Will ATMs disappear in the digital RMB era?

As an offline service channel, ATMs have long played an effective complementary role to bank branches. However, with the booming Internet and IT and profound changes in customer behavior, the functions and services of ATMs are facing a huge impact.

Will ATMs disappear in the digital RMB era?

Total domestic ATM ownership has shown an overall decline after reaching a historical peak in the third quarter of 2018.
As an offline service channel, ATMs have long played an effective complementary role to bank branches. However, with the booming development of the Internet and IT and profound changes in customer behavior, the functions and services of ATMs are facing a huge impact.

The rise of non-contact banking services, especially after the outbreak of the new crown pneumonia outbreak, has further exacerbated the decline of bank ATMs. In addition, the increasing pace of digital renminbi will also greatly affect the existing financial landscape.

Will the ATMs on the street disappear?

The decline of ATMs in the digital era

“ATMs were once the largest application of commercial banks, but with the development of mobile payments, traditional ATMs are becoming less and less useful. Especially after the epidemic, mobile payment and contactless payment have become more popular to prevent human-to-human transmission.” Meng Xiaofeng, think tank expert of Zhejiang Blockchain Technology Application Association and global partner of 33 Complex American Chain Reform, said to “Chain New”.

Public data shows that during this year’s May Day holiday, the total transaction amount of UnionPay and Netlink for five days was 6.97 trillion yuan. Among them, UnionPay’s 5-day transaction amount was 1.91 trillion yuan, which was the highest in the same period of May Day, with an increase of 5.5% compared with the same period last year.

The Netlink platform processed a total of 8.532 billion inter-institutional network payment transactions of funds, amounting to 5.06 trillion yuan, with the average daily number of transactions increasing by 26.07% and 94.85%, and the average daily transaction amount increasing by 46.48% and 87.96%, respectively, compared with the same period last year and the year before.

With the development of information technology and the mobile Internet, payment methods have changed dramatically, people’s demand for cash service system has greatly decreased, and the number of ATMs as a whole shows a downward trend.

According to the Central Bank’s previously released report on the overall operation of the payment system, in 2015, when demand for ATMs in China peaked, the number of new units was as high as 252,000, while in 2016 and 2017 it quickly fell to 58,000 and 36,000; from 2018Q1, the Central Bank has adjusted the statistical caliber of the number of ATMs, except for the original self-service deposit machines, self-service withdrawal machines, all-in-one access machines, and In addition to the original self-service deposit machines, self-service withdrawal machines, all-in-one machines and self-service bill payment terminals, new types of terminals such as self-service terminals, visual counters (VTM) and smart counters (STM) have been added to the statistics, so the total number of ATMs under the central bank’s statistical caliber has increased significantly. However, it is worth noting that the total domestic ATM ownership showed an overall decline after reaching a historical peak in 2018Q3, and the number of ATMs corresponding to each 10,000 people has continued to decline since 2018Q4.

On the other hand, banks have responded to the development trend and also cut the number of ATMs and self-service banks to reduce operating costs in order to reduce operational costs.

According to Zero2IPO’s statistics on nine banks, including Gong, Agriculture, China, Construction, Communications and Post, banks have been cutting back on the number of ATMs since as early as 2014.

Among them, CITIC Bank has made the biggest reduction, from 11,128 ATMs to 6,058 ATMs from 2014 to June 2020, a reduction of 46%.

The largest reduction in the number of ATMs was made by Agricultural Bank, which reduced its ATMs from 130,000 to 78,000 from 2016 to June 2020, a reduction of more than 50,000 units.

Recently, the People’s Bank of China released data on the overall operation of the payment system in 2020, showing that the number of ATMs per 10,000 people corresponded to 7.24 units nationwide, down 7.95% year-on-year.

In stark contrast, the volume of mobile payment business maintained growth. 235.225 billion electronic payment transactions were processed by banks in 2020, amounting to 271.181 trillion yuan. Non-bank payment institutions processed 827.297 billion online payment services, amounting to 294.56 trillion yuan, up 14.90% and 17.88% respectively year-on-year.

Manufacturers survive in the cracks

Undoubtedly, the biggest impact of the reduced demand in the ATM market is on ATM manufacturers.

A brokerage fund manager introduced: “ATM manufacturing in the past to see the gross margin is higher, the overall about fifty-six percent, but now continues to decline. 20 years ago, an imported ATM machine to 400,000 to 500,000 yuan, now a domestic ATM machine overall less than 50,000 yuan, the decline is more obvious.”

“ATM machine manufacturers’ performance and profits are not optimistic in these recent years.” Meng said to Chain New.

During the development of fintech, the country’s technical support for independent security and control has been strengthened, and domestic ATM manufacturers have dominated the domestic market, with major equipment suppliers such as Royal Silver, Broadcom Express, EverBank Financial, Yihua, China Banknote Coburg, Dongfang Telecom and CEC. Among them, listed company Quante Express is the largest ATM supplier in China, with the top ATM market share in China for eleven consecutive years and more than 300,000 units deployed worldwide.

Many ATM manufacturers believe that the financial self-service equipment industry has entered a phase of accelerated “reshuffling” and that the transition requires more technology accumulation, which will now become a watershed in the industry’s development.

The company’s main products are ATM self-service equipment, which are used by banking-type financial institutions to provide self-service financial services to their customers.

In the first quarter of 2021, the company reported operating income of 20.828 million yuan, down 56.86% year-on-year, and realized a net loss of 34.525 million yuan attributable to shareholders of the listed company, compared with a loss of 46.759 million yuan in the same period of the previous year. According to the company, the main reason for the decline in operating income is due to the impact of market demand, the company’s ATM sales revenue, ATM technical service income and other year-on-year reduction.

For the company’s future development, some investors are concerned that the development and implementation of digital RMB is cutting the demand for cash, which means that the demand for ATMs will become lower and lower, so is there still a need for ATM manufacturers to exist in the future?

The company said it is actively following the progress of the central bank’s digital currency, conducting research on the application of digital currency transaction processing on smart devices and the development of technologies related to digital currency wallets, which have not yet been commercialized.

“Most ATM suppliers are actively seeking transformation due to mobile payments and intelligent upgrading of bank branches.” According to the observation of Ren Wansheng, an analyst at Zero2IPO, the industry has seen a situation in which the strongest remain strong and the weakest withdraw from the market, for example, Centron Smart, Digital China and Xindaotong have chosen to withdraw from the market; ATM suppliers, represented by Quanta Express, Hengyin Technology and Yihua, have increased their R&D investment around the intelligent upgrading and transformation of banks, exploring the possibility of integrating artificial intelligence, big data, cloud computing and intelligent devices, and moving the product chain from They will extend the product chain from “teller machine” to “intelligent network point” and develop from low-end business to high-end, complex and core business.

Intelligent transformation to find a way out

“With the popularity of digital RMB and intelligent network points, ATM-related industry chain software and hardware companies must actively combine AI, blockchain and other technology research and development to have a future. Investing in R&D on their own may not be enough time, energy and expense, so they can look for cooperation with well-known companies in the industry.” Meng Xiaofeng said to The Chain New.

The correct translation of ATM is Auto-TellerMachine, which can replace tellers to do many services. Moreover, this is not only limited to the counter service of banks, but can be expanded to any industry’s smart counter service.

At present, it seems that the demand for cash-only ATMs is decreasing, but the demand for ATMs that can handle all personal banking and corporate banking is increasing. A number of commercial banks in China are actively upgrading their branches and stepping up the construction of smart counters.

According to the 2019 China Banking Industry Service Report released by the China Banking Association, as of the end of 2019, banking industry outlets reached 228,000, and from 2016-2019, nearly 3.5 outlets completed renovation, and 190,000 outlets are facing upgrading, with each outlet projected at 1 million yuan renovation fee, ATM providers will see a 100 billion dollar market.

In addition to this, banks continue to reduce the number of self-service banking distribution. In the future, with the development of digital RMB and mobile payment, self-service banks will likely disappear, for example, both Construction Bank and ICBC are cutting the number of self-service banks; while the number of ATM equipment will likely remain between 2-3 units per outlet, the number of outlets has been stable at around 220,000 in recent years, therefore, the number of ATMs will likely remain between 400,000-70,000 units in the future.

It is worth noting that the emergence of digital RMB has created a new demand while further squeezing the ATM’s space for survival.

As the technology of digital RMB matures and the payment circulation environment improves, banking IT systems will be the pioneer area for various technologies to be implemented. In terms of payment scenarios, ATM and POS upgrades and supporting windows will gradually open. The mutual exchange of digital RMB and cash is one of the basic functions of digital RMB circulation in the future, and ATMs as cash flow machines will have to guarantee their free exchange rights, so the upgrade of ATM software and hardware systems is highly certain.

On February 6, 2021, Beijing Dongcheng District People’s Government hosted the “Digital Wangfujing, Ice and Snow Shopping Festival” digital RMB pilot event around the full scenario of Winter Olympics consumption, and some ATMs of ICBC already support two-way exchange of digital RMB and cash.

From April 25 to 29, the 4th Digital China Construction Achievement Exhibition was held in Fuzhou. Led by the Digital Currency Research Institute of the People’s Bank of China, a special digital RMB exhibition area was set up at the exhibition to showcase the various exchange processes of digital RMB. At the booth, Bank of China displayed a self-service teller machine for “direct exchange of foreign currency to digital RMB physical cards”, which will facilitate foreigners’ spending in China in the future.

According to previous news, Agricultural Bank of China has taken the lead in launching the digital RMB access and cash function in ATMs. Based on the digital RMB access on ATMs, it can realize the senseless exchange of digital RMB and cash, and has been piloted in some branches in Shenzhen.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/will-atms-disappear-in-the-digital-rmb-era/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2021-05-19 12:59
Next 2021-05-19 13:04

Related articles