ISC ‘BANCS’ on new ATM sharing network

While Swadhan, the first ATM sharing network pioneered by India Switch Company (ISC) did not take off as expected, a lot is expected from BANCS, another ATM sharing initiative by the same company. What is the difference this time? Can this initiative succeed? Srikanth R P tries to find some answers

Harish Murthy

While Swadhan was a great concept, it failed due to a couple of reasons. Firstly, the average transactions per day in Swadhan (around three per day) was uneconomical to maintain the network. Additionally, most of the ATMs were offline. Offline ATMs were a problem for member banks since they did not check the customer’s balance in real-time with the actual balance in the customer’s account. The only deterrent was the limit on cash a customer could withdraw from an ATM on any given day. This stopped the banks from issuing ATM or debit cards, which in turn resulted in the dismal record of average transactions recorded per day.

Hopefully a lot of lessons have been learnt from the Swadhan debacle. One big change with BANCS is that all the ATMs will now be online i.e. all ATMs will have the capability to check balances of customers in real-time. Also, unlike Swadhan, which was managed by the Indian Banks Association (IBA), BANCS will be managed by a consortium of banks. The initiative seems to be striking positive notes as can be seen from the number of banks who have signed up and the number of transactions on the network. 12 banks have already signed up and another eight banks are expected to sign up. More importantly, the number of transactions processed on the network has been impressive. BANCS has been processing close to one lakh transactions per month since it commenced operations this year.

Currently, the member banks who are participating in BANCS include Bank of Maharashtra, Bank of Bahrain & Kuwait, Greater Bombay Co-operative Bank, Centurion Bank, Central Bank of India, UTI Bank, Punjab & Sind Bank, IDBI Bank, Ratnakar Bank, SBI Commercial & International Bank, Cosmos Bank, Air Corporation Employees Co-op Bank and Saraswat Co-op Bank. Bank of India is the settlement bank for the BANCS network.

Member banks participating in the BANCS initiative will now have a chance to compete aggressively with banks like ICICI Bank (1700 ATMs) and HDFC Bank (800 ATMs). For example, a bank like Greater Bombay Co-operative Bank, which has only 13 ATMs will have access to a network of more than 2,000 ATMs now. While banks like ICICI Bank and HDFC Bank are not yet part of the network, smarter banks like UTI Bank have decided to be part of this network. By allowing customers of other banks to be part of this network, UTI stands to gain by way of revenues from usage of its ATMs by non-UTI Bank customers. Additionally, India Switch Company (ISC) is looking at positioning the BANCS network as a national electronic funds transfer network rather than just a plain ATM sharing network. Further, there are plans to upgrade the ATMs to include features like bill payment and ticketing. If the BANCS initiative succeeds and more banks join in, the day would not be far when any card of any bank would work on any ATM of any bank.

srikanth@expresscomputeronline.com