NCR's Collins: Milking the ATMs

The local ATM is about to get smarter. Over the next year or two, ATMs will do much more than just spew cash, churn out balance statements or even book airline tickets. They are likely to morph into "mini branches." "ATMs have evolved from largely being cash dispensers to multipurpose machines that can handle cheque deposits, cash deposits, bill payments, and other electronic transactions," says Malcolm Collins, Senior VP of global ATM giant NCR's financial solutions division. NCR is showcasing an ATM machine in India that accepts cash deposits minus the mandatory envelope. The ATM accepts the cash, counts it and then hands out a receipt.

"We have done pilots with a couple of banks, and have developed the templates for Rs 50, 100 and 500 notes. The technology is ready to be deployed. Banks do not have to spend a fortune installing these new machines as the technology is modular. The consoles can be added to existing machines," says Deepak Chandnani, Managing Director, NCR India. The only inhibitor for this technology is the poor quality and variants of Indian currency in circulation. NCR expects to roll out these machines in India over the next two years.

Another technology that is likely to be introduced in the first quarter of 2007 is cheque truncation at ATMs. NCR plans to deploy machines that will scan the cheques that are being deposited and send their images across banking networks for clearance, instead of that happening physically. The new system will ensure quicker clearance along with reduced costs for banks. NCR is also pushing Indian banks to adopt cash recycling technologies. "One of the big operational costs for banks is that cash has to be replenished regularly at ATMs. Cash recycling allows the ATM to use cash that has been deposited by customers at the ATM," says NCR's Collins.

Banks, themselves, are keen to adopt these new technologies. UTI Bank has the highest ratio of ATMs to branches in the country (4.5 ATMs to every branch). As a result, more than 97 per cent of the bank's transactions happen on its 2050 ATMs. "We are keen to adopt the latest ATM technologies. But there are issues to be resolved like quality of the currency in India which is not yet machine readable. Once that's sorted out, we can look at a technology like no-envelope cash deposits," says Hemant Kaul, President (Retail), UTI Bank. The number of plain cash dispensers in UTI's ATM network is 'negligible.' "Over the next couple of years, we are likely to see the adoption of 'no-envelope' cash deposits and check truncation at ATMs. In time, ATMs are likely to become mini-branches with a variety of cash and non-cash functions being offered," adds Sanjay Sharma, advisor (it), IDBI Bank.

In addition, NCR also provides remote management and diagnostic services for ATM networks from its remote management centre in Mumbai. NCR is also implementing technology that enhances ATM security. Among other things, ATMs will spray staining ink on stored currency when breached, thereby, rendering the loot worthless.

There are about 23,000 ATMs across the country of which almost 35-40 per cent are single featured cash dispensers. "India is an important market for us because it's growing at nearly 30 per cent, adding over 6,000 ATMs per year," says NCR's Collins. The potential for growth in the world's second most populous country can be gauged from the fact that China has nearly 80,000 ATMs and Brazil nearly 1,00,000.

-T.V. Mahalingam

The Postman Knocks
If you ate the biscuit but didn't become taller, this one's for you.

You might have at some point in time stumbled into Dabur's red toothpaste ads which promised strong teeth, HLL's radio commercials for Clinic All Clear Hair Fall Defense which promised 'baal girney ka sawaal hi nahi', BPCL's ad for speed premium petrol which showed Narain Karthikeyan zooming on the roads, Hyundai's Santro ad of a young boy on the bonnet of a moving car, or ITC's ad of Sunfeast biscuits that showed a boy growing taller after eating the biscuits. All these ads have been discontinued or withdrawn after complaints were launched with the Advertising Standards Council of India (ASCI) highlighting the fact that they were either false or exaggerated claims or simply dangerous for vulnerable young minds. ASCI's three new 'postman' ads, created by Leo Burnett, are now on air for precisely this reason-to make viewers aware that they have a right to complain against advertisements they find vulgar, exaggerated and false or dangerous.

After 21 years of existence, the Advertising Standards Council of India has decided that it is not enough for just advertisers to know of the body's existence. "The consumer must have a voice and be aware that he can complain," says secretary general Gualbert Pereira.

The 'postman' ads, which have a postman riding onto the screen every time an ad threatens to cross the line of decency or truth, highlight probable scenarios which viewers might find exaggerated, indecent or untrue. "The advertising council's code might be complex to understand for some people, but with these ads the message has been simplified," says Leo Burnett's chairman and CEO Arvind Sharma. Knock, Knock...

-Shivani Lath

Bringing Home the Bucks
Banks queue up for a slice of the NRI remittance pie.

With more than three lakh Indians migrating abroad every year, it is hardly surprising that India receives the largest inflow of remittances globally. India received an estimated $24 billion (Rs 1,08,000 crore) last year of the worldwide remittance market of $240 billion (Rs 10,80,000 crore). Indian banks are now trying to get a slice of the remittance pie which has traditionally been dominated by pure play money transfer companies like Western Union Money Transfer. And they're doing so via the Internet. "Overall, the remittance market is growing at 15 per cent. The online segment is significant and growing," says Manish Misra, Head of Remittance Products at ICICI Bank. ICICI is among the leading players in the remittance market in India with a 20 per cent market share; nearly $5 billion (Rs 23,000 crore) flows into India through its remittance service, money2india.

For long, non-resident Indians (NRIs) have relied on traditional money transfer channels to send cheques or wire money. But cheque clearance can take time (up to four weeks) while wire transfers are costly, at as much as $40 (Rs 1,840). Banks like ICICI and HDFC Bank have launched online remittance services that will help NRIs send a remittance by just logging on to the banks' websites. Customers also have multiple options for remitting money such as Real Time Gross Settlement (RTGS), demand drafts and credit to a Visa Card. For example, using the RTGS option, a remittance can be directly credited to a beneficiary's account held with any of the 23,700 branches of banks in the RTGS network within a day or two.

"The online model offers greater convenience and transparency than traditional modes of money transfer. A customer can track the progress of the money he sends home. And since he does not have to physically go to a brick and mortar outlet, it's convenient," says Misra. What makes online remittance even more attractive for NRIs is the fact that ICICI offers 'free' remittance services. Industry watchers say that ICICI makes its margins on the exchange rates, which are cheaper in the inter-bank currency market, and on increased volumes.

To reach out to the NRI population, banks are busy sewing up relationships with financial banks and houses internationally. These include public sector banks (PSBs) like Dena Bank which recently tied up with UAE Exchange Centre LLC, the largest exchange house in the Emirates, for a rupee-drawing arrangement. "NRIs in the Gulf can now transfer funds by sending rupee drafts drawn on uae Exchange Centre to 200 branches of Dena Bank in India. We expect a growth of 15-20 per cent in our NRI business through this tie-up," says Paresh Kumar, General Manager for treasury and forex at Dena Bank. ICICI Bank itself has tied up with foreign banks across geographies like Lloyds TSB in the UK, and Wells Fargo in the us. It has also tied up with exchange houses in the Gulf. In addition, PSBs like Bank of India are also tying up with money transfer service providers like Western Union to provide wire services to their NRI clientele. Gujarat, Andhra Pradesh, Kerala and up receive maximum remittances.

With increasing competition and adoption of cheaper models for money transfer, two things are likely to happen. One, the inflow of money through unofficial channels like Hawala and Hundi are likely to come down. And secondly, the volume of funds from the 20 million strong Indian diaspora is likely to go only one way-up.

-T.V. Mahalingam

Of Nice And Men
Will an 11-member North Indian common economy work?

Trade ought to create its own imperatives and its own dialogue. However, politics often plays the spoilsport, as is evident from the confabulations of the chief ministers of northern states last fortnight in Chandigarh. Presided over by Prime Minister, Manmohan Singh and Planning Commission chief, Montek Singh Ahluwalia, the conclave was to paper the way for a regional block called nice, an acronym for North Indian Common Economy.

The states involved include Delhi, Haryana, Punjab, Himachal Pradesh, Rajasthan, Uttaranchal, Uttar Pradesh, Jammu and Kashmir, Madhya Pradesh (BJP) and Chattisgarh. The Union territory of Chandigarh too is a part of the conglomerate.

The idea was originally floated by the PHD Chamber of Commerce and Industry (PHDCCI) whose membership is derived primarily from the northern states. "The idea is to evolve a minimum common economic agenda for these states. If political consensus could be brought about at the national level in the Common Minimum Programme of the present government, surely the same can be done at the regional level," says Sushma Berlia, President, PHDCCI.

However, the difficulties were immediately apparent as chief ministers from five out of the 10 states stayed away. Prominent among the absentees were the non-Congress chief ministers of Uttar Pradesh and Rajasthan. Of course, they sent their teams. And ironically enough the perennial issue of water supply to Sonia Vihar treatment plant in Delhi erupted almost simultaneously highlighting the fractious water and power sharing agreements between some of these states.

Delhi chief minister Sheila Dixit was sufficiently exasperated to say, "This (Sonia Vihar project) is an agreement which has been reiterated time and again. We are entitled to it and we have paid for it. To withdraw water at any point for merely political whims is not justified." However, Dixit is hopeful that it is exactly issues such as common facilities which can be ironed out with the development of nice. "It is certainly an idea whose time has come," she says.

The evolution of a common economic platform on the lines the European Union is expected to yield significant economic dividends. According to PHD estimates, if efforts at integration are pursued the state domestic product of the entire conglomerate may well increase by 1.5-2.0 per cent. On the agenda is removal of barriers to inter-state trade, efforts towards power and water sufficiency and drafting an integrated action plan for e-governance. Taskforces set up by the industry chamber have already given specific recommendations in each of these three areas.

Currently, North India accounts for 38 per cent of the country's population and is the breadbasket of the country, but in terms of its contribution to industrial output it is a low 30 per cent. "I just hope it (the nice idea) works. Seamless transfer of goods, services and people is always beneficial," says Rajiv Kumar, Director and Chief Executive of the Indian Council for Research on International Economic Relations. Some of the scepticism stems from the diverse fiscal and tax policies that different states have been following in a bid to attract investments. However, as the Prime Minister recently pointed out, the road to prosperity is not paved with competitive populism. Singh warned state governments that the tax breaks and shelters that have perversely been facilitating development of backward regions are unsustainable. nice sounds nicer against such a backdrop.

-Shalini S. Dagar