Ms Shubhalakshmi Panse has been the Executive Director of Vijaya Bank for over two years now.
She has handled a range of assignments including field postings as she moved up the hierarchy. She was earlier General Manager with Bank of Maharashtra where she began her career in 1976.
She counts her stint as head of IT as one of her most interesting assignments. This gave her an understanding of the changes that were happening in banking and helped her mature as a leader.
She says, “Unless your thinking is tech-oriented you can't be a good banker. Any new customer project you take up, you should be IT-savvy. All bankers who are moving to the top should be more IT- savvy.”
In an interview at her Bangalore office, Ms Panse answered a range of questions on her bank and industry issues. This interview focused on how public sector banks are handling issues related to ATMs.
Excerpts:
What is the idea behind the consortium approach to purchasing ATMs? Will it save costs?
There are two things. One is to avoid duplication. Second, if the number (purchase order) goes up, my power to negotiate also goes up.
At my bank level, if I negotiate for 500 ATMs, it is a very limited number. I would get a better price if I deal with 5,000 ATMs.
However, there are only three vendors and the orders go to them. It all depends on how these players respond.
The second idea that is coming in is the White-label ATMs (ATMs that are established by non-bank entities and which can be used by customers of all banks). Today, there is so much of duplication of ATMs in cities, which is really not required. When we are going in for financial inclusion and going to the rural areas, it is essential that we don't waste money. Obviously, the resources are very limited. And that is why it has been rightly decided to go for this white label ATMs model. Banks will just have to plug and play and pay per transaction. That is an excellent model and we can really reap the benefits.
We need not put up too many ATMs in the rural areas. Any ATM to break-even requires 175 transactions a day. I will not get that kind of hits when I put an ATM in rural areas with a population of 20,000. So it is better to have a WLA and many banks can get the connectivity to the customer.
In your ATM experience, did you find other bank customers using your ATMs more or was it the other way round?
In our bank, I have found that the other bank customers use our ATMs more
So you are making money. How much do you get from other banks?
We must be making about Rs 7-8 lakhs a month. This may be because some of our ATMs are in areas where other bank customers are residing. I have looked at why my bank customers are not using my ATMs.
And we found out that our customers are residing somewhere else and they are opening an account in the branches that are nearer to their office. This happens to many other banks.
So how do you choose a location?
A location should be chosen with 2 or 3 things in mind. One, a place where there is a very young crowd. Second is it should not be on the main road as there should be lot of space to park. Third, it should be in a locality where there are lots of people so that even at nights it gets used.
You said it should not be on the main road but also a place where there is a crowd. Isn't it contradictory?
Typically in the residential areas, you see that there are people always there or if there are shops, people keep coming and buying.
The younger generation likes to come and draw in very small amounts. Rs 100, Rs 200…etc.
All these factors play a big role and when there is a big queue, you should have enough space for them. Another factor is that the younger generation likes to come there and chat. It serves as a meeting point.
If you have ATMs that offers small denominations, it will be a rage….
The only limitation is the size of the cassette inside the ATM. You can only have a maximum of three or four cassettes. Now, if I keep Rs 10 and Rs 50 notes, and somebody wants a huge amount, then to keep so many notes becomes a problem. Then, I will have to keep filling it up again and again.
ATM maintenance, cash uploading, the paper for the receipts – these are all very expensive affairs. When you install technology, you will also have to think in how much time it will take to start paying you back.
The cost per transaction plays a very important role, which we have still not thought too deeply about.
Some foreign banks do a survey every year.
They divide ATMs into four quadrants and figure out the cash cows and the laggards.
Immediately, the laggards (the ATMs which don't make enough money) are relocated.
We don't do that. We think that once an ATM is set up in one place, it should be there for life.
That professionalism, that business sense, must be developed by us also.
How long does an ATM take to pay back?
I look at it from the point of view of number of ATMs and the average hits. We see that some of the ATMs take nearly six months to get 175 transactions per day, which is the break-even point. The average hits for all the ATMs of a Bank put together is a good indicator. We divide that into city-wise data and see what needs to be relocated. We hold on for one or two years though.
Also the number of hits depends on the number of cards I have issued in a branch. If it is an onsite ATM and I have 4,000 customers, I must issue cards for all four thousand customers. These things only happen when your thinking starts changing. It is not taught in any school.
In terms of ATM adoption, what has been your experience in the cities that you have seen?
You will be surprised. I have seen Tier- 3 and Tier- 4 cities adopting ATMs and the number of hits increasing. The novelty factor causes then to shift to ATM usage. In tier-3 and tier-4 cities, handling cash is the norm. Credit card is not accepted in shops there.
That's why you need cash. So that's why usage of ATMs goes up. As far as the metros are concerned, the customer behaviour is largely settled and they are used to these things. Acceptance level there has become high. But in terms of growth potential, it is found more in tier 3 and tier 4 cities. The customer psyche has changed there. They want these things now, their expectations have gone up.
Earlier, the customers used to be scared. In my earlier bank, I had come across people who would ask what to do if their hands get stuck inside! They had a fear of technology. That's changing.