Inlaks: How Nigeria’s largest ATM operator keeps market relevant

The use of Automated Teller Machines (ATMS) remains significant to how Nigerians engage in financial transactions. In a predominantly cash-spending economy such as Nigeria, the relevance of ATM transactions is certainly not waning.

The Central Bank of Nigeria (CBN) reports has it that the value of ATM transactions rose by 650 percent to N12 trillion at the end of August 2020 from N1.6 trillion in 2011. During this period, the volume of ATM transactions rose by 347.6 million to 968.4 million from 347.6 million. This increase speaks to the consistent growth in the utilization and adoption of ATMS as a reliable channel for accessing cash by citizens across various societal strata.

Additionally, Banks have invested heavily in the ATM business over the years. This is evidenced by the rapid growth in the number of ATMS deployed across the country ranging from 10,865 in 2011 to 19,355 in 2021. In the same vein, ATMS in Nigeria increased from 1.8 units per 100,000 adults in 2006 to 16.2 units per 100,000 adults in 2020, growing at an average annual rate of 22.52 percent.

In all this ATM growth trajectory, one major player in the ATM Sales and Support Industry believes there is still big room for more ATM business expansion both within Nigeria and Sub-saharan Africa. Despite competitive forces and a harsh macroeconomic climate, ATMS remain one of the leaders in digital payment channels in the country, thanks to operators like Inlaks.

“In a country where cash dominates transactions, ATMS will always be a preferred payment channel for many people. Inlaks ventured into the ATM business space in 2009 and by 2013, it became the sole distributor of the hyosung brand of ATMS manufactured in South Korea,” Tope Dare, executive Director, e-business and Infrastructure, Inlaks, said.

The Organization leads the ATM sales and support industry in Nigeria with a 40 percent market share, it is ahead of competitors in the innovation of new products, deployment, and maintenance of next-generation ATM technologies.

Dare stated further that hyosung became the preferred choice for Banks, following a detailed feasibility study conducted prior the launch of the product into the Nigerian market. In addition to its affordability, the ATM brand by design, drastically reduces incidents of high cash reject rates whilst still maintaining high resilience to intermittent power outages, thereby making it suitable for the highly volatile operating environment in the country. First Bank

Plc and Jaiz Bank were the first set of customers to sign up for the product, followed by heritage Bank, Access Bank, and all the commercial banks in the country.

Today, Inlaks services twenty-three commercial banks and financial institutions. The company has grown the number of ATMS it supports from 300 in January 2013 to over 10,000 in

August 2022.

The galloping inflation has caused many banks to rapidly adopt drastic cost-reduction measures to sustain their operations by investing in and growing Digital Banking services which includes the deployment of more ATMS to decongest their Banking halls.

given the above indices, the obvious fact is that the demand for ATMS is not going away any time soon, irrespective of the surge in the adoption of mobile payment channels. A new report by Business research estimates that the global ATM market size is projected to grow from $19.94 billion in 2021 to $22.08 billion in 2022 at a compound annual growth rate (Cagr) of 10.7 percent.

In Nigeria, most of the ATMS utilized are concentrated in urban areas with Lagos accounting for the largest distribution at over 3,000 ATMS. Peers such as South Africa with an estimated 30,000 ATMS as of 2021, have deployed 70 percent of those machines situated in remote locations and on-premises that are not owned by banks, such as petrol-station forecourts, malls, and shops in more remote communities. A primary limitation for ATM deployment in Nigeria is the acquisition cost. But Ingoes laks says it exists to remove the burden of deploying and running ATMS from financial institutions.

“With the growth in ATM usage, Inlaks focuses on innovative ways that will enhance mobile integration in ATM customer experience. We are considering various dynamics in which financial transactions can evolve to meet the needs of the populace. In the long term, our drive is to heighten financial inclusion irrespective of trends. As a market leader, we are spreading our tentacles to improve the impact and options of customer spending available to Nigerians on the journey to economic development,” Dare said.

In the future, ATMS will integrate more with other payment channels such as USSD, POS, Agency Banking, and Mobile Banking as adoption options continue to grow. This integration will make transactions more seamless for customers. The greater responsibility for encouraging innovation in the ATM market lies with the government. Industry operators also deserve special grants for foreign exchange sourcing to import ATMS into the country. There is also need for reduction of excise duty paid on ATMS.