Urgent Need to Improve Bank ATM Operations... 14,300 Fewer Machines Than 6 Years Ago

[Asia Economy Reporter Jo Gang-wook] Recently, as the scale of ATM installations in the banking sector continues to decline, concerns have been raised about potential difficulties for the public in using cash due to regional imbalances in ATM installations. It has been pointed out that if each bank continues its ATM operation strategy without inter-bank cooperation, the imbalance could worsen with some regions experiencing oversupply while others face undersupply of ATMs.

According to the Bank of Korea and the financial sector on the 16th, the number of ATMs installed by banks stood at 55,800 at the end of last year, continuing a downward trend since reaching a peak of 71,000 at the end of 2013. This represents a decrease of 14,300 units compared to six years ago.

However, the number of affiliated ATMs has increased as VAN companies have installed and operated ATMs in convenience stores and public places. The increase during the same period reached 9,861 units.

Nonetheless, half of the domestic ATMs are concentrated in the Seoul metropolitan area, and the gap between Seoul, which has the highest number of ATMs per unit area (1 km2) at about 36 units, and regions such as Gangwon, Gyeongbuk, and Jeonnam, which have the lowest at 0.3 to 0.4 units, was found to be more than 100 times.

Accordingly, the Financial Services Commission, the Bank of Korea, and the financial sector have decided to discuss cooperative ATM operation plans through the Financial Inclusion Committee under the Financial Informatization Promotion Council to mitigate the side effects associated with the digital transformation of payment methods.

Looking at overseas cases, in Japan, Mitsubishi UFJ and Mitsui Sumitomo Banks (ranked 1st and 3rd by assets at the end of 2018) voluntarily began joint ATM operations between the two banks in September last year to manage and operate ATMs efficiently.

They target off-site ATMs installed in subway stations and plan to expand joint operations to on-site ATMs and increase participating banks in the future.

Other banks in Japan, especially regional and small-to-medium banks, are increasingly using ATMs of other banks or institutions for cash handling services. Shinsei Bank replaced all its directly operated ATMs with affiliated ATMs in convenience stores (Seven-Eleven) in June 2017, and Aozora Bank replaced all its directly operated ATMs with Japan Post Bank ATMs in August 2018.

In the UK, the issue of ATM placement is approached from the public interest perspective of financial inclusion, and the ATM network operator (LINK) is implementing financial inclusion programs to prevent deterioration in consumer cash usage convenience.

In particular, to prevent ATM concentration in urban areas, a project to install free ATMs in underserved areas is underway, providing incentives to banks and other ATM operators.

[Image source=Yonhap News]

The Financial Services Commission and the Bank of Korea have decided to promote joint ATM operations. Since the 4th of this month, KB Kookmin, Shinhan, Woori, and Hana Banks have started a pilot operation of ‘joint ATMs’ where a single ATM can handle transactions for all participating banks. A total of eight joint ATMs were installed, two each, at four E-Mart branches (Hanam, Namyangju Jinjeop, Dongtan, and Gwangju Gwangsan).

Joint ATM operations between major commercial banks and regional banks, as well as between nationwide infrastructure providers such as the Post Office or NongHyup and banks, are also being pursued.

Additionally, the Financial Services Commission and the Bank of Korea plan to carry out a CD joint network maintenance and data standardization project in the second half of the year through consultations with the banking sector to collect and manage ATM installation information. They will promote joint ATM operations between large commercial banks and regional banks, as well as between the Post Office or NongHyup and banks, and build a database to provide ATM information through an application (app). Cooperation measures to prevent redundant ATM investments and rapid closures among banks will also be discussed.

This content was produced with the assistance of AI translation services.