ATM solutions are transforming developing economies

In a few days it will be exactly 35 years since the first ATM became operational in South Africa. Standard Bank’s first AutoBank machine went live in Johannesburg on 21 April 1981. Considering the number of banking and prepaid tasks that we are able to perform at an ATM nowadays, it’s hard to believe that it once took ATMs a full minute to perform a balance check and that ATMs were initially only operational for 12 hours a day, six days a week.

ATMs have changed significantly since the 80s, but they still have a long way to go in developing countries. In this blog we look at how the latest ATM solutions are impacting developing economies.

The concept of the ATM inspires a necessary innovation in Kenya

Kenya has been suffering a water-shortage crisis for years now, and an unforgiving climate and corrupt practices by water cartels only deepen the struggle of the residents of Kenya’s slums. But there might be hope in the form of an unconventional combination of technologies that has led to the deployment of water-dispensing ATMs.

The Danish water engineering company Grundfos partnered, in 2015, with Nairobi Water and Sewerage Company to introduce the country’s first water ATM, called the AQtap, to the city’s rural community. The way it works is simple: the residents are issued free “water cards” that they can load with any monetary value in the form of points either at their nearest Nairobi Water and Sewerage Company branch or through their mobile phones. Once the cards are loaded the residents are able to swipe them at any of Nairobi’s water ATMs and the amount of water they purchase is expressed into their containers via a hose located below the water ATM.

The water dispensed by the ATMs is a clean and safe alternative to the water residents normally get from water vendors – the cleanliness of which they can’t always verify. The ATMs also help cut down on costs since residents no longer have to sanitise the water themselves by boiling every batch, and they’re no longer at the mercy of water cartels and their exorbitant prices.

The ATMs are still in the early stages of implementation, but are likely to spread to other parts of Kenya and Africa.

Ethiopia has started manufacturing its own ATMs

Mela Electro Manufacturing in Ethiopia has become the country’s first local ATM manufacturer. The company, which was founded by husband and wife Naoll Addisu and Lilia Hailu, opened its first plant in Sebeta earlier this year, where ATMs are manufactured and assembled. Between 10,000 and 15,000 ATMs will be deployed across Ethiopia, the company predicts.

Currently, the plant is capable of manufacturing four ATMs per day but with expansion and added infrastructure, Naoll believes that the company will be able to produce between 10 and 15 ATMs a day, which will aid their goal of penetrating the rest of East Africa. “With the hope that the regulatory framework will be conducive, we have a plan to even manage [bank] transactions through [the] ATMs,” says Naoll.

Ethiopia has one of the most promising economies in East Africa and companies like this can only help boost it even further. Their ATM manufacturing plant is a great way of creating STEM (science, technology, engineering and mathematics) jobs for Ethiopian citizens while promoting entrepreneurship.

Sierra Leone’s National Switch Project surges forward with Altarra Group

Since last year, Sierra Leone has been inching towards the implementation of a National Switch Project that is set to introduce interconnectivity of commercial banks to the country for the first time. The Bank of Sierra Leone (BSL) is working with Swiss consulting company Altarra Group on the project. Altarra has previously worked on national switch implementations in various other African countries including Ghana, Nigeria and South Africa.

As it stands, Sierra Leone’s ATM infrastructure only allows users to transact at an ATM from their bank and not any other competitor’s ATMs. The switch seeks to change this by removing bank-specific and card type-specific limitations, leading to more inclusive and convenient ATM solutions. “We believe that the establishment of a well functional National Switch will strengthen the delivery of financial services by creating a single integrated and effective platform for the settlement of interbank electronic payments derived from different channels,” said Hasiatu Jalloh-Agbaje, the president of the Sierra  Leone Association of Commercial Banks.

The switch is a huge leap towards developing Sierra Leone’s financial services sector. Currently, the country has 13 commercial banks with 91 branches, yet only six of those banks have operational ATMs, only four have working POS terminals and the ratio of users to ATMs is 100 000 users to one ATM.

Biometric technology is imminent for South Africa’s ATMs

Biometrics are a powerful weapon against banking fraud, and financial institutions have known this for a long time. Fingerprint scanning technology has become the new frontier for banks to conquer – and some of them already have.

In 2011, FNB became the first bank in South Africa to implement a biometric identification and verification system that worked integrally with the Home Affairs National Identification System (HANIS). This has allowed FNB to crack down on identity theft and guarantee its clients better security compared to other commercial banks.

Standard Bank has been giving its app users the option to log into their accounts using Touch ID (the fingerprint scanning technology in Apple’s latest devices) since last year. Users of the app still have the option of sticking with the password login but the biometric verification provides a stronger defence against security threats and is expected to spread to other mobile device brands as fingerprint scanners on mobile phones becomes more widespread.

The next step in biometrics for banks is introducing ATMs that verify the identity of users with fingerprint scanners and it’s starting to happen. Absa announced last year that they will be trying out Visa’s fingerprint scanning ATMs soon. Fingerprint validation at ATMs is working in Brazil and with Absa leading the change in South Africa, the future of ATM solutions in the country already looks good.

With all this innovation surrounding ATMs, it’s hard to believe that some businesses still don’t have an ATM installed on-site. Download our ATM solutions brochure and see all the different industry-standard installations we have available that are designed to serve businesses of all sizes and functions.