Banking Street Special: A tap that drinks water, An ATM that inhales currency

New Update

MUMBAI, INDIA: What if toasters, airplane floors and even car engines were made of glass? There would have been no need to wonder and anticipate endlessly if the bread is finally done. Travelling several feet above clouds (unless you are acrophobic of course) would have finally come with its views for the ones who miss window seats. Any time a wagon conked off, all that would be required was a look instead of a painful peek under the hood.


If this sounds like a hangover after seeing that song from Hrishikesh Da's Khoobsurat, no, the world is still as boring and practical as it used to be. Taps don't deliver coffee at one's whim and rice fields do not grow chocolate bars yet.

But when Manjunath Rao, Senior VP and Head of Sales at CMS Infosystems talks animatedly about ATMs that can swallow notes (if you want them to, let's be clear); it's hard not to wonder what he has been drinking all morning? Or has he been munching too many of those Fortune cookies?

After all as wistful and fantasy-delight as it may sound, there is a lot that goes around when horses try to fly - encryption, safety, integrity, quality of currency, ecosystem maturity, adoption readiness, fraud vulnerability and a lot more.


We could have kept wondering on these ‘ifs' and ‘buts' or we could have pulled a chair and asked Rao to tell us in detail why or why not the toast can pop in and out with equal ease.

Have a bite.

How has the concept of BNAs (Bulk Note Acceptors) travelled to this stage today? A backdrop first.


BNAs are hi-tech secure ATMs having the multi-functional ability to offer deposits or dispense transactions of bundles of up to 200 mixed bills after having counted and authenticated them. The customer is first asked to verify the amount of deposit to ensure it tallies and then it is credited online into his/her account immediately. Look closer and you will admire that it completely takes away human intervention required until now for these transactions and enables user to manage and control the same. As to ‘Deposit Automation' as a concept, this is nothing new. The initial attempt at deposit automation included certain types of traditional ATM machines which allowed users to deposit cash via envelopes. The money would then be counted, verified and credited later once the customer confirms the amount kept in escrow category. If the customer disagrees with the amount for some reason, the notes come back from the temporary casket. This never really gave customers a sense of security regarding their deposit. Even if one note does not make through the checks for integrity and quality, only that note is impounded and the customer can iron this out at the branch later with a receipt that the machine would generate and hand over to the customer.

Why did this interest you, specially for a market like India? How would this iron out some obvious apprehensions for both banks and customers?

I perceive that the concept of self-service has really caught on. Even ATMs were considered white elephants by banks initially when they were introduced. The complete cycle of cash from a customer walking in, through deposit at the counter, authentication, checks etc to it reaching the vault costs a bank some significant money, almost Rs 70 to 8o every time. The concept initially did not appeal as for a customer the waiting time till the credit is reflected was a tad long (due to machine readability issues with notes), but now this would be immediate. Now the reading technology, RBI mandates on clean notes and effects on soiled notes, rich security features etc come along with this concept. There are some 12 to 15 machine-readable characteristics for every note and that will ensure consistency.


Embedded encryption or holographics will be a strength and notes have got much better. Every deposit goes through four levels of checking - like UV (if notes are good or not), check for double notes, check for dirty notes etc. Interestingly India is a cash-positive market so equal levels of cash deposit and withdrawals connote a good sign too (despite all the plastic penetration so far). CMS entered into a partnership with Nautilus Hyosung of KoreSa to bring these high end machines to India. I think that these machines have the potential to change the way deposits are done in the country today. Think of no long queues at banks, think of anytime deposit and you can imagine a new level of convenience just as ATMs have brought in this space in terms of withdrawing cash.

Would it really make matters easier? How about their real scope, penetration, integrity and quality aspects?

Try to think of how much cash sits with petrol stations but they are often soiled and banks have to spend so much time and resources in clearing currency. So cost of cash for a bank is rising. . BNAs, hence, make a positive impact on the bottom line of banks by reducing the cost of every deposit transaction. We estimate that a typical PSU bank spends Rs 60-70 for every physical transaction that takes place, however small it may be. Deposit automation can help bring this cost down significantly.

The machine is designed for 200 bills for various denominations with flexibility and ease on restrictions. The new generation of deposit machines also enable real time physical validation of currency notes and instant credit into a user account, replicating a branch deposit experience for the user.


So India should be on a good timing now?

The potential impact of BNAs on currency circulation and customer service was seen significant enough for the RBI to subsidize the cost of BNAs up to 50 per cent for urban areas (and even 75 per cent in semi-urban and rural). I am very buoyant of their penetration levels as there is so much bank excitement and confidence that we are witnessing for the next generation of ATMs. The first-generation is aging now and they are opening up for replacements etc. Policy thrust will propel this shift, along with other factors that are placed just right for deposit automation to really take off, such as advancement in the physical currency note itself that can be used by these machines to detect authentic notes. The current installed base of BNAs in India is 2000 machines across the country. We believe, one immediate opportunity for BNAs in India is about 20,000 - which is the number of existing ATM machines that accept envelop deposits and should be replaced with these instead. Look at China which deploys 50,000 to 60,000 BNAs every year. Some banks are ready and some are trying it out already like ICICI, Axis, SBI, BOI etc that have deployed some.

What happens to counterfeit notes? And recycling possibility (same cash back to dispenser from the same machine)?


They are handed over to machine makers and they modify and update their templates. It would be ensured that they stay up-to-speed with fraudsters. With savvy software and automatic download of templates, the scenario would be stronger. Recycling would naturally be a little complex and it's a control panel that runs the back-end. Tomorrow if banks sort out permission to handle the back end, it can churn again from the deposit side. All machines are recycle-capable when it comes to dispensing parts too. The possibility is ripe and may be only three to four months away.

Would the cash-cycle cost benefits balance well with the maintenance and skills-part of the package that banks would have to deal with?

Obviously the machines would be little complex and since they have an intelligence level so skill sets and management that they would need would be at a higher level when compared to normal dispensers. But with cost efficiency come advantages like 24/7 access, increase in number of transactions, customer convenience, and also the cash management cycle is taken care of. A self service will cost lesser than a branch-based transaction cost. RBI is also helping banks to reach automation at new levels.


Any India-specific issues that these machines need to watch out for?

Huge levels of dust, humidity, soiled notes in the system and need for whole-hearted adoption - are some challenges I can think of. These can take the need for maintenance and follow-up a little higher.

Can you give a back-of-the-envelope cost comparison?

These machines can go up to Rs 12 to 13 lakh vs. eight lakhs for usual ones. The capacity of 15,000 bills along with RBI subsidy mentioned earlier would make them a good bet. Next two years would be very critical for this space and we are very excited and can foresee a lot of penetration.

Talking of new generation of ATMs, what's your sense of vein-pattern reading machines that are being experimented with in Poland, Europe etc?

Four to five years back, even retina scan was available as a technology, so I would say anything that can translate into practical benefits is a good idea. But stocking, unifying and transmitting patterns could be a challenge. Aadhar can create a database of fingerprints for instance, but unless everyone accepts them, the idea will not really take off. Any technology or idea needs that premise - will everybody use it? Then it will work wonderfully. But even if one or two small spokes count themselves out, the entire wheel id disoriented. An ATM is a dumb terminal because it does not take any decision, it only sneds it to the back-end of a bank, so you can put whatever technology you want at the back-end as long as that works well. A good database and a ready ecosystem is vital for innovations.