RP still lags in ATM usage, says study

While Asia Pacific has become the region with largest ATM network globally, the Philippines has remained among the under represented markets in the region, according to a study undertaken by Megalink, one of the three ATM operators in the country.

Asia Pacific is a highly diverse market with the presence of densely populated ATM markets like Korea, Japan, Australia, Hong Kong, Singapore and Taiwan, as well as grossly under represented ones like China, India, Indonesia, Malaysia, Thailand and the Philippines.

On a global scale, North America is the most mature region with the highest density at 1,372 ATMs per million population. This is followed by Western Europe with 707 ATMs per million; Latin America, 310; Central and Eastern Europe, 185 and Middle East and Africa, 36.

Based on the global average of 240 ATMs per million population, the Megalink study indicated that the Philippines should have 41,966 ATMs instead of its present count of a mere 7,175 units.

There are a total 1.67 million ATM units in existence, worldwide as of 2005, with Asia Pacific accounting for 476,000 followed by North America with 450,000; Western Europe has 330,000; Latin America, 175,000; Central and Eastern Europe, 75,500 and Middle east and Africa, 40,000.

Aside from the low ATM unit count, the Philippines also had just 21 million ATM cards issued. Six commercial banks alone accounted for 75 percent of the total cards deployed.

However, thrift and rural banks are now starting to deploy ATMs, according to the Megalink study.

Also, a growing trend has seen banks shifting to outsourcing of services, including the adoption of outsourcing services at the network level, the study revealed.

Aside from Megalink, the other two ATM operators are BancNet and ExpressNet. The three are now interconnected, allowing for cross transactions across banks and networks.

“Mobile communications as an alternative transaction channel are mushrooming in remote areas such as GSM ATMs, point-of-sale (POS), and mobile phone banking. Telecommunication companies have started offering prepaid and remittance instruments (with or without cards), resulting in the expansion of prepaid cards and prepaid card issuers,” the study added.

It said the trend, however, is not unique since independent ATM deployers in North America, Europe and Australia are already driving the expansion of ATMs, mainly off-site.

A case in point for the Philippines is the MASS-SPECC Cooperative Development Center in Mindanao. It presently operates four ATM units called Pinoy Coop ATM. It covers 120 primary cooperatives and provincial federations in 21 out of 25 provinces in southern Philippines.

It has issued its own card, numbering nearly 6,000, and averages 13,230 monthly transactions, mainly payroll, loans and other personal transactions. It is looking to deploy a total of 12 units by end-2008.

Meanwhile, EnCash and Nationlink are two examples of non-bank ATM operators or ATM outsourcing firms making significant headway. They either service thrift or rural banks or sell ATMs to merchants such as convenience stores, schools, cooperatives and private companies.

Eighty percent of the ATM deployed in the country are located in the branches of the top 10 banks.

Six commercial banks account for 75 percent (approximately 16.2 million) of ATM cards. They are: Banco de Oro Unibank Inc. (BDO) with 4.6 million ATM cards; Union Bank of the Philippines, 3.1 million; Bank of the Philippines Islands and affiliates BPI Family Savings Bank and BPI Direct, 2.8 million; the Land Bank of the Philippines (LBP), two million; the Philippine National Bank (PNB), 1.9 million, and the Metropolitan Bank and Trust Co. (Metrobank), 1.8 million.

The others are the Rizal Commercial Banking Corp. (RCBC), China Banking Corp. Allied Banking Corp., and the United Coconut Planters Bank (UCPB).

In terms of regional deployment regardless of institution, the National Capital Region accounts for 48 percent of ATMs deployed; Luzon, 28 percent, Visayas, 13 percent and Mindanao, 11 percent, ATMs are also concentrated in urban areas. Of the total ATMs deployed, 77 percent are on-site (located in bank branches) and 23 percent are off-site.

Out of the 1,617 municipalities in the country, only 711 or 44 percent have universal, commercial or thrift banks. On the other hand, rural banks and cooperatives are well positioned in the provinces and rural areas.

Based on data from the Bangko Sentral ng Pilipinas (BSP) as of March 2007, the Philippine banking system numbers 861, composed of universal and commercial banks (39), thrift bank (84) and rural and cooperative banks (734). The total number of branches including head office of universal and commercial banks are 4,278 thrift banks, 1,338; and rural and cooperative banks, 2,088.