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Only a few
years ago, rural folk had to travel to the city or a large
poblacion many a tricycle and jeepney ride away to
withdraw much-needed cash from an automated teller machine
(ATM). Today an increasing number of cardholders
experience the convenience of taking out cash right in
their own vicinity.
“This
phenomenon can be attributed to the fact that more and
more rural banks are investing in technologies that result
in convenience for their clients in far-flung areas,” Eric
Severino, president of Encash, the country’s first
independent ATM deployer, said.
In a
presentation delivered late last week at the 2008 Rural
Bankers’ Management Conference, the information-technology
veteran highlighted the importance of investing in
technology to keep rural banks abreast of emerging trends
in the rapidly evolving business environment.
By
investing in IT, Severino said, rural banks not only
improve their efficiency but also enhance their ability to
defend their market share. “If a rural banker wants the
competitive edge, I personally recommend going for the
tried-and-true approach, while taking a different tack,
coupled with innovation in the approach to the market,” he
said. He added that finding a dependable supplier and
benchmarking against the best in the market are also of
major importance.
He
cautioned rural bankers, however, against IT vendors who
make promises that they cannot deliver. “The developer or
supplier that the rural bank selects must display an
exemplary track record, including success in previous
projects, coupled with industry experience. A good
indicator of developer excellence is the use of modern
software,” he explained.
In the
case of Encash, he said, “When we started partnering with
rural banks two years ago, we offered to provide them with
ATMs and install these in locations where commercial banks
usually do not go.” The proposition was clear: Encash
provides the machine, the technology and the cash, while
the rural bank houses the ATM. Partner rural banks pay a
fee to join Encash’s network, but they also get a share of
the revenues per ATM transaction.
To date,
28 rural banks representing approximately 180 branches
nationwide have signed up, and 20 ATMs have been
installed. By the end of 2008, Encash expects to roll out
at least 200 ATMs in many barrios to bridge the huge gap
between the number of ATM machines and cardholders in the
country.
The first
nonbank affiliate network of MegaLink, Encash is also the
first within the consortium to comply with the Triple Data
Encryption Standard (3DES), currently the highest security
specification by the industry. It also utilizes the ATM
transaction processor software u/Switchware, which
provides the company with real-time information on various
elements within its network.
The Encash
business model, Severino said, is an example of how a
healthy mix of rural banking and IT can result in a
win-win solution for banks and cardholders in remote
areas.
“What we
learned from the Encash experience is that a market exists
for this type of service. Also, this example shows how
technology impacts on the way rural banks do business.
Apart from preparing rural bankers to offer their own ATM
service, the technology also gives them market advantage,
prestige and revenue share,” he said. | 
