Friday, December 28, 2007

Outsourcing ATM Maintenance - Next big business

This is one of my speculations - things I feel will be the next thing coming.

Of late all of the cell phone service providers have been hiving off the the setting up and management of the cell phone towers into separate business and some of them are even selling them off to third party tower management. What I think ultimately will happen is that the tower companies will put up the towers and manage them and they will lease out space on the towers to cell phone service providers to put their equipment on them. This has a a lot of benefits

- The same tower can be used by multiple cell phone vendors thus sharing the cost of ownership
- Takes away the management of towers away from cell phone service providers thus helping them to concentrate on their core business
- Ensures someone is looking after setting up new towers and also managing them thus giving better performance.

On a similar note there has been quite a bit of news lately about RBI wanting banks to allow customers to use any ATM to withdraw money with no extra charges (Right now if you use an ATM of another bank the charges can vary from nothing to Rs. 50). As a consumer this is a wonderful idea and banks that have few ATMs (HSBC, Kothak Mahindra Bank, etc) love this move and are all for it since they get a wider ATM network for free and on the other hand banks that have a large ATM network (SBI, ICICI, etc) suddenly lose their edge of having a wide ATM network.

What I feel will happen is that banks will do something similar to what cell phone service providers are doing and will hive off their business of setting up and managing ATM networks into a separate business and ultimately sell it off to third party vendors. That way the company that owns the ATM network can charge various banks on the transactions done on the ATM. I think the same benefits the cell phone service providers get from selling off their tower businesses will be applicable to the banks doing this. This way it benefits the bank and the consumer and the RBI gets what it wanted.

Lets see if this is what will happen.

1 comment:

Abhay said...

I think its a very nice resolution towards resolving the problems of searching for the ATM of a particular bank.But again i agreed for SBI and ICICI etc..who have lots of ATMs at various places. Very nice and informative blog.