The beginning
It is quite a change from when they were first introduced in India, nearly 30 years ago. Citibank and the Hongkong and Shanghai Banking Corp (HSBC) introduced them in Bombay (now Mumbai) in September 1987 on the premises of the banks. They only accepted cheques and dispensed cash of up to ` 3,000 a day.
Worldwide launch
Internationally, ATMs had been introduced exactly 20 years earlier. As with most major technologies, multiple efforts were on around the same time towards making a machine that mechanised basic banking tasks. From the 1950s, vending machines had become popular for dispensing many products in the US, UK, parts of Europe and, in particular Japan, where the 1964 Tokyo Olympics had helped showcase the country to the world. There’s some evidence that a cash-dispensing machine was tried there.
The first functioning ATM
The first functioning ATM is generally agreed to have started on July 27, 1967, in Enfield, a suburb of London. Its inventor John Shepherd-Barron, whose father was the chief engineer of Chittagong port, was born in Shillong in 1925 and was later sent to Britain to be raised. His first job was with De La Rue, the famous specialist printers of banknotes, and he would eventually become managing director of its instruments division.
The take off
ATM installation took off towards the end of the 1970s, especially as telephone networks enabled them to be connected in an ever-increasing web. In the US, their ease of use helped bring the large segment which operated on cash and either had no time for or were wary of bank branches come into the formal banking network – very much as is hoped will happen in India. Paul Volcker, one of the most notable governors of the US Federal Reserve, called them “the only useful innovation in banking”.
Banking made easier
The regularity of strikes from the intransigent unions of public sector banks increased the demand for the round-the-clock reliability of ATM services. Banks extended ATM services, offering them in multiple languages, adding bill payment, ticket payment and other financial services. A few even tried offbeat services like giving horoscopes or allowing temple donations.
The future
In the US and Europe, ATM usage seems to be diminishing. According to the American Banking Association, the percentage of customers using ATMs to manage their accounts has declined from 17% in 2009 to 11% last year. Banks say that people now visit ATMs around once every two weeks, down at least once a week. Alternatives like internet and mobile banking are partly responsible for this, but above all, it seems driven by a decreasing demand for cash.
Miles to go
Despite the growth of cards and other payment systems, the market for cash, and ATMs to dispense it, does seem likely to remain strong in India. As a business historian and expert on cash economies, Batiz-Lazo points out, the ratio of ATMs to the population in India is still way below global norms, leaving plenty of scope to expand. Once you leave the metros, ATMs can still seem far too few and remote.