In just two weeks Awash International Bank (AIB) will become one of largest owners of Automated Teller Machines (ATMs) in Ethiopia after it announces the winning bidder who will supply 100 ATMs and 80 Point of Sales (PoS) terminals.
The bank floated a procurement tender two weeks after reporting a net profit of 394.4 million Br, amounting to earnings per share (EPS) of 469 Br on November 17, 2012.
Six companies participated in the tender. However, only three were short listed, according to a Bank official who requested anonymity.
M2M Group, a Moroccan-based company, locally represented by MOTI Engineering Plc; Copy Cat, an Indian supplier with a local office; and CBM, represented by the local SSC were short listed after a committee comprised from the Board of Directors of the Bank conducted a technical evaluation.
“The winner will be announced within the next two week,” said an official of AIB.
Parallel to possessing its own ATMs and POS, the Bank has already established Premier Switch Solutions S.C, in collaboration with Nib and United banks, for implementation and joint operation of ATM and POS terminals.
The consortium, which was established in July 2010, after the three banks signed a Memorandum of Understanding (MoU) in February 2010 with each bank contributing 30 million Br, has managed to install 20 ATMs, out of the total 60 that will be installed in the first phase by S2M, a Morocco based company.
If the deal goes according to the plan, AIB’s number of ATMs will increase by six fold to 120. This will help the Bank jump to the top of the list of financial institutions because they will own one the largest ATM network in the country.
With 647 branches and a market position of mobilising close to 80pc of the nation’s finance, Commercial Bank of Ethiopia (CBE) has close to 120 ATMs operating in the country. After the Bank purchased 420 ATMs and 600,000 electronic payment cards, at a cost of 100 million Br a year ago, CBE managed to increase the number of its ATMs from 58.
The remaining ATMs of CBE is expected to be installed within the current fiscal year.
The second largest number of units functioning in the market today, 105, is owned by Dashen Bank, followed by Wegagen’s 27 and Zemen’s 35.
The proposed purchase of ATM machines by AIB will add up to around 300 ATMs currently operating inEthiopiaincluding those that are operated by the CBE. This number, however, is much lower than the number of ATMs operated by commercial banks inKenya, which stands at 1,400.
Although the banking sector is currently going through a major and rapid program of modernization, most banks had trouble with their ATM services continuously failing due to network problems, an expert told Fortune on conditions of anonymity.
This is because most of the banks are installing or upgrading their centralised, online, real-time, electronic (CORE) banking system.
The National Bank of Ethiopia (NBE) has set July 2011 as the deadline for the existing banks to interface with the National Payment System.
There are 15 banks that have acquired such banking solutions, while three have been in process ever since NBE made it mandatory in June 2011.
AIB has already signed a 3.5 million dollar contract with MISYS International Banking System, a London-based banking software supplier, to replace the old CORE banking system it has.
Private banks have become more cautious about lending due to a liquidity crunch so installing more ATMs to boost deposit mobilization efforts through cost effective methods is essential, the expert told Fortune.
It is convenient to withdraw cash from ATMs so depositors prefer those banks, which have the highest number of ATMs network in the country, said the expert.
Zemen Bank can attest to this through their experience.
Zemen’s ATMs are being used on average of around 400 times every single day, according to the latest annual report of the bank. On a monthly basis, the ATM network is utilized by 12,000 customers making 19 million Br in cash withdrawals.
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