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Chinese banks should upgrade ATMs
By Zhao Renfeng (China Business Weekly)
Updated: 2004-05-11 09:21
Chinese banks should rev up steps to upgrade the software systems used in automated teller machines (ATMs) to meet the looming challenge from foreign counterparts, experts say.
"Adopting leading technologies is becoming a pressing task for local bankers to help them meet the needs of China's fast-growing consumer base and compete with overseas companies," said C.K. Chan, general manager of financial solutions with NCR China. NCR is the world's largest ATM manufacturer.
China's banks, according to Chan, are noticing the power of technology in an ever-competitive environment. But the application of technology is still in its infancy.
In a mature market like Singapore, he said, as much as 45 banking services can be provided at a single ATM. While in China, consumers normally do five operations with ATMs.
One of the key reasons is that most banks have yet to migrate their ATMs from an OS/2 platform to a Windows-based platform, he said.
A Windows-based platform is capable of making many value-added ATM services like ticketing and MP3 downloads more viable and faster to deploy.
Most of the leading banks in Western countries started moving their ATM networks onto the new platform in 1997.
In China, less than 10 per cent of ATMs are deploying the Windows-based software, according to Chan.
Chan said it would be costly for some banks, particularly for those equipped with out-moded machines, to upgrade the system, but it is a "must-do" step.
As China's commitments to the World Trade Organization (WTO) will give unfettered access to foreign players by the end of 2006, local bankers have to race to install new systems to facilitate customers' needs and retain their position in local market.
"It is an imperative task for local banks," said Chan, in an interview with China Business Weekly.
"Foreign banks are about to enter the market in a very forceful way. Local banks will not give up without a fight and will improve the penetration of their own ATM networks."
Despite the wide use of the Windows-based platform, the OS/2 platform is still deployed by most banks in China.
"That is mostly out of security consideration," Chan said.
Bankers tend to be one of the most conservative groups of people in upgrading computer technology as any flaw in the new technology may result in unmeasurable losses.
In addition, it often takes time to evaluate the new technology's maturity.
Chan said that the Windows-based platform had been used for more than 10 years in various industries, so bankers could feel safe about upgrading to the system.
The country's largest lender, the Industrial and Commercial Bank of China, has applied the new system to its nationwide network.
Chan expected all the country's ATMs will be upgraded by the end of 2005.
With bank card usage increasing and government initiatives for the establishment of payment networks, many banks have begun to offer access to cash in many more convenient ways and launch various plastic products.
Chan said each bank should be fully aware of its business strategy when deploying new machines.
"Those banks with fewer branches can install new machines to extend their reach to customers, and those with machines in downtown areas can profit from charging transaction fees for providing cash to the account holders of other banks," said Chan.
"With different marketing strategies, banks should deploy machines with different functions."
China's plastic business has reported explosive growth in the past few years. Bank card transactions have been rising almost 100 per cent for three consecutive years.
China has issued more than 700 million banks cards. The figure is about 150-times of that ten years ago.
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