation enables banks to offer 24x7x365 service using lesser manpower.
No doubt, innovations like telebanking and automated teller machines (ATMs) have
considerably put customers at ease in the recent past. But with net banking the
customer will be able to transact with the help of a mouse and his visits to the
neighborhood bank will become a thing of the past.

With Computerization and networking of bank branches in the country, most banks
today are in a position to capture and consolidate financial data about a customer.
Financial data is typically a summary of the loans granted, savings and fixed accounts
held by the customer, credit card facilities availed. More so, their IT systems also
record operational data, such as the number of times a customer has visited the bank
branch in the last month, the number of ATM transactions he has undertaken in the
same time period.

Private and foreign banks also analyse each customer’s financial behaviour, in terms
of average balances maintained, number of cheques used each month, number of
cheques dishonoured and many other things such as regular payment of loan
installments, credit card payments and so on.

The logical question is how do banks benefit from this data?

They first determine the profitability of each customer to the bank. Also, this data
helps them to select customers for profitable cross-sell opportunities. Most banks
these days have a proxy profit and loss statement for each customer, which records
the revenue the bank earns from each customer and the money the bank spends in
servicing the customer.
Revenue is in the form of interest income on loans such as home/auto/personal loans
and fee income which bank earns from a customer when it sells insurance policies,
foreign exchange, etc

The other side of the profitability statement shows the transaction cost the bank is
incurring to service you. For instance, each branch visit, vis-à-vis an ATM visit of a
customer is 3 times more expensive for the bank. Hence each time you visit the
branch to withdraw money instead of the ATM, you are costing the bank thrice the
amount of money. Similarly, for the other channels such as internet, phone and
mobile, the cost of servicing the customer is significantly lower for the bank.

Summary of the statement shows the bank the amount of profits it is earning from
each customer. Consequently, it is obvious that the bank prefers the more profitable
customers. While the loss-making ones are either gradually upgraded to better levels
or are weeded out of the bank’s business through disincentives. For instance, the
customers who do not maintain the average quarterly balance are charged heavy fines
and are also restricted on the number of free ATM transactions they can undertake
each quarter.

channels covered

ATM”S Internet
(Automated Banking
Teller Machine)

Phone Mobile
Banking banking


‰ Introduction

10 years ago, an ATM was a novelty in Indian bank branches. But with the entry of
aggressive private sector banks, ATMs have mushroomed in the urban Indian

With ATMs now a part of everyday life, access to funds has to be ensured anytime,
anywhere, by most banks if they are to survive the dog-eat-dog competition in the
banking sector.

Users visit their ATM center on an average of two times per week. Office (40%)
happens to be the most favored place to access Internet for banking purpose. Home
comes close second and Cyber café in third place. ATM in the close vicinity to the
office is the most preferred place among users for banking.

While ATMs do help banks to attract customers, there is also one more critical aspect
to consider—the immense cost savings from which a bank can benefit due to a
transaction taking place over an ATM vis-à-vis a branch. Typically, it costs a bank
close to Rs.50 per transaction if conducted in a branch. The same if done through an
ATM costs about Rs. 15. A look at the volume of ATM transactions conducted
reflects the level of success of this delivery channel.

From standing in a queue for hours on end to withdraw paltry sums, we have reached
a stage where we hardly need to know where our bank is located. A welcome relief
for those of us who had to start a morning on a bad note, courtesy of the pompous
officer at the bank counters.

Another group that has benefited immensely from progress on this

front are frequent travelers. From having to carry wads of notes
stuffed into a wallet ready to burst at the seams all that the traveler
now needs is a small piece of plastic that can be used to withdraw
money from almost any corner of the country, if not the world.

While today each and every bank touts ‘The customer is King’ mantra, it was a quite
a different story not so long ago. Customers patronizing PSU banks were greeted with
the typical ‘babu’ culture, where getting even a cheque encashed used to take ages. A
customer had to adjust their schedule to the bank and very rarely was it the other way
around. A person in a city like Mumbai usually had to wait for a weekend to deposit a
cheque, because by the time he reached home, the bank would have closed. Today,
while the timings of banks have not changed drastically—banks have become more
customer-friendly. Now, power has shifted into the hands of the customer.

The ATM industry is an evolving one, which has seen radical and
business-changing events occur frequently in its first three decades.

Banking in India has come a long way thanks to a combination of factors like
increasing consumer awareness, technological advancement, as well as the growing
financial muscle of our populace. One such innovation is the Automated Teller
Machine (ATM), today’s most preferred mode of delivery channel in all FIs. Banks
like ICICI Bank, UTI Bank and HDFC Bank all deploy ATMs aggressively and have
seen their customer base swell. Subsequently, even PSU banks have followed suit
with an increasing numbers of ATMs.

Increasing pressure to cut costs, coupled with changing customer expectations and
competitive pressures forced most banks to look at IT deployment as a part of a
comprehensive strategy rather than fragmented investments.

“A combination of regulatory and competitive issues have led

to the increasing importance of banking automation”

Banks are focused on three areas: meet customer's service expectations, cut costs, and
manage competition. For this banks are exploring new financial products and service
options that would help them grow without losing existing customers. And any new
financial product or service that a bank offers will be intrinsically related to

“The new generation banks showed the way and others had no option but to follow
the tech infusion to retain and attract profitable customers”

Customers today consider services and facilities such as Internet, ATM, phone and
mobile banking an essential part of the banking experience. This calls for channel
aggregation, which would be possible only through complete automation.

Prior ATM cards were been used to access only ATM transactions, but nowadays the
banks are offering facilities of Debit card with ATM’

A Debit card is a card that has direct access to your bank account. The bank issues the
card. Whenever you use your debit card, your bank account is debited immediately.
Unlike credit cards, you don't enjoy any credit period and therefore the debit card
does not have minimum income eligibility criteria.

Two types of debit card transactions

1. A ‘Direct’ debit card allows only "on-line" transactions. An immediate

electronic transfer of money from your bank account to the merchant's
account. This requires you to enter your PIN or Personal Identification
Number at the store's terminal. The system then checks your account for
sufficient funds to cover the purchase. These are typically the cards that come
with the "Maestro" logo, from MasterCard.


Suvidha debit card issued by Citibank in select cities.

2. A 'Deferred' debit card looks similar to a credit card, but is not a credit card. It
bears a Visa or MasterCard logo, and can be used wherever your card's brand
name is displayed. This card allows "off-line" and "on-line" transactions. Off-
line purchases are where the shopkeeper's terminal scans your card and creates
a debit against your account.

You are not required to enter your PIN at the store's terminal. Most off-line
transactions are verified immediately to see whether there is enough money in
your account. Off-line debit cards usually carry the 'Electron' logo, from Visa.


HDFC Bank issues Electron debit cards in more than 15 cities around the

Salient features

™ It is a combination of a Cheque an ATM card. Therefore, there are no

fees for using the ATM for cash
withdrawal, or as a debit card
for purchase.

™ A Debit card is more affordable than a credit card. You just use your
bank account for all your transactions.

™ Currently, there are only two issuers in India - Citibank and HDFC

™ No credit period. Your bank account is debited immediately.

™ No credit check is required to get a Debit card.

™ Spending is limited to your bank balance.


™ Free with your Bank Account:

Obtaining a debit card is easy. If you qualify to open a bank account, you
usually get a debit card, if your bank offers the service.

™ No background check:

When you are applying for a debit card, the bank does not need to look into
your credit history. All you need is the documentation to open a bank account,
and money in your bank when you use your debit card.

™ Convenience:

A Debit card frees you from carrying a lot of cash or a chequebook. In case,
you are an international traveller, you don't need to stock up on Traveller's
Cheque or cash. You can use your debit card to withdraw cash from over
500,000 ATMs around the world in over 100 countries. You can withdraw in
the local currency of the country you are in; limited only by the money you
have back home in your account, and your Business Travel Quota (BTQ) limit

™ Fair Exchange:
If you return merchandise or cancel services paid for with a Debit card, the
transaction is treated as if it were made with cash or a check. Customers
usually get cash back for off-line purchases; for on-line transactions, the
amount is credited to your account.


™ Unlike a credit card, debit card transactions are on a "pay now"



The other important delivery channel, from a bank’s perspective, is Internet banking.
Consumers in today's fast paced technology driven world expect access to information
regardless of the time or place. In a borderless world spinning on the axis of the
Internet, Internet Banking assumes a special and sophisticated significance. With
Internet Banking, your bank travels with you around the world. You have on-line,
real-time access. We call it 24*7*.365 banking.

Internet Banking is a service offered by banks that enables their

customers, easy and secure access to their accounts via computer
with an internet connection. One can have access to account
information from anywhere in the world anytime.
Future belongs to technology. Cheaper delivery points like Internet
and tele banking will improve their shares. ATM banking costs 80% while Internet
and telebanking costs only 15% compared to normal banking transactions.

Internet banking for the retail segment is a recent phenomenon that has generated a lot
of interest among the banks in India. Private and foreign banks have been the prime
movers in the area while public sector banks are also beginning to latch on to the

Prime driver for any bank to offer services online is to offer 24 X 7 availability and
convenience to its customers. Beyond that, cost reduction is another major reason. It
is estimated that cost to the bank per transaction done over Internet is nearly one eight
of that done through branch banking.

It is clear that Internet banking is here to stay and will be a major channel to
acquire and service customers.

With the facility of being able to execute a host of banking transactions at one's own
convenience, one is no longer restricted to branch timings. Internet banking is
provided at no extra costs by banks.

The kind of transaction that one can carry out using internet banking largely depends
on the bank providing the service. Some of the transactions are:

¾ Allows new account application for deposits and loans.

¾ Provides with a summary of all your bank accounts.

¾ Allows transaction tracking which enables retrieval of transaction details
based on cheque number, transaction amount, and date and so on.
¾ Provides viewing demat transaction and holding statement (if one have a
demat account with the bank)
¾ Change Customer profile. (I.e. the customer can update their mailing
address and all your communication from bank will go to their new
¾ Allows transfer funds between ones accounts including loan payments.
¾ Offers payment of utility bills such as (telephone, mobile, electricity,
insurance premium, credit card, etc.) online.
¾ Allows electronic submission of request for a cheque-book, stop payment
instruction, opening a fixed deposit, etc.
¾ Request for a Demand Draft.
¾ TDS Inquiry
¾ Customer Support

In the long run Bank can save money by not paying for tellers or for managing
branches infact the Internet will provide the bank with an almost paperless system.
Then the bank can reach a whole new market, as there are no geographic boundaries
with the Internet. Banks provide a highly secure environment for carrying out the
banking activities on the internet.

ICICI bank was the first to launch Internet banking in India in 1997.After that
many Private and Nationalized Banks have jumped into the bandwagon, of providing
financial services on the Net.

It removes the traditional geographical barriers as it could reach out to customers of

different countries/legal jurisdiction. It has added a new dimension to different kinds
of risks traditionally associated with banking, heightening some of them and throwing
new risk control challenges.

It poses a strategic risk of loss of business to those banks who do not respond in time
to this new technology, being the efficient and cost effective delivery.

Online banking commands finances, deposits, payments, balances etc whenever one’s
feel like, through PC without taking the pain of visiting the bank, physically. One can
make financial transfers sitting at home or at your office, just by logging into the site
of the bank. Net banking does not require any software installation on your computer.
As long as you have an Internet account and a 'secure connection' you can access your
account from anywhere, anytime.

"Net banking provides both the Bank and the customers an opportunity to re-
evaluate their relationships and move to a new paradigm of faceless banking."

There is no doubt that the potential for Net banking is immense considering the rising
penetration level of Internet in Indian homes and offices. The lure of convenience
through internet banking is definitely going to catch up with the business executives,
homemakers and people who work odd hours.

Internet Banking is quickly revolutionizing the entire financial industry. It is

providing the banking industry an opportunity to expand its reach into a broader
market – primarily composed of the bank's most profitable customers. Through the
collection of data captured online, the banks can target specific customers for more
efficiently, taking full advantage of the least expensive delivery channel available


Telephone Banking has quickly become as common in banking as branches and

ATM's. In today’s competitive banking environment consumers expect banks to offer
the convenience of at-home telephone banking; and, if one bank doesn’t offer it,
someone else will.

Through Phone banking the following transaction can be accessed.

¾ Check your account balance.

¾ Check the last 5 transactions in your account.

¾ Enquire on the cheque status.

¾ Have a mini statement (last 9 transactions) faxed across to you.

¾ Request for a cheque book / Account statement.

¾ Enquire on your fixed deposits / TDS.

¾ Open a Fixed deposit.

¾ Request for Demand Draft / Managers Cheque.

¾ Transfer funds amongst your linked accounts.

¾ Pay utility and Bank Credit Card bills.

¾ Do a stop cheque payment.

¾ Report loss of your ATM / Debit Card.

¾ Product information.

¾ Enquire on the Interest / Exchange rates.

E-Age Advantages
• Security
When Phone Banking facilities are used, transactions are completely secure.
When an account is opened, a unique Telephone Identification Number (TIN) is
given, which is completely confidential.

• Choose any language

A language can be chosen between English and Hindi for guidance through the
Interactive Voice Response (IVR) menu of services, at the time of calling the

• Account details/balance enquiry

Can get up-to-the-second details of Savings or Current Accounts and Fixed
Deposits & can also get details of the last five transactions (on the IVR), which
would be read out at the touch of a button.

• Cheque status inquiries

Phone Banking can be used to check on the status of cheques issued or deposited
from anywhere in India.

• Cheque book/ account statement requests
Can register a request for a new cheque book.

• Stop payment requests

Stop payment of a cheque, 24 hours a day. Can have the facility to stop a single
cheque or a series of cheques.

• Talk to a Phone Banker

Can talk to a Phone Banker for all the financial transactions and for any other
account related details over the phone. Can also give instructions to change one’s
correspondence address or get information about the latest products.

• Bill Pay
Pay your Utility and Bank Credit Card bills through Phone Banking

The customers can have access to their account information 24 hours

a day, 7 days a week, all through the convenience of a touch-tone
phone in a safe and secure environment.


In today's business environment, with so many deadlines to fulfill,

appointments to meet and meetings to attend, we are hard pressed for
time. Don't we wish we could do all your activities while traveling
from one meeting to another?
Now one can access bank account and conduct a host of banking transactions and
inquiries through our Mobile Banking service. Also can check balance, stop a cheque
payment, or even pay utility bills. Mobile Banking service gives an account
information and real-time transaction capabilities from the mobile phones at a true
"anywhere, anytime, anyhow" convenience.

All this through SMS or WAP or R World (for Reliance India Mobile
customers). SMS Banking brings your bank accounts to your fingertips. It works
using Short Messaging Service (SMS) technology. With SMS we can perform a wide
range of query-based transactions from our mobile phone, without even making a call.

Mobile Banking on regular mobile phones can be conducted with

normal SMS codes:


a) Get your balance details (HDFCBAL)

b) Request a cheque book (HDFCCHQ)

Steps for activating mobile banking

1. Fill the requisite mobile application form, which will be available on the
bank’s website and / or at its branches. One can even also call the customer
care centre and request a customer care executive to have the form sent to
you. This form elicits personal information like the customer’s name,
mailing address, bank account number and the branch and their mobile
phone number. It may also require the customer to choose the mobile
banking services that you are interested in.

2. Submit this form to the bank and wait for the processing period, which is
usually 2-3 working days.

3. Enter the mobile number (as indicated by the bank) on the mobile phone,
followed by the mobile banking request, in the format specified by the bank.

4. Thereafter, you will receive mobile phone alerts and can put in request for
your banking information and/transaction through the mobile.

But still ATMs remain the most successful delivery channel followed by telephone
banking and internet banking.
With drastic fall in cell phone tariff and emergence of seamless connectivity between
fixed and mobile lines, mobile banking is set to emerge as one of the cost-effective
delivery channels in near future. Toll-free-numbers would also gain popularity as an
important delivery channel. Although banks abroad are using call centre as a delivery
channel for some time, banks in India have just begun to exploit it as an effective non-
branch delivery channel.

The bankers will have to take a comprehensive view about their delivery channels.
Till now delivery channels were viewed in terms of cost and technology. Delivery
channels were devised focussing mainly on time and place advantage to the
customers. However, with the continuing advances in wireless technology, flexibility
in delivery channel device would be the forte of banks.

The modes of delivery like ATM, telebanking and Internet banking not only offer
convenience to customers, but also reduce the overhead costs of operations
significantly for banks by reducing the need for maintenance of records, books of
accounts, etc. in the traditional format.

With about thousands of off-site and on-site ATMs installed, banks are effectively
reaching out to a large customer base at a substantially lower cost.
While ATMs do help banks to attract customers, there is also one more critical aspect
to consider—the immense cost savings from which a bank can benefit due to a
transaction taking place over an ATM vis-à-vis a branch. A look at the volume of
ATM transactions conducted reflects the level of success of this delivery channel.
Typically, it costs close to Rs.50 per transaction if conducted in a branch and the same
if done through ATM costs about Rs.15. In order to reduce the cost of transaction
banks have started out-sourcing and sharing of ATM services and this trend will
gather momentum in near future. As this delivery channel gains mass acceptability
and is user friendly, the bank can use it to cross-sell it’s as well as others'

It would be wise therefore to restrict your branch visits and instead use ATMs.

To Sum up, “For while winners may not see massive gains, the losers will fade from
view as their ability to compete is eroded with every mouse click."


Since, ATM’s has provided a boon to the automation of the

banking industry therefore it is advisable to restrict the branch
visit and insist on more usage of ATM’s.

Let us see the functioning of ATM’s.


Following are the basic steps:

• Insert your card into the slot provided.

• Select the language in which you want to be led through the

transactions. Most ATMs offer you the options of conducting

your transactions in English and Hindi. At some locations, you

will be able to select between English and the regional language.

• At the prompt, enter your PIN. Press the "Enter" key.

• Select the transaction you wish to conduct (e.g.: withdrawal/

balance inquiry).

• Select the account type. If you are using a Credit Card, select the

"Credit" option.

• If you are making a withdrawal, enter the amount you wish to


• Confirm that the amount is correct.

• Collect your cash, card and receipt.

Technical working of ATM’s


Although the first ATM installed in India was in late eighties. The real boost in the
ATM services came in the wake of the economic reform process. The banking sector
reforms allowed for more competition in the market and to gain a competitive edge
the banks started to look for new ways to differentiate. The reform process also
brought to the fore a new generation of banks, namely the private banks and more and
more foreign banks started opening their shops in India. These developments in the
industry provided reasons to the banks to increase reach, gain competitive edge and
respond to growing customer awareness.
First there were Rigid bank union restrictions on deployment; there was no
government regulation restricting the deployment of ATMs by banks but the it was an
indirect control whereby the Indian Bank Unions determined the number of ATMs
deployed by the bank hence putting a constraint on the growth of ATM services.
Second there were extremely high tariffs on the hardware import: Earlier the duties on
the ATMs were 150 to 200 percent. With the levels of duties as high the feasibility
and viability of putting ATM outlets also became an issue for the banks.
However the most important factor for the slow growth was the Lack of sophisticated
computer technology that hindered the progression of processing networks. Most
government banks are still on distributed databases and the move toward complete
automation has been slow.


Traditionally ATMs deployment by the banks was seen as an attempt to reduce the
teller cost, it made the banking convenient for the banks' customer handling their cash
withdrawal transaction through ATMs. Today with changes in technology, decreasing
telecommunications and hardware costs it is not only a tool for reducing costs, it
provides several other opportunities to the banks. First it helps the banks increase their
reach; for any bank the key focus is to increase the customer base. Deploying ATMs
at an offsite location is cheaper and faster also the hassles of regulatory clearance can
be reduced.

Second the ATMs can also be used as marketing tool for the new products and
services; ATM locations offer important distribution points for new products and
services by the banks. The advances in technology have made the machines more
functional; the online ATMs connected to the customer databases can provide updated
and customized information to the customers.

Thirdly it helps the banks attract new customers; The shared ATM networks allows
the customers of different banks to do their banking transaction efficiently, giving the
acquirer banks an opportunity to open interfaces with new customers.

Apart for these ATMs also benefit the banks by providing Additional revenue
opportunities; these front end sites form an important resource for the banks for
generating revenues by marketing these distribution points for distribution of third
party products and services. Couponing schemes, distributing leaflets of the third
party products etc are some of the ways in which additional revenues from an ATM
site can be generated. Advertising on the screens and on the site can be another source
of revenue for the banks. Utility payments, ticket distribution points are the other
areas where the ATMs can generate additional revenues for the banks.

Customer is absolutely free to bank whenever and wherever he wants. That is,
whether it's a national holiday, a strike or a traffic jam, the ATM is there for you
always. Plus, there's no queue and most of the time, the crisp notes coming out of the
ATM are an added bonus.

Most banks today are looking at ATMs not only as a delivery channel that bring in
customers in droves but also significantly reduce transaction costs.

E-Age Advantages

¾ 24-hour access to cash

¾ Balance inquiry

¾ Mini-statement request

¾ Cheque book request

¾ Funds transfer

¾ PIN change

¾ Bill Payment of Utility Services, etc

¾ Anytime cash deposits

Though Internet Banking-is not as popular as ATMs but it is an emerging delivery

channel-offers significant cost advantage to banks. A net-based transaction costs the
bank only around Rs. 4 and costs per transaction are even lower than those of an
ATM. In addition, as a delivery channel, Internet banking does not require physical

infrastructure, thus saving on prohibitive real estate costs. Thus, banks are trying to
get customers to switch over to this mode of banking.

But in spite of all the positive signals, there are problems galore, which if not set
right, can come in the way of ATM growth rates in India. One is the familiar
infrastructure problem. Other problems are issues like obtaining many different
permissions from different authorities like the municipal authorities, building society
permission, permission for locating VSATs on top of a building, obtaining permission
from the local telecom provider, etc. The rapid deployment of ATMs earlier was
because of the fact that there was no permission required from the Reserve Bank of
India. But today this is mandatory. Industry experts point out that this was done
because there were a lot of banks, which set up ATMs without adequate funds. The
RBI wanted to check the status of banks before allowing them to set up ATMs.

First there were Rigid bank union restrictions on deployment; there was no
government regulation restricting the deployment of ATMs by banks but the it was an
indirect control whereby the Indian Bank Unions determined the number of ATMs
deployed by the bank hence putting a constraint on the growth of ATM services.
Second there were extremely high tariffs on the hardware import: Earlier the duties on
the ATMs were 150 to 200 percent. With the levels of duties as high the feasibility
and viability of putting ATM outlets also became an issue for the banks.

Although Internet banking has made its advent in the Indian Banking Scenario, the
pace of its acceptance is not exciting. Internet itself is out of reach for the potential
consumers of Net banking services. In the course of time when ISPs come up with
sufficient bandwidth at a reasonable price, then only we can expect a smooth
acceptance of Internet Banking.

While Internet banking is a potential and powerful delivery channel, it has failed to
make a significant impact due to a variety of reasons. There are three clear reasons
why Internet banking has not taken off in India:

1) Slowness in adoption of the Internet by the 40+ age group.
2) Lack of a strong trust environment prevents rapid move of corporates into
adopting Internet,
3) Lack of a critical mass of early adopters of security and trust technology among
bankers operating in India to drive the transition from bricks and mortar to e-

However the most important factor for the slow growth was the Lack of sophisticated
computer technology that hindered the progression of processing networks. Most
government banks are still on distributed databases and the move toward complete
automation has been slow.

One of the problems faced by Net banking in India is lack of customers having PC
and Internet access and above all security is a huge issue which is restraining the
customers from doing their banking on the Net.

In spite of facing several such limitations, it is heartening to see that many co-
operative and rural banks have taken the technology plunge and are able to offer the
latest services to customers at affordable budgets.

Frauds and ATM

ATM Fraud has been with us since we first started using them. Although it is not
considered one of the major frauds, it could have devastating effects on the victims
A victim can loose an entire month’s salary or hard earned savings money. The most
important fact to remember is that criminals can only access your bank account via an
ATM if they are in possession of your ATM bankcard and your secret pin number. It
is therefore up to you to protect yourself against ATM fraud.

ATM cards that function as debit cards are particularly vulnerable to fraud because
they are used in "point of sale" transactions that require only a signature rather than a
PIN to verify withdrawals. These cards withdraw money from a customer's account at
the time of sale and deposit the funds into a merchant's account.

Techniques used to carry out ATM crime

¾ Card swapping – where a customer’s ATM card is swapped for another card
without their knowledge whilst undertaking an ATM transaction.
¾ Card jamming – where an ATM machine card reader is deliberately
tampered with so that a customer’s card will be held in the card reader and
cannot be removed from the machine by the customer. The criminal removes
the card once the customer has departed.
¾ Vandalism – where an ATM machine is deliberately damaged and/or the card
reader is jammed preventing the customer’s card from being inserted.
¾ Physical attacks – where an ATM machine is physically attacked with the
intention of removing the cash content.
¾ Mugging – where a client is physically attacked whilst in the process of
conducting a transaction at an ATM machine.

Few Success Stories

1) ICICI Bank
ICICI Bank is one bank, which has seen a massive surge in volumes, since the
introduction of ATMs. The number of ATMs, which numbered around 90 in
December 1999, has now swelled to 540. Currently, the total volume of ATM
transactions is pegged at an astronomical 2, 00,000 transactions a day.
“The larger the volume of transactions, the less the cost per transaction.” Also, the
convenience of anytime money has attracted a lot of customers. ICICI has also shown
how technology can translate into reduced costs. Typically, a transaction through a
bank branch costs approximately Rs.45. The same transaction done telephonically
costs Rs.30, through an ATM costs about Rs.18, and through the Internet in huge
volumes, only Rs.4.

2) Federal Bank
The increase in the percentage of cash transactions through ATMs has led to a
reduction in costs for the bank. The cost of a transaction done across the counter is
nearly Rs.50. However, the costs are only Rs.15.50 per transaction when done
through the ATMs.

Interestingly, the average number of transactions through ATMs of Federal Bank is

around 200 per day.

3) UTI Bank

The automatic teller machine, set up at an altitude of 13,200 feet (4023m) along the
winding route that links the Tibetan capital Lhasa to Sikkim's capital Gangtok, has
been installed by UTI Bank with the help of US-based NCR Corp, which made the
special machine.

"This is a technological feat," stated by highly sourced of UTI. This ATM runs on a
generator when its fuel is frozen by temperatures that plummet below -20 degrees
Celsius. NCR Corp. had made an extensive survey before labelling it the world's
highest-placed ATM.


The critical issue, which is engaging the attention of most bankers these days, is
ATM-sharing. This too can become a major risk-mitigation measure, and will help
bring down the transaction costs significantly and enhance usage. Essentially, a
shared ATM network will mean the getting together of a clutch of banks, with a
common switch, where any bank’s ATM card can be used to access his funds from
any of the ATMs in that group of banks. For instance, if I have a Bank X ATM card,
it should not matter to me which ATM I go to (that of Bank Y, Z or P). I can access
my money from any of the ATMs, which are part of that shared ATM network. This
also spreads the risk effectively and ensures customers have easy access to their
money at low cost. Some banks, however, are still holding on to a proprietary ATM
model (meaning they don’t want to share their networks with others), little realising
that would only expose them to greater risks

The shared network would facilitate optimum use of the banks' resources, the
infrastructure and rationalise deployment of ATMs. Participating Banks as well as the
customer will gain from the arrangement. Since many Banks have evinced interest to
join the network the number of ATMs under our network will definitely grow.

The system will work on an integrated backbone network and will be online and
available on a 24 / 7 basis with all new security features. This is a very unique
proposal of broad-basing the customer service through a concerted effort and in a very
cost-effective manner.

SBI case study-

State Bank offers the convenience of over 4174 ATMs in India, already the largest
network in the country and continuing to expand fast! This means that one can
transact free of cost at the ATMs of State Bank Group (This includes the ATMs of
State Bank of India as well as the Associate Banks – namely, State Bank of Bikaner &
Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State
Bank of Patiala, State Bank of Saurashtra, and State Bank of Travancore), using the
State Bank Cash Plus card.

Transaction Limits:
Daily limit of Rs.15, 000/- at the ATM
Daily limit of Rs.25, 000/- at Point of Sale (POS) terminal for debit transactions
Combined daily limit of Rs.40, 000/-
State Bank accepts Debit / Credit Cards issued by Banks in India and Abroad
affiliated to both VISA and Master Card International at its over 4174 ATMs in India.
Cash transactions and
Balance enquiries are allowed at a nominal fee as under: -
Transaction Costs. Rs.
Debit Cards Issued in India Rs. 30.00
Credit Cards Issued in India Rs. 50.00
Debit / Credit Cards Issued Out side India Rs. 60.00
Balance enquiries Rs. 12.00

SBI tied up with Indian Bank for sharing ATM on 16th July, 2004.
State Bank of India has entered into an agreement with Indian Bank for bilateral
sharing of their ATM networks. SBI has a network of 4100 ATMs while Indian Bank
has a network of 104 ATMs.
SBI already has such bilateral sharing networks with HDFC and UTI Banks.

ICICI Bank signed MoU with SBI for ATM network sharing
ICICI Bank, India’s largest private sector bank, signed a Memorandum of
Understanding (MoU) with State Bank of India (SBI), India’s largest public sector
bank for sharing of ATM networks.
SBI and Associates, having 2068 ATMs and ICICI Bank having a network of 1725
ATMs. The agreement will enable the customers of ICICI Bank and SBI to have
access to the combined ATM network of 3793 ATMs, spread across over 600 centres
in the country.
The country’s largest private and public sector banks, ICICI Bank and State Bank of
India, integrated their ATM networks to give their retail banking customers access to
almost 4,000 automated teller machines across the country.
Customers of both banks will be able to use ATMs of the other bank at no extra
charge or fee.

This is the first bilateral ATM sharing deal of this size in the country. Though the
trend had been started by other smaller banks, which have made attempts to form
bilateral and multi-lateral ATM networks in order to provide more machines at more
locations to their customers, as well as maximise revenues from each machine.

ICICI Bank has utilized technology to provide value-added services to its customers.
The Bank services a growing customer base of more than 6 million customer accounts
through a multi-channel access network comprising over 450 branches, over 1725
ATMs, call centers and Internet banking. Today, ICICI Bank witnesses more than
seventy percent of its transactions on electronic channels as against only 5% usage
less than three years ago.

SBI, HDFC link ATM sharing pact - January 28, 2004

PSU banking major State Bank of India has signed an ATM sharing agreement with
private sector HDFC Bank. The agreement covers 2,850 ATMs belonging to SBI and
its seven associate banks and 870 ATMs belonging to HDFC Bank.

“The ATM network sharing alliance reiterates our commitment towards maximizing
customer convenience. It further enhances the proposition of anywhere, anytime
banking offered by the ATMs for our customers. Hence it makes sense to enter into
multiple sharing arrangements with banks as it leads to greater utilisation of the

Case study
Facts on State Bank of India’s banking
automation project

One can only imagine the complexities involved in deploying a core banking solution
for an entity the size of State Bank of India. With more than 13,600 branches spread
across the length and breadth of the country, the project was huge in size and
complicated in its implementation. The project involved deploying a centralized core
banking system throughout the SBI group, consisting of SBI and its seven associate
banks. In the group, SBI alone has more than 9,000 branches with 51 foreign offices
in 31 countries. The estimate of investments for SBI is Rs. 500 crore ($102 million).

But this mammoth task, said to be one of the largest of its kind in the world in terms
of the number of branches, customers and transaction volume, was undertaken by
TCS. The project involved procurement, supply and installation of hardware and the
core banking software, customization of the core banking software, implementation
and rollout of the software at SBI branches, and training and support. TCS will
manage the entire project and the system integration activities involved. As the prime
vendor, TCS has teamed with Financial Network Services, Australia (FNS) and
Hewlett Packard (India) for this project. Hewlett-Packard will provide its ‘always-on
Internet infrastructure’ solution consisting of Superdome servers and XP storage
systems, whereas the core banking system will be supplied by FNS.

Computerization in public sector banks

Total number of branches in India

Partial computerization at branch level

Number of fully computerized branches

Number of existing service branches

Number of partially computerized service 63


Number of fully computerized service branches

Total ATMs installed

Online terminals at corporate sites installed

Debit cards (as ATM cards) issued


Market analysts believe that the growth in the installed base of ATMs, which was
primarily driven by private sector banks, will be driven by Indian PSU banks in the
next year. The retail-banking scene is getting hotter by the day with banks going all
out to increase access points. This is great news for ATM majors like NCR India and
HMA Diebold, which are fighting aggressively to increase market shares.

As part of its strategy in offering innovative services, NCR is talking to the Railways
in Mumbai for deploying an ATM, which could be used to dispense railway tickets.
The focus is on letting the customer use the ATM as a medium which can be used for
non-cash transactions like payment of bills, insurance payments, printing of
statements or accessing the Internet. The key idea is to get the customer used to these
channels and then migrate him to different low cost channels like the Internet. For
example, a customer using a Web-enabled ATM would be more likely to go in for,
say, a service like Internet banking. Also, from the bank’s point of view this would be
more cost effective as a transaction over the Internet would be minimal cost to the
bank per transaction.

NCR is also looking at offering solutions that can bundle the ATM with the smart
card. For example, the value of a Petrocard (a smart card with stored value used in
petrol stations) would double if the Petrocard user has the option of topping up the
pre-paid value of the card via an ATM. This option would give the customer better

“The trend now is to use the ATM as a tool to acquire new customers and retain them
by providing a range of services. Banks are slowly waking up to the ATM’s potential
as a serious marketing tool. They are also earning sizeable revenues by using ATMs
to advertise products from other companies.” A few banks are offering utility bill
payment facilities on their machines too. Apart from that, a variety of services ranging
from railway card/season tickets and cinema tickets to dispensing of mobile phone

smart cards are being thought of as a part of the strategy to attract customers and earn
extra revenue.

This could be the future of ATMs, where more non-cash transactions will be done.
Some banks are even toying with the idea of selling movie tickets through ATMs.
For example, the SBI ATM at CST railway station in Mumbai dispenses season
tickets too.

Another unique strategy from NCR is the installation of local language ATMs which
are available in almost all Indian languages. In rural areas for example, some farmers
are extremely rich but do not have access to ATMs. How do banks reach out to such
people? The answer is in the form of intelligent ATMs. Besides, an illiterate person
would not be able to use an ATM, whichever language it displays. The answer is an
ATM that offers an audio aid, which has clear instructions on how to withdraw cash
in the language he speaks.

“We are seeing two distinct trends—state-run banks are installing ATMs to ensure
that they do not lose customers, and to cut costs, while private and foreign-owned
banks are using it to acquire customers.” This does not mean that the cost-factor is not
relevant to the latter. Again, of the installed ATM base, nearly 70 percent is accounted
for by private and foreign players. We also see that state-run entities have more of
onsite ATMs.

“ATMs have evolved from only basic cash dispensing solutions to one which can
provide value added services. The future of ATMs will be touch-screen kiosks,
payment of bills, and smart cards bundled in with ATMs.”

Consumers in this age of financial self-empowerment expect continuous access to

their money and account information. In these changing times ATMs are in a position
to cater the demand for cash availability and are finding growing acceptability in the
Indian mentality. This changing scenario gives a lot of scope for the proliferation of
ATM services in India.
The future of ATMs in India is fantastic. In fact, within a few years, the country will
be flooded by ATMs. And, with e-commerce expected to boom in the next few years,

banks will play an increasingly important role. But for that to happen, banks will have
to transform themselves to serve customers in a better way. They will have to re-
invent themselves so that better services can be offered at all levels. Thus, ATM,
telephone and Internet banking are set to become the key drivers of growth for banks.
According to International Data Corporation (IDC) projections, banking through
Internet will get revenues of more than US $ 3 bln in another two years’ time.

In future a bank's ATM would function like a kiosk delivering more of non-cash
transactions, thereby simultaneously reducing the fixed and operating cost of

ATMs, the Internet, call centers, instant messaging, mobile phones, and wireless-
enabled handhelds are giving people round-the-clock access to cash, retail goods and
services. In this age of accessibility, people no longer need to visit their bank to
retrieve their money—it comes to them. Financial service sector organizations are
competing with one another to deliver to their customers the most sophisticated access
points to funds.

Among all the delivery channels used by banks today, ATM’s remain the most
successful, followed by telephone banking and Internet banking. But the biggest
potential could lie in mobile banking. With cellphone tariffs falling and increased
bandwidth, the potential for banking player to tap this channel is enormous. “The
future delivery channel will have various mobile portals using technologies such as
GPRS (General Packet Radio Service). The customer would prefer to do banking
transactions not only anytime, anywhere, but also through any device. With the
current rate of evolution in the wireless industry, the mobile channel is poised to
become the de-facto banking channel within the next three years.”

One more delivery channel, which will increase in the future, is the deployment of
call centres. For instance, looking at the cost effectiveness of call centers.

As a delivery channel gains ground, it can be used to sell products of other vendors
too. Analysts believe that as banks discover the marketing power of ATMs, one

would see a trend where ATMs would be used to deliver products of other vendors as

The next five years will see a marked shift, wherein customers will show a preference
for non- branch delivery channels.

Research indicates that globally, 80 percent of cash withdrawals occur on ATMs; the
emphasis is now shifting towards adding new services at these touch points. ATMs
thus become an ideal banking unit of a bank, as acceptor as well as dispenser.

As per the survey over the last three months across nine major cities in India came up
with some startling figures. The potential banking consumer population in India is
around 300 million. The number of ATMs required to service this population would
be a whopping 200,000, at the minimum. At present we have a paltry 5,000 ATMs
countrywide. To be very precise, an ATM will have to be installed for every 1,489
cards issued. In order to break even, the number of transactions per ATM would have
to be 203 every day and the customer would have to make a minimum of four
transactions per month on an ATM. The potential for the ATM industry in India
thus remains largely untapped so far.

ATM Outsourcing
The question remains as to whether the banks and the bankers can afford to wait while
building the required infrastructure and formulating business and revenue models to
generate future profits for the bank.
As banks look at the difficult task of minimising operational costs, while
simultaneously enhancing ATM channel availability and customer satisfaction;
outsourcing the management of the ATM channel has presented itself as an attractive
option. This would also enable them to concentrate more on banking rather than
getting involved with the intricacies of technology.

In order to outsource an important project, the bank has to consider various factors
before choosing a service provider. In this emerging highly competitive scenario,

service providers who can offer services in the shortest time frame and with the least
down time will be the winners.

Many Indian banks that were hampered because of lack of knowledge of technology
are now actively talking to ATM vendors for outsourcing their needs. For example,
Bank of India recently signed an agreement with India Switch Company, a Diebold
HMA group company, for outsourcing the setting up of ATMs. Other banks-
especially PSU and co-operative banks are expected to follow this trend.

The Indian ATM Industry has seen explosive growth in recent times, with the
installed base registering a CAGR of almost 60% in the last few years. While
committing to substantial capital outlays on the deployment if ATM channel, banks
are recognizing the significance of the 3Ms – Maintenance, Monitoring and
Management to make the self-service channel a profitable one.

ATMs represent the single largest investment in the electronic channel services for the
banks. Running a large ATM network is a serious business, involving varied
disciplines and complexities of hardware, software and processing requirements. The
banks are working towards optimum availability of ATM networks for their
customers, while protecting margins in a competitive environment. Outsourcing
management of the ATM network to subject-matter-experts is becoming an
increasingly preferred alternative, since this helps freeing the banks resources for
their core business of banking.

This is part of a global trend, as banks and financial institutions the world over are
discovering that outsourcing the ATM channel management can bring both improved
performance and reduced operational costs.

Typically, outsourcing could involve various tasks. The scope depends on a bank's
long-term strategic goals. Tasks that could be outsourced include:

• ATM Monitoring Sophisticated software and tools, such as those at NCR's ATM
Management Centre at Mumbai, make it possible to monitor the entire ATM

network remotely on a 24 x 7 basis. In addition, the tools also facilitate accurate
diagnosis capabilities help significantly in maximizing ATM availability across a
widespread geographical area through faster and accurate response to fix any
problem or even pre-empt a possible problem.

• Cash and Consumables Replenishment; this service helps minimize outages and
maximize channel availability through improved logistical management of Cash
and Consumables Replenishment.

• Currency Management; This is one of the important elements of ATM

management. This helps ensure that the ATM does not have cash-outs, which
could mean dissatisfied customers besides avoiding expensive emergency Cash
replenishment trips. Mostly importantly, currency management lowers a bank's
cost of cash, eliminating excessive idle cash that could mean a loss of interest

• Network and Systems Management; This includes the monitoring of the entire
network connectivity on a 24 x 7 basis, including the network equipment and
servers, the telecom and transmission lines and the software within the ATMs.

Outsourcing Benefits
In today's ATM sharing, high availability of the ATM to the bank's customers is a
must for the channel to become a profitable one for the banks. Outsourcing of ATM
management plays a significant role in making the vital network available in an
efficient and cost-effective manner through the coordinated delivery of field services
from a single service organization.

• Lower Operational costs: Banks choosing to outsource operational management

of ATM channel may be able to achieve as much as 15 to 25 percent savings on
ATM management service over the cost of in-house operations. The outsourcing
agency is able to leverage economies of scale and continuously upgrade
technology to drive cost efficiency.

• Cost of Cash: Cash carrying costs are among the largest cost of running the ATM
channel. With the integration of advanced currency management tools, cash costs
can be reduced substantially.

• Improved performance: The single point of contact accountability maximizes

availability through the elimination of delays repeated callbacks and out-of-scope
charges that may occur when several organizations are providing the services.
Through its Management Centre Infrastructure, a company like NCR can instantly
pinpoint and diagnose problems throughout the ATM network ensuring an
accurate and quick response.

• Concentrating on core Competency: Outsourcing ATM management to

specialists frees Bank management to focus on its core business of banking.
Outsourcing also stimulates branch productivity, freeing branch personnel to
concentrate on customer interfacing and revenue generating functions.

• Technologies Edge: On its own, it may be a difficult for a bank to keep ATM
hardware and software updated as technology evolves. NCR as a leading ATM
manufactures invests heavily in management infrastructure to provide customers
with state of art tools.

The key to successful outsourcing strategy for the ATM channel is to have a
partnership between the two organizations rather than just traditional vendor
relationship. A partnership approach to ATM outsourcing can offer banks an
operational model whether overall channel availability is increased with the
significantly lower cost and higher customer satisfaction.


I] Number of ATMs various bank have:

S.No. Banks No. of ATMs

1 Indian Bank 83
2 IDBI Bank 295
3 SBI 4100
4 The Greater Bombay Co-op Bank 13
5 HDFC Bank 870
6 Syndicate Bank 182
7 Union Bank 145
8 Punjab National Bank 600

From the survey conducted by me, it has been observed that Private
sector banks have been the early adopters; Public sector banks have been
doing a fast catch-up except SBI, being the largest bank in India &
spread over across the country.

II] Frequency of Customer’s visit: Pre-Automation & Post-

S.No Frequency of visit -- Frequency of visit –
. Banks Avg Avg
Customer per mth Customer per mth
Pre-Automation Post-Automation
1 Indian Bank 10 times 7-8 times
2 IDBI Bank 10 -12 times 5-6 times
3 SBI 10 times 3 times
The Greater Bombay
4 Co-op Bank 10 times 5 times
5 HDFC Bank 10 times 6 times
6 Syndicate Bank 8-10 times 3-4 times
7 Union Bank 10 times 5 times
8 Punjab National Bank 10 times 9 times

From the above table, it can be seen that the average customer’s visit to
the branch in pre-automation phase was 10 times and visit after

introduction of Automation channels is Avg. 6 times. Retail Banking is
going through an active metamorphosis. This is thanks to the number of
consumers who have migrated from paper to plastic, and of course also
due to changes in the banks themselves. So far there are just a few banks
that have jumped onto the retail banking bandwagon, but many are sure
to follow.

III. Time taken per transaction (Teller v/s ATM)

Sr. Banks Teller per Time taken by Saving in time

No. transaction ATM per per transaction
1 Indian Bank Appx 10 min Appx 3-4 min 6-7 Min
2 IDBI Bank Appx 10-12 min Appx 3 min 7-8 Min
3 SBI Appx 8-10 min Appx 2-3 min 6-7 Min
4 The Greater Appx 10 min Appx 2-3 min 7-8 Min
Bombay Co-op
5 HDFC Bank Appx 7 min Appx 3 min 4 Min
6 Syndicate Bank Appx 10-12 min Appx 3-4 min 7-8 Min
7 Union Bank Appx 10 min Appx 3-4 min 6-7 Min
8 Punjab National Appx 8 min Appx 3 min 5 Min

From the survey conducted, it can be observed that Avg. time taken by
Teller is 10 Min. whereas ATM takes on an Avg. 3 Min. Hence, it can be
said that ATM is more effective in terms of timing saving and providing
better customer satisfaction than the Teller at Branch.

IV. Average Transaction per day by ATM
From the survey it was found that the Avg. transaction per day through
ATM of various banks is 92.

V. Impact on employment due to technology change.

As per the interview with various bankers, there is no significant impact
on employment.

VI. Other Services offered by the banks.

From the visit to various banks it was observed that many banks have
started with Payment of Utility bills, Prepaid Mobile Refill, Credit card
payment, etc except few public sectors yet to start the above services.

VII. Networking Channels used by banks.

Almost all banks have with networking channels like Internet, Phone &
Mobile except few public sector and co-operative banks.


In this prevailing scenario, a number of banks have adopted a new deployment

strategy of infrastructure outsourcing, to lower the cost of service channels. As a
result, other banks too will need to align their new technologies with their reinvented
business models. The required changes at both the business and technology levels are
enormous. In a highly competitive retail banking market, early adopters are profiting
from increased efficiencies.

Even though there are certain limitations, it is heartening to see that many co-
operative and rural banks have taken the technology plunge and are able to offer the
latest services to customers at affordable budgets.

As we move inexorably into the future, the banking sector is poised to scale new
heights, adopt advanced technologies and rise to new levels. The banker of the future
will look to technology as a tool to provide better quality and service to customers,
while banking technology will be increasingly sourced from trusted technology
service providers to the banking sector.

What has been achieved so far is only a modest beginning and many more industry
wide projects are in the offing. In addition, banks are yet to complete major
technological up-gradation of their systems. They are yet to see the real benefits of the
technology. However, the implications of large-scale technological usage are
paramount for a robust and proven disaster capability.

When banks depend on technology for their day-to-day business, the complexity and
risks of technology have to be understood and sufficient backup plan put in place to
ensure continued customer service.

In addition, as more technology based services are provided, the demand from
customers will keep increasing and banks would thereby end up in a technology war.
In order to win this war, investments in technology are going to increase and proper

utilisation of these investments is essential for banks to ensure that the systems
deployed are fully integrated with their operations

Mumbai being the financial capital of the country will always set the pace of
automation in the banking and financial services industry. It will also take the lead
in deploying large-scale systems and reap the benefits. Several banks, (RBI, SBI,
BOB, BOI, CBI, Dena Bank, ICICI Bank, UTI Bank, etc.,) with their headquarters in
Mumbai, are already setting the pace of technology deployment. They have set an
example of how technology-based transformation is delivering enhanced customer

It is only a matter of time before the Indian banking industry witnesses enhanced
technology deployment. With that, customers are assured of better service from the
banking industry. This would ensure better services to customers and also reduce the
incidence of fraud or scams in the banking industry.


1) Internet sites

2) Magazine – Industrial India

3) Newspaper – Economic Times, Asian Age.

Example of Internet Banking
Section I
Section II
Section III
Section IV
Section V
Section VI
Section VII