India has 11 ATMs per million people. When compared to the U.S., which has 1,300 ATMs per million, it's evident that either the U.S. is severely overbanked or there's tremendous growth potential in India and in the broader Asia-Pacific market.
Angling to bring ATMs to the billions, Diebold (North Canton, Ohio) purchased an ATM manufacturing facility from Tata Infotech, a subsidiary of the Tata Group (Mumbai). The purchase stems from a manufacturing partnership started in 2002, which included an option for Diebold to buy the facility outright after a designated period of time.
Diebold also manufactures ATMs in the United States and in China. "We build terminals close to our customers so that we can meet market demand quickly," says Ken Justice, Diebold's vice president of product management and marketing. "Those products are localized for the local needs of that region."
Supporting Diebold's local manufacturing is a global engineering group, which maintains development capabilities in the United States, Brazil, China, India and in Europe. "That gives us a lot of capability to work on multiple projects around the clock," says Justice. "We've got guys in Canton working on software part of the day, and guys in Europe working on parts of that project in different parts of the day."
The specific needs of the Indian market stem from the structure of the banking market, the demands of its customers, the currency itself and even the climate.
India's burgeoning private-sector banks tend to go for the more advanced terminals. "There are a lot of attractive consumers with good incomes in India, and the private banks seem to be going after those customers more," says Justice. "Those are customers that want to do more self-service type of transactions, whether it be through an ATM or Internet banking."
By contrast, the traditional public banks opt for ATMs that can handle the higher volumes. "The public banks are still more in the traditional mode of lots of branches and tellers," adds Justice. "They're deploying ATMs but in a much simpler transaction format."
Indian customers withdraw large numbers of low-denomination notes -- an average of 40 notes per withdrawal, which is 10 times the U.S. average, according to Diebold. Accordingly, it's a daunting prospect for a bank to refill a broadly distributed network of ATMs on such a frequent basis, and as a result, Indian banks gravitate towards lobby terminals rather than through-the-wall terminals.
Another key factor in India is the heat and the humidity. "We have to have a lot of environmental protection capabilities on the products that we market there," notes Justice.
Also, ATMs have to be equipped to handle the variable quality of the paper currency itself. "In the U.S., when you get a stack of notes, retailers and banks put a paper band around them," relates Justice. "In India, they get a bunch of notes and they staple them -- the cash has a lot of holes in it."