Automated Augmentation

The global ATM market increased in 2003 and will continue to expand over the next five years, with an average of 100,000 new ATMs being installed annually, according to a recent study by research and consulting firm Retail Banking Research (RBR; Surrey, U.K.). But, the report notes, growth in ATMs in the North American market will not keep pace with global ATM expansion, and North America's market share of global ATM installations will decline.

According to the study, ATM total deployment worldwide reached more than 1.3 million terminals in 2003. RBR predicts that global ATM installations will grow to 1.7 million by 2009.

Though North America currently accounts for the largest share of the global ATM market - 31.4 percent of ATM installations worldwide - rapid growth in emerging markets and U.S. banks' interest in other technology investments will cause North America to lose ground in the global ATM market, relates Mark Glover, associate, RBR. "Financial institutions [in the U.S.] will continue to rationalize and optimize their ATM portfolios," he says. "This is likely to entail selective relocation and upgrading of ATMs, rather than substantial expansion of their ATM networks in the near future."

RBR predicts that the North American market's share of ATM deployments will shrink over the next five years, to 26.8 percent. Several factors will make North American banks think twice about expanding their ATM fleets, but ultimately it comes down to the best return on their investment, Glover says. The high cost of software upgrades - as a result of the Americans with Disabilities Act, Check 21, IBM non-support of OS/2 from 2006 on, and Triple DES compliance required by Cirrus, Visa, NYCE, Pulse, Co-op and Star - likely is a deterrent, he explains.

Glover credits three factors with spurring ATM growth in emerging markets: the fall in the price of ATM technology; cost cutting within financial institutions; and customer demand. The countries with the most prominent ATM growth will be found in developing regions such as Eastern Europe, Russia and Ukraine, as well as in the Middle East, Glover continues. But, "The greatest growth in absolute numbers," he says, "will be found in Asia-Pacific." According to the report, ATM growth in China will eventually push Asia-Pacific past North America as the world's No. 1 ATM region.