Union Bank to outsource work for 1,000 ATMs

Public sector lender Union Bank of India plans to outsource work for the installation and upkeep of 1,000 ATMs as part of its plans to scale up alternative channels for business operations.

Through outsourcing, the lender would set up ATMs in nine zones, including Mumbai, Delhi, Lucknow and Bhopal, according to the Request for Proposal (RFP) floated for the rollout plan.

As of December 2010, the bank’s total outlets, including branches, stood at 5,017. Its ATM network stood at 2,516 units.

Private sector Axis Bank has entered into an agreement with two third-party service providers to increase its ATM count to more than 9,000 within the next 18 months. It has inked contracts with Prizm Payment Services and AGS Infotech to set up and manage 5,000 ATMs on a purely variable model. The bank said it might install second and third ATMs at same site. Union Bank has retained the option to buy back the ATM and site infrastructure after three years. The buyback value would be linked to the years of operation. The initial investment for an ATM will be assumed at Rs 8.3 lakh.

The public sector lender has firmed up plans to use alternative delivery channels like ATMs, online banking, phone banking, mobile banking and banking correspondents. The bank has set up a separate department to oversee the transactions recorded in alternative channels.

These alternative channels, which until a couple of years back, contributed barely eight per cent of the bank’s transactions, are poised to account for 50 per cent of its transactions by the end of 2010-11. In 2009, the alternative delivery channels accounted for 31.71 per cent of the overall transactions. The share of the electronic mode rose to 45.49 per cent by December 2010.

Union Bank would use alternative channels for financial inclusion to cover around 3,500 unbanked villages across the country by March 2012.