Implementation of ATMS at SBI. Banks in India are looking at deploying biometric ATMs targeted to reach the unbanked population in rural India. Using thumbprint and voice guidance

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MANAGEMENT INFORMATION SYSTEMS

Narsee Monjee Institute of Management Studies

MBA – Banking Management

Trimester I

“Implementation of ATMs in SBI and management issues”

Submitted to:

Prof. Nilay Yajnik

Submitted by:

CONTENTS

VISION

Create a large vibrant ATM Self-Service Channel

spread across the country that

offers a wide range of services

to enhance customer convenience and also

enable the Bank to attract new customers.

EVOLUTION OF ATMs

  • Introduction

The origin of ATMs can be traced back to June 1967 when Barclays Bank installed

the first cash dispenser manufactured by Burroughs in the UK. The race commenced

when just forty-eight hours later, National Westminster Bank commissioned a machine

manufactured by Chubb. Since then, there have been rapid developments both in

ATM hardware and software.

  • The First Generation ATMs

The first-generation ATMs basically dispensed cash and offered very limited banking

functions.

In the next two years, ATMs were installed in several European countries, Japan,

and the United States, and the first ATM Network was created in Switzerland. In

1972 Lloyd's Bank in the UK installed the first ATM connected online with their

banking system. By the mid-1970s, ATMs with a range of transactional services

were developed.

  • The Second Generation ATMs

The next phase (late 1970s to early 1980s) saw the use of micro-computer

technology in ATMs which resulted in a number of technical improvements and

significant reduction in cost. Consequently, the deployment and usage of ATMs

picked up substantially.

  • The Third Generation ATMs

In the mid-1980s modular ATMs were developed, on account of which banks could

configure ATMs to suit their specific requirements. Moreover, these new features

permitted upgradation of ATMs as and when new technology emerged.

  • Fourth Generation ATMs

In this phase, the ATMs graduated to systems based on PCs and OS/2. This enabled

ATMs to take full advantage of developments in PC hardware, like improved

processing power, larger memory and high performance - high capacity disk drives.

Consequently, ATMs could support a wide range of services.

During this period, deployment of ATMs gained momentum and banks in advanced

countries necessarily provided ATMs to their customers, both on-site and off-site.

Alongside, Cash Dispensers (CDs), which did not provide cash deposit facilities,

were deployed in large numbers at every conceivable convenience point.

  • Fifth Generation ATMs

The fifth generation marks a quantum jump in ATM technology with the manufacture

of open web-enabled ATMs. These ATMs contain many significant improvements in

design and architecture.

These ATMs support delivery of a wide range of bank products and services. It has

also become possible to integrate the ATM channel with other retail banking delivery

channels.

  • New Generation ATMs

Banks in India are looking at deploying biometric ATMs targeted to reach the

unbanked population in rural India. Using thumbprint and voice guidance in ATMs

reduces literacy requirements to a considerable extent. Thus, establishing the identity

of a rural depositor through biometrics makes it possible for illiterate or barely literate

people to become part of the banking user community.

A simplified menu on ATMs coupled with possible audio guidance in local language

enables easy use for rural masses. So far, bank ATMs are dependent on PIN

(Personal Identification Number) verification. The fingerprint authentication method

is non-PIN based, and this requires enhancements to the standard switch

environment. Though identification can be via face, voice, retina or iris, fingerprinting

has the advantage of being a familiar concept worldwide.

Some Indian banks have started implementing biometric applications in retail branch

applications for officer authentication. Elsewhere in the world, efforts are on enabling

payments through kiosks based on fingerprints (non-card based). ATM enhancements

with biometric support envisaged by vendors eliminate the need for PIN entry, and

authenticate customer transactions by thumb-impressions. Biometric ATMs are

introduced by us selectively in a few centers.

In recent years the importance of biometrics has grown tremendously with an

increasing demand of security in accordance of unique identification of individuals,

in applications other than policing, the traditional area of use.

Apart from banking, biometrics finds use in the retail payments arena. Developments

in biometric technology have made their presence felt in the pervasiveness of selfservice

devices such as Point of Service / Sales (POS) machines. Some of the

new generation POS terminals are biometric enabled with smart card readers,

allowing thumbprint-based authentication.

By deploying Symstream II™- wireless modem for GSM (Global System for Mobile

communications) connectivity, banks in India will now be able to deploy ATMs to

the most remote sites in India, thereby enabling them to offer banking services to

the unbanked rural population.

The solution uses voice channel, unlike traditional GPRS (General Packet Radio

Service) connectivity using data, making it more reliable and fast. Banks will be

able to increase their ATM penetration with reduced overhead costs, faster

deployments, better security, improved efficiency and functionality compared to other

legacy technology being used.

Customers opting for biometric authentication can visit the nearby kiosk or ATMs or

bank, where his fingerprint data would be scanned into a special PC (Personal

Computer) with a fingerprint scanner, and the scanned fingerprint is then stored in

an encrypted form in a central server.

When a customer inserts (or swipes) his card in a biometric-enabled ATM, he is

prompted to set his finger in the fingerprint scanner. The transaction along with

customer's biometric information is passed on to the switch. The switch verifies the

fingerprint with the server, and if successful, requests the banking application to

authorise the transaction. Based on the result, the switch instructs the ATM to

complete the transaction.

  • ATMs in India

Hongkong and Shanghai Banking Corporation installed the first ATM in India in

1987 at Kolkata. Indian Bank was the first public sector bank to install an ATM in

India. These were all standalone ATMs.

In 1997, the Indian Banks Association promoted a network of ATMs in Mumbai

called 'SWADHAN' providing facility of cash withdrawal at ATMs of any of the member

banks. This network provided only offline services and consequently, did not become

popular. On the other hand, the services provided by the networked ATMs of foreign

banks were immensely popular amongst their customers.

The advent of new generation private sector banks in India gave a fillip to the

creation of ATM networks as these banks relied more on ATMs as the delivery

channel instead of branch banking, which was the forte of the traditional Indian

Banks - both in the public sector and the private sector.

In response to the aggressive use of technology by the new generation banks and

to meet the expectations of customers, the traditional Indian banks also resorted to

the creation of technology driven delivery channels, including the ATM channel.

  • ATMs in State Bank

The first ATM of State Bank of India - a standalone ATM was installed in the year

1993, at Jamshedpur. The installation of ATMs in State Bank was at a slow pace up

to the year 2000 due to the restrictions placed on the number of ATMs as per the

agreements with the Unions. The subsequent agreements with the Unions coupled

with computerization of branch operations resulted in the Bank deploying a large

number of ATMs and the growth over the years is summarized below:

* Includes 2 ATMs of SBICI Ltd.

* Includes 13 ATMs located abroad

In order to provide enhanced facilities to customers, the Bank started networking its

ATMs and the first networked ATM was made operational at Mumbai in March

2001. SBI's network of ATMs has grown rapidly since then. Associate Banks also

joined the network from May 2002. The Bank has also entered into sharing

arrangements with several banks in order to get additional return on investments.

Currently, the ATMs provide a range of services, including payment of fees and

utility bills, donations to temples and mobile recharging etc. We have value addition

in our ATMs by providing additional services/facilities as under:

• ATM cards issued at the time of opening of accounts (Welcome kit).

• International ATM Cards to enable our customers to withdraw cash and/or

purchase at Merchant Establishments (MEs) overseas too.

• To cater to the needs of high net worth customers - Vishesh Card, Maestro

Gold Card and VISA Gold Card with higher withdrawal limits.

• Money Transfers - Through Visa Money Transfer (VMT), Business to Business

(B2B) and Card to Card (C2C)

• Kisan Credit Card facilitating Agriculturists to withdraw cash from ATMs

  • State Bank ATM Network at Foreign Offices

At present, we have 13 ATMs at foreign centers located as under:

ATMs are directly linked to ATM Switch Centre (ASC) and customers of our

foreign offices can withdraw in their respective local currencies from these ATMs.

The database (Finacle) of these foreign offices is located at Global IT Centre,

Belapur and is also linked to ASC.

To enable customers of our Foreign offices to withdraw from State Bank ATM

Network on their visit to India, a Multi-currency module has been enabled at ASC.

Whenever cardholders of these foreign offices withdraws from State Bank ATM

Network in India, ASC converts the Indian Rupees in to their respective local

currencies for debit to their accounts.

Nepal SBI Bank Ltd ATMs in Nepal have been enabled for accepting all State

Bank Group ATM cards. State Bank Group card holders can withdraw money in

Nepalese Rupees and their accounts are debited in Indian Rupees at the fixed

rate of exchange 1 INR = 1.60 NPR loaded at Switch.

International card having Maestro and Cirrus logo have been issued at Maldives,

Sri Lanka, Muscat and Bahrain. Nepal SBI cards are VISA cards for use in Nepal

and India only. Affiliation of MasterCard/VISA is in progress at other Foreign

Offices.

* * * * *

ATM HARDWARE

  • ATM

An ATM is a machine in which routine banking transactions can be done by

customers on their own without any intervention by bank staff (like withdrawal of

cash, deposit of cash / cheques, balance enquiry, obtention of mini statements etc.

The main advantage is that it provides anytime services and is extremely user

friendly.

  • Cash Dispenser (CD)

Cash Dispenser is a pruned down version of ATM. CD is an ATM without a

depository and hence cannot be used for making deposits.

{Please note that in this manual wherever ATM is used, it includes CD also unless

otherwise mentioned).

  • ATM'S Customer Interface

Video Display Monitor: The most visible part of an ATM is the Video Display Monitor

(VDM), which acts as the visual interface between the customer and the machine.

The display supports larger fonts and animated special effects to heighten customer

interest and easy understanding, and offers cross-selling opportunities. The monitor

displays messages to guide customers in performing transactions. While graphics

and animation displays are tailored to suit the bank as a whole, messages can be

input locally to serve as a marketing tool

  • There is a privacy filter on the VDM, which ensures that the person standing

exactly/normally in front of the ATM alone gets to see the display.

  • Function Keys: These keys are placed around the display screen and provide

input facility to customers to select transaction options.

  • Keyboard/Keypad: A recessed keyboard with 11 or more keys is available in the

front panel and used for entering numeric data viz. Personal Identification Number

(PIN) and the amount of transaction. The keys on the board represent numbers

from 0 to 9, Cancel / Clear, and Enter / OK. Normally, the keyboard is vandal

proof i.e. it cannot be tampered with easily.

  • Touch Screen: Most of the ATMs now-a-days come with touch screen that enables

customers to select transaction options by touching the screen with their fingers.

In case of certain applications, virtual keyboard also appears on the screen for

alpha-numeric data entry. Function Keys are, however, not available in Touch

Screen ATMs'

  • Slots: There are slots in the ATM for various purposes as detailed below:
  • Card Reader: slot for insertion / placement of the ATM card into the Card

Reader Unit (ATM can have DIP Card Readers / Motorized Card Readers).

In a dip card reader, the card has to be dipped and removed i.e. placed into

the slot where it is read. In a motorized card reader, the card is inserted in the slot and it is taken into the unit and retained there till the entire transaction is completed.

  • Cash Dispenser: slot for dispensing cash to the ATM Cardholder against a

successful withdrawal transaction

  • Envelope Dispenser: slot for dispensing envelopes for deposit of cash/

cheques.

  • Deposit Slot: slot for depositing envelopes containing cash/cheques for

eventual deposit into customer's account.

  • Receipt Printer: slot for delivery of transaction slips indicating details of

transactions put through by the ATM Cardholder, statement of account, etc.

  • ATM'S Internal Configuration

ATM is built in a modular fashion to facilitate quick and easy maintenance. Broadly,

the ATM houses the following functional modules:

Card Reader Unit: A Card Reader Unit (either DIP Card or Motorized) to read

information encoded on the 'magnetic stripe' of the ATM Card for the purpose of

verification and authentication of the card before transactions are allowed.

Cash Dispenser Cassettes: Currency notes (denomination-wise) are stored in

these Cassettes. (Also called Bins)

Divert Cassette: Used for storing rejected / undelivered currency notes and notes

ejected from the Cash Dispenser Cassettes.

Depository: Used to store envelopes of cash / cheques deposited by ATM

Cardholders.

• Journal Printer: This printer records all transactions / events, taking place in the

ATM system.

• Receipt Printer: Used to print transaction receipts, mini-statement of account,

account balance, etc.

• Safe: All the above units are secured within a URL safe. Access to the safe is

through Combination Lock or Physical Keys.

• A Keyboard Display Module / Hand Held Terminal to carry out maintenance

functions.

• Floppy disk drive / CD drive for loading software.

• NCR Intelligent Power Management (NIPM) system, which enables completion

of the transaction even when there is a power disruption.

Fig. Internal Structure of ATMs

* * * * *

ATM ACCESSORIES

  • Access Lock

Normally an ATM is housed in a separate enclosure. Access to this enclosure is

available only to card holders and is controlled through an Access Lock.

  • Video Surveillance System

In some cases, Video Surveillance System (VSS) with a tiny video camera is installed

somewhere in the ATM enclosure to take snapshots of activities inside the enclosure

continuously. VSS basically consists of a VCR, camera and monitor. The cassettes

used are special and record for a period of 30 to 45 days. The recorded cassettes

are required to be stored for a period of three months after which they are reused.

In case of any dispute on transactions, the recorded cassette is played internally to

ascertain facts and take appropriate decision in the matter.

  • Digital Video Surveillance System (DVSS)

ATMs installed from 2005 onwards, (under Phase IV and V) are provided with DVSS,

wherein the images are recorded on the Hard disk of the ATM PC. This has saved

our branches from the tedious work of loading / maintaining the cassettes. In built

camera has been provided in Phase V ATMs. All phase VI ATMs will be provided

with DVSS.

  • Types of ATM Installation

ATMs are installed to suit specific locational and functional requirements, as under:

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• On-site or Off-site: ATMs that are housed in the branch premises are referred

to as "on-site" and those installed at other locations "off-site" or "off-premises".

• Indoor or Outdoor: ATMs that are placed within a premises or enclosure are

referred to as "indoor" and if installed outside as a drive-in / walk-up facility

referred to as "outdoor".

• Mobile: ATMs set up on vehicles that can move from place to place are used to

provide services at locations where it is difficult to find a suitable site or adequate

potential for placing an ATM is not available. Mobile ATMs ...

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