By Ellson Quismorio
If a local bank official is to be believed, then automated teller machines or ATMs have been a losing business venture for the country’s top banks.
“A fairly large percentage of the ATMs are actually losing money,” Bank of the Philippine Islands (BPI) Chief Executive Officer Cezar Consing told the House Committee on Banks and Financial Intermediaries Tuesday during a public hearing.
“In the case of my bank, BPI, where we have 2,500 ATMs, hundreds of them make no money. We lose a lot of money just keeping the ATM there…in a far-flung place we need to send motorized vehicles with guards, you have to reload so often,” he said.
According to Consing, the maintenance of ATMs is no joke, especially during the holiday season when people tend to withdraw cash a lot.
“Can you imagine, Christmas time is coming…and our biggest problem is how do we stock our ATMs fast enough? Just a few days ago, our bank, and we are just one bank, had over P4 billion in withdrawals. Can you imagine how fast you have to refill?” he told the panel, which tackled bills on regulating the rate of fees and charges that banks imposed on ATM transactions, among other things.
“When we do the numbers at the end of the day, we realize, we’re making no money. This is service. And that is the difficulty in this business.
“All I’m saying is, I think the issue on ATMs in the country is, we need for ATMs. We really need for ATMs. At least allow the banks to recover their [investment],” the BPI official said.
It was bared during the panel hearing that two-thirds of all ATMs in the country are controlled by just six banks–Banco de Oro (BDO), BPI, Land Bank, Metrobank, Rizal Commercial Banking Corporation (RCBC), and Philippine National Bank (PNB).
This means that much smaller banks–which comprise their competition–have been relying on their existing ATMs to service their own customers via inter-bank transactions.
“There are some banks that have decided that it is not worth it to build up their own ATM networks, that they will never make money because it is so expensive…so you have 50-plus banks or maybe 100-plus banks that have decided to rely on these six banks. It’s a very difficult situation,” Consing said.
There are 58 million bank account holders in the country.
Consing said that a “mercantilist approach” to the problem would be for them to stop rolling out ATMs and simply rely on other banks to service our customers.
For his part, Banks and Financial Intermediaries panel chairman, Quirino 1st district Rep. Junie Cua broached a positive way of handling the problem in order to continue the convenience that ATMs give to clients, their bank notwithstanding.
“Under the present set-up, it’s only the Bangko Sentral [ng Pilipinas] who would be able to check on what you’re saying, and I suppose that you have checked on them. We accept that as an assumption,” Cua told Consing.
“The point I’d like to ask is, if the situation in the industry is that you are being taken advantage of by your competitors because it’s better not to invest and for others to invest, what can be done to incentivize?…Maybe as a positive way of approaching this, you may want to look at it,” added the veteran solon.
Future is digital
Consing said it may simply be time for the local banking industry to go digital, as the case with China.
“I don’t want to criticize our competitors. They are making from my standpoint, intelligent business decisions. For them it’s not worth growing their ATM network,” the businessman admitted.
“If you visit China today, you will hardly see an ATM. That is because the percentage of transactions in cash is so low.
Everything is done digitally. There are many very good banks that have decided to focus on digital, to try to grow the number of digital transactions, to reduce the percentage of transactions in cash.
“I think we are at a stage in our economy wherein we would grow ATMs first, and at some point you’re actually going to see ATMs come down because digital transactions will overtake cash transactions. Which our regulators are also pushing. Banks will have to respond in their own ways,” Consing said.