ATMs turn into a nuisance

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ATMs turn into a nuisance

The author is the head of the financial planning team of the JoongAng Ilbo.

In 1990, the Banking Supervisory Service (BSS) had an intense debate over the installation of Automated Teller Machines (ATMs) for Citibank of the United States. It was the first case applying the 24-hour operation of ATMs in Korea.

ATMs were considered the darlings of high-tech financial services as Korean banks at the time remained at cash dispensers (CDs), which only allowed withdrawals and did not take deposits. One Japanese CD machine cost 5 million won ($4,214), while an ATM cost 80 million won at the time.

The attack of American ATMs was a shock to Korean banks. Considering the impact, the BSS permitted Citibank to oversee 12-hour operations. But the trend of the time could not be blocked. In the following year in 1991, 24-hour ATMs were installed all across the country.

Encouraged by the move, other banks competed to offer ATMs, and customers became used to them. Shortly after the financial crisis, banks reduced the number of their branches and increased ATMs instead. The heyday of ATMs was 2013, when more than 70,000 ATMs were in operation nationwide.

Now it is going down. As of the end of 2019, 55,807 ATMs have been installed nationwide — a 20 percent decrease in six years. While some worried that ATMs would take away jobs from tellers, the number of ATMs decreased faster than the number of tellers. The Bank of Korea (BOK) said that’s because demand for cash decreased as online banking and mobile payment became common.

In fact, the financial authorities accelerated the weeding out of ATMs. In 2011, the Financial Supervisory Service (FSS) pressured banks to revise unreasonable fees. As banks were making a “fortune” from ATM fees, they were pressured to lower them. In 2012, banks lowered the ATM withdrawal fee of 900 to 1,000 won to 700 to 800 won.

While the burden on customers was reduced, banks were in agony, as operating one ATM results in a deficit of 1.66 million won a year, according to the Korea Institute of Finance. ATMs turned into a nuisance. Banks quickly removed unprofitable ATMs and turned to mobile banking.

The BOK expressed concerns on Aug. 11 that the decrease of ATMS could leave cash users alienated. To prevent ATMs from drastically decreasing, the central bank reviewed a plan to subsidize ATMs in rural areas. Did the official, who was applauded for the kind policy to lower the fee, predict this consequence?
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