ATMS Contributing To The Banks Profitability Finance Essay

Abstract- the intent of this research work is to happen out the effects of Automated Teller Machines on the profitableness of Banks. Information engineering, of which Automated Teller Machines are portion of, has been the nucleus tool of competitory schemes used by successful organisations for deriving competitory advantage over others. The rapid development in the banking sector has encouraged the adjustment of engineering suppliers. This can be testified by the presence of ATM of all kinds, spread all over our bank premises. This paper addresses the issue of coaction amongst Bankss and other service suppliers in the proviso of inexpensive and efficient ATM services. It besides addresses the issue of consumer behaviours with regard to quality services and has come to the decision that ATM deployment by Bankss saves clip, encourages competition, and reduces bank hazards.


An machine-controlled Teller machine or automatic Teller machine ( ATM ) , besides known as an machine-controlled banking machine ( ABM ) , is a computerized telecommunications device that enables the clients of a fiscal establishment to execute fiscal minutess without the demand for a teller, human clerk or bank Teller. On most modern ATMs, the client is identified by infixing a plastic ATM card with a magnetic band or a fictile smart card with a bit that contains a alone card figure and some security information such as an termination day of the month. Authentication is provided by the client come ining a personal designation figure ( PIN ) .

Using an ATM, clients can entree their bank histories in order to do hard currency backdowns, debit card hard currency progresss, and look into their history balances every bit good as purchase pre-paid mobile phone recognition. ATMs and the back uping electronic fiscal webs are by and large really dependable, with industry benchmarks typically bring forthing 98.25 % client handiness for ATMs and up to 99.9 % handiness for host systems that manage the webs of ATMs.

If ATM webs do travel out of service, clients could be left without the ability to do minutess until the beginning of their bank ‘s following clip of gap hours. The ATM channel is sing noteworthy growing in Pakistan. The state ‘s cardinal bank today said that in the last one-fourth of the 2011 financial twelvemonth, the value and volume of ATM minutess rose by 5.9 per centum and 7.4 per centum severally. Harmonizing to The News, the figure of ATMs besides increased. Banks added 197 new machines to raise the state ‘s entire to 5,745. The mean sum of an ATM dealing is Rs9, 693 ( $ 102 ) .The Numberss of plastic cards in circulation besides increased during the one-fourth, entering an uptick of 8.3 per centum. A sum of about 18 million cards are in circulation in the state.

Problem statement

Addition in ATM machines may take the organisation towards fiscal additions ( net incomes ) .

Literature Review

Banks make a net income on each noncustomer ATM backdown, and they use those net incomes ( along with the surcharges that they impose ) to subsidise the services that they provide to their ain history holders.A Finally, Bankss claim that ATMs are simply a convenience, and argue that it ‘s hence all right for them to bear down whatever the market will bear. But for many consumers, ATMs are a necessity ; this is peculiarly true for those who are required to have their payroll checks or benefits cheques electronically.

Furthermore Bankss themselves pressurized consumers into trusting on ATM by shuting down subdivisions ( frequently as a consequence of amalgamations between large Bankss ) assuring cost nest eggs, and in some cases by enforcing fees for transacting concern with a unrecorded Teller. Even if ATMs truly were simply a convenience, the “ free market ” statement is flawed. The ATM market is n’t peculiarly competitory ; big Bankss dominate the regional webs, most of which possess a geographic monopoly. Network “ nondiscrimination ” regulations frequently prevent smaller Bankss and recognition brotherhoods from contending back against big Bankss that impose surcharges — that ‘s dry, because most surcharges are themselves prejudiced, in clients of some Bankss pay more to utilize an ATM than clients of other Bankss.

Large Bankss tend to command the most desirable ATM locations with sole contracts with concatenation shops and shopping centres, go forthing smaller Bankss unable to vie. And most significantly, the ATM market has important external effects on competition in the overall consumer banking market. Even if the ATM market would back up high ATM surcharges with true competition, such surcharges still have anticompetitive effects on the consumer banking industry as a whole.


Both primary and secondary informations are used for the survey. Primary information is collected by structured questionnaires. Secondary information is gathered signifier websites [ 1 ] , [ 2 ] , [ 3 ] , [ 4 ] , [ 5 ] .Questionnaire consisted of 17 inquiries developed utilizing dichotomous graduated table and class graduated tables inquiries. The sample taken for the survey consisted of 20 people straight or indirectly related to ATM banking system of Pakistan. It is a basic research with a descriptive intent. The research identifies the relationship of Bank Profits and increase in ATMs. This is done under non contrived environment with minimum intervention

Aims Of The Study

The followers are the aims of the survey:

To analyze the impact of addition in ATMs on the profitableness of Bankss.

To analyze the impact of ATM on client satisfaction by measuring the jobs faced by the clients.


H0- If the ATM machines are increased, so the gross of Banks would increase.

H1- If the ATM machines are increased, so the gross of Bankss would non increase.

Data Collection Methods

Primary information has been collected through questionnaire. A sample size of 20 respondents has been taken. A personal visit has been made to the NIB bank to in order to cognize about the subdivisions & A ; ATM installations provided by the bank.

Datas Analysis

In Pakistan Bankss normally charge a fee of PKR 0 to PKR 20 per non user ‘s ATM hard currency backdown. These fees are levied chiefly to countervail Bankss ‘ ain costs at par merely, without any net income border whatsoever. All Pakistani Bankss are members of one or the other switch as per the authorization of the State Bank of Pakistan, the state ‘s cardinal bank. Some Bankss absorb the costs wholly, and offer their clients wholly free backdowns at all ATMs countrywide, including Azad Jammu and Kashmir ; a district between Pakistan and India whose position is disputed [ 4 ] . Fee charged by the Bankss is one of the variables taken for look intoing the Bankss ‘ net incomes.

If client feels that the fee charged by the bank is sensible so he/she is satisfied and vice-versa. Surcharges are needed to cover the cost of put ining and keeping ATMs, and that without surcharges ; consumers would non hold entree to ATM at all. ATM range is acquiring higher in people as shown below by saloon charts.

Above figures are demoing the tendency of clients towards the ATM. Banks are increasing the figure of ATM machines, by looking at the tendency, and acquiring surcharges for utilizing these ATM. Peoples are utilizing ATMs for their installations because it ‘s non easy to take hard currency in your custodies everyplace. The clients are satisfied with bank ATM services and want to increase its figure in rural countries.


The Payment Systems substructure in Pakistan showed uninterrupted upward growing tendency during 3rd One-fourth of twelvemonth 2012. A sum of 139 more ATMs were added conveying the entire figure of ATMs in the state to 5,548 whereas 194 more bank subdivisions were up-graded to Real-time Online Branches ( RTOB ) . Currently, 9,099 bank subdivisions are offering RTOB services out of sum of 9,948 bank subdivisions across state.

The figure of plastic cards besides increased by 9.07 per centum com-pared to the Numberss recorded in the preceding one-fourth. By the terminal of one-fourth under reappraisal, there were 16.6 million plastic cards go arounding in the state.

The volume of overall e-banking minutess in the state during the one-fourth under reappraisal registered an addition of 5.4 per centum to 70.6 million. At this degree, the value of these minutess besides depicted a growing of 6.26 per centum compared to the preceding one-fourth ended December, 2011. The overall figure of ATM minutess besides showed an addition of 5.1 per centum and the value increased by 8.1 per centum. The mean value per ATM dealing stands at Rs. 9,831.

The portion of ATM minutess in entire e-banking minutess ‘in footings of volume and value worked out to 59.6 per centum and 6.0 per centum severally. Compared to the figures reported in old one-fourth, the figure of Real Time Online Branches ( RTOB ) minutess besides increased by 5.72 per centum whereas the value of minutess increased by 5.95 per centum. The volume and value of minutess through POS terminuss stood at 4.5 million and Rs. 21.05 billion picturing 6.2 and 7.6 per centum growing severally as compared to the figures reported in the old one-fourth.

Although the volume of big value payments through RTGS increased by 8.8 per centum, the value of minutess nevertheless recorded a diminution of 8.2 per centum.

The lessening is due to worsen in securities colony value from Rs. 18.7 trillion to Rs. 16.1 trillion. Despite the above diminution, the major part of RTGS minutess continued to be in regard of colonies against securities followed by Interbank Funds Transfers and colony of retail checks through many-sided glade lending 57.7, 31.5 and 10.8 per centum severally [ 5 ] .