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Cash recycling machine deployment up 42.9% amid pandemic
The year was 1993 and British bank Standard Chartered kickstarted somewhat of a revolution in Bangladesh’s banking landscape: it installed the country’s first-ever automated teller machine, a simple device that let customers take out cash any time of the day without a branch representative or teller.
And fourteen years later, City Bank ushered in another form of revolution: it installed the country’s first cash recycling machine (CRM), a smarter form of the ATM that enables real-time banking by not only dispensing but also accepting/depositing cash.
Understandably more expensive than the regular ATMs, banks have been slow in rolling out CRMs. But the pandemic seems to have compelled a number of banks to embrace the machine in a bid to reduce gatherings at branches for cash deposit and withdrawal purpose.
In Bangladesh, the first confirmed cases of COVID-19 were announced on March 8 and three weeks later, the government put the country on a two-and-a-half-month-long general shutdown.
Banks though had to continue to provide branch services at reduced hours during the shutdown, which led to huge crowds at branches, making social distancing, which is essential to avoid getting infected with the coronavirus, difficult.
At the end of March, the total number of CRM machines stood at 266, according to data from the Bangladesh Bank. The number stood at 380 at the end of August.
Just as cash withdrawal at an ATM reflects in the account balance immediately, the cash deposit in the CRM also takes place in real-time and the transaction reflects in the bank account straight away.
When the cash is deposited, a cash recycler counts the currency notes and displays the amount denomination wise and the total amount inserted in the machine for deposit.
Once it displays the amount, the customer needs to confirm if the amount is correct, and the transaction will then be complete. The customer will then get a receipt displaying the updated account balance.
The CRMs accept Tk 100, Tk 500 and Tk 1,000 denomination notes and will return torn, taped or mutilated notes. It also checks for counterfeit notes during both cash deposits and cash withdrawals.
The deposited cash is then used in subsequent withdrawal transactions. This is economical for banks as the cost of handling cash represents a significant part of ATM operating costs.
In a CRM, the frequency of cash loading and replenishment is minimised, reducing the number of visits by cash-in-transit (CIT) agencies, in turn reducing CIT, cash sorting and cash handling costs.
CRMs are particularly popular in neighbouring India, thanks in part to its central bank subsidising 50 per cent of the cost of the machine or Rs 2 lakh or whichever is lower for urban centres and 60 per cent of the actual cost of the machine in semi-urban areas and rural areas or Rs 2.5 lakh whichever is lower.
At the end of August, Tk 456.1 crore were transacted through the CRMs, up 86.5 per cent from March.
Other than City, United Commercial Bank, Southeast Bank, Mutual Trust Bank, Eastern Bank and Islami Bank have deployed CRMs all over the country.
Islami Bank, the country’s largest private bank, has turned out to be a big proponent of CRMs amidst the pandemic.
The bank got on the CRM bandwagon only last year and until February had only 10 machines. In October, the number stood at 253.
“We turbocharged our CRM roll out during the pandemic to reduce gatherings at our bank branches,” said a high official of Islami Bank upon the condition of anonymity as he is not authorised to speak to the media.
Md Mahbub-ul-Alam, managing director of Islami Bank, could not be reached for comment.
“We are now getting huge response from banks for CRMs amid the pandemic,” said JoshodaJibon Debnath, MD of Technomedia, which supplies ATMs, CRMs and real-time cash deposit machines (CDMs).
Recently, Dutch-Bangla Bank, Dhaka Bank and Bank Asia placed orders for CRMs with Technomedia, he said.
Dhaka Bank’s maiden CRM would be deployed in January next year, said its MD Emranul Huq.
CRMs cost three times more than a regular ATM but the amount of cost-saving that a bank would make over time would even things out, according to Debnath.
There is no alternative to CRMs if banks want to bring down their operational costs, Debnath added.
“We plan to go big on cash recyclers,” said Mashrur Arefin, chief executive officer and MD of City Bank.
The bank has five CRMs at present but is set to install 20 more this year, all in Dhaka and Chittagong. It plans to roll out 200-300 such machines in the near future.
The CRM costs about Tk 5 lakh and another Tk 2 lakh goes towards the rent of the booth and the other maintenance charges.
“But there are big cost savings to be had in CRMs. We can downsize the number of branches and can ultimately become a virtual bank,” Arefin added.
Other than CRMs, City also has four CDMs, where the amount deposited reflects in the bank account within moments. But unlike in CRM, the deposited cash is not recycled for use in subsequent withdrawal transactions.
City plans to deploy such machines up to the divisional cities, according to Arefin.
Like City, Eastern Bank has just five CRMs for now, all of which were set up last year.
“We definitely plan on expanding our CRM network,” said Ali Reza Iftekhar, CEO and MD of Eastern Bank.
There were plans to deploy 20 more this year but the installation will now be done in 2021.
“CRMs are banks inside a box,” said Amin Md. Mehedi Hasan, head of digital channels at Eastern Bank.
And they would be of great convenience for big corporate houses with an expansive distribution model such as British American Tobacco, bKash and Nagad: they would be able to safely deposit the vast sums of cash that are generated each day – after business hours.
At present, they have to sit on the huge pile of cash and wait for the following morning for the bank branches to open to deposit the sum in the corporate accounts. Had they access to a CRM, that cash could have been deposited past the banking hours.
“The prospect for CRMs were very bright but in this ‘new normal’ situation it is even brighter as it would reduce traffic in bank branches,” Hasan said.
Eastern Bank is also planning to roll out real-time CDMs.
“We are in the testing phase with real-time CDMs.”
Locations where cash withdrawal and cash deposits are the same, CRMs are useful; and places where deposits are high, real-time CDMs would be handy, Hasan added.
Mutual Trust Bank (MTB) though is keener on real-time CDMs than CRMs, said Syed Mahbubur Rahman, its CEO and MD.
The bank has recently set up a CRM at Chef’s Table Courtside in United City near Madani Avenue in Dhaka, taking the tally to seven.
“We will go by need. We won’t be too aggressive in deploying CRMs like the other banks,” said Rahman, also a former chairman of the Association of Bankers, Bangladesh, a forum of banks’ MDs.
MTB has just recently strategised to go for real-time CDMs, especially in a place where it has space and the need for cash deposit is there. Those will mostly be placed at branches, he added. As of now, MTB has 18 real-time CDMs.
Over at the glossy headquarters of Standard Chartered in capital’s Gulshan, the bank that introduced this automated form of banking in Bangladesh, preparations are in full swing for the deployment of this maiden CRM this week.
After that, the bank will soon be setting up 10 more machines in Dhaka and Chittagong, said Naser Ejaz Bijoy, its CEO.
“If it works out well, we can bring down the traffic in our branches and eventually the number of full-fledged branches. In future, there will be service centres and those would have CRMs,” he added.
(DT)
