Amir Ullah Khan

 
The story of ATM
 
The ATM could almost completely replace the bank, the late twentieth century onwards, as broadband connectivity made banking a roundthe- clock activity.
 
It was the Barclays bank which gave us the Automated Teller Machine, or ATM. Any Time Money, as they called it, came out through a cash dispenser that worked with magnetic strips in cheques given to a few, trusted customers. Barclays was the first to install a machine in London, developed by another inventor from Edinburgh, John Shepherd-Baron, who died last year. Like the Higgs Boson particle, much in the news these days, the ATM was a reality changer. The ATM allowed people to withdraw cash any time and this, in itself, was such a big relief for those who could not access bank branches. Shepherd-Baron thought of the modern PIN, which was introduced; then, it had four digits and these are used even today. This cash dispenser changed the functioning of banks forever. The ATM could almost completely replace the bank, the late twentieth century onwards, as broadband connectivity made banking a roundthe- clock activity.
 
And now we have solar-powered ATM’s. Indian engineering firm Vortex has now declared solar-powered ATMs it has created will provide access to banking for a large number of villages in India. This machine is energy-efficient and can be installed almost anywhere. The machine comes with solar panels and a 4-8 hour battery back-up. These ATMs can work in extreme heat and do not need cooling, unlike the conventional machines. Even more remarkable, these ATMs are equipped with fingerprint identification systems that make it accessiblefor those who are not literate, or cannot tap on the English language keyboards, or read the English language instructions, to use the machine. These ATMs would provide remote villages with access to cash at all times. Not only does this do wonders to withdrawal, it also allows a large number of people access to savings. The entire issue of micro-finance and banking for the poor has been stymied by the fact that bank branches are few and far-between and villagers have to travel nearly ten kilometers to access their meagre savings.
 
Less than 45 % of the Indian population has access to bank accounts, and there is just one bank branch for every 16,000 people. The number of branches per lakh of population stood at 6 in March
2010 compared to 25-45 in most developed countries. Financial inclusion, talked of for quite some time now, is the “process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost.” However, transaction costs are high, especially in thinly populated areas that are also often inaccessible. With the average cost of each small transaction being the same, managers are better-off dealing with one large customer than with several small borrowers. They don’t often want small customers, who want to deposit a few rupees and withdraw small amounts regularly. Technology can overcome some of these costs through connectivity, monitoring and reporting. This has been proved conclusively in many parts through the use of mobile phones and shared computer centres. And now this ATM comes in to fill a large gap.
 
Amir Ullah Khan is an economist
working at the Bill & Melinda Gates Foundation as Deputy Director, Strategy.