In the latest edition of its 2009 survey, "ATMs and Cash Dispensers Central and Eastern Europe," Retail Banking Research Ltd. says the 15 countries it has tracked in CEE have once again shown exceptional growth. Over the last 12 months, the region's number of ATMs increased by 28 percent, and the number of new installations in the 15 countries studied was the highest ever.

The new RBR survey shows that a combination of economic growth and a rapid increase in the number of cards issued over the past few years has driven the expansion of many CEE ATM markets, most notably Russia, Ukraine and Poland.

Kazakhstan and Russia experience highest growth rates

Kazakhstan was once again the fastest growing ATM market in the region during the year, following a period of economic prosperity that has attracted foreign investment into the retail banking arena and resulted in an increase in ATM expenditures. It was followed by the much larger markets of Russia and Ukraine.

For the eighth year running, the greatest absolute growth occurred in Russia, where an additional 19,000 ATMs were installed during the year; the country still has huge potential for expansion because of its large population and area. Heavy deployment by Russian banks over the past eight years has driven the market to 70,500 units. In 2008 Russia overtook France, Germany, Spain and the United Kingdom to claim the mantle of Europe's largest ATM market.

Not only has Russia become Europe's largest ATM market, but SberBank has become its largest deployer, increasing its installed base to 17,500 ATMs. SberBank and the three other large Russian state-owned banks — Bank of Moscow, GazPromBank and VTB24 — accounted for one third of new ATM installations in Russia in 2008.

IADs make limited contribution to growth
 
Although independent ATM deployers have expanded into CEE markets over the last few years, they accounted for only around 3 percent of new terminals in 2008. One country that did see an increase in IAD activity was Poland, which in 2008 experienced its highest absolute increase in the number of ATMs this decade; non banks now account for 19 percent of the installed ATM base in the country.

Euronet's deployment of terminals in Bulgaria and the removal of Euronet's ATMs from Slovakia means that the number of countries in the region in which IADs operate remains at five: Bulgaria, Czech Republic, Poland, Serbia and Ukraine.

Availability of automated deposits becoming more widespread
 
The number of automated deposit terminals in the CEE region has more than doubled over the past year. Eleven percent of ATMs now offer automated deposits, compared to only 2 percent that offer envelope deposit. In 2008, deployers in all markets except Bulgaria and Hungary had installed ATMs with automated-deposit functionality, although the former is the only country where no form of deposit may be made at cash-dispensing ATMs.

Most of the region's automated-deposit ATMs have been deployed in Russia, where the provision of automated-deposit facilities for loan and bill payments is particularly important as checks and online and phone banking are not yet widely available. The share of ATMs with automated-deposit facilities in Russia increased to 20 percent during the year. The Russian market now accounts for 83 percent of all automated-deposit ATMs in the region. The only other countries with more than 400 automated-deposit ATMs installed are Kazakhstan, Poland and Ukraine.

When it comes to cash-recycling ATMs, deployers in the CEE region are still weighing the benefits of the costly recycling technology. At present, only 200 automated-deposit terminals in the region contain recycling units.

Transaction volumes grow by 17%
 
Cash withdrawals at ATMs in CEE totaled 4.2 billion transactions in 2008, up 17 percent from the previous year. While annual growth in the total number of cash withdrawals was strong, it was lower than in 2007, with two countries — Estonia and Slovenia — experiencing a decline in the number of cash withdrawals made at ATMs. Average usage in CEE fell by 9 percent to 2,267 cash withdrawals per terminal per month, as the increase in the number of ATM installations continued to have a diluting effect on per-terminal transaction volumes.

Estonia's machines recorded the heaviest usage, at 4,961 cash withdrawals per ATM per month, while Kazakhstan witnessed the lowest usage level, at just 1,148 transactions. The high level of usage in Estonia is attributable in part to the tendency of domestic cardholders to visit ATMs frequently and withdraw only small amounts on each occasion. In contrast, at EUR 127, the average value of cash withdrawn by Kazakhi cardholders is well above the regional average of EUR 113.

Large jump in use of Windows
 
Windows XP has been the most popular ATM operating system in CEE since 2006. In 2008, the Windows share of the market grew by 17 percentage points to 85 percent, as deployers continued to migrate their terminals from legacy systems such as OS/2 and older Windows-based systems such as Windows NT. Windows XP is now the most popular ATM operating system in every country except Bulgaria.

Outsourcing of cash replenishment at ATMs falling
 
The proportion of terminals at which cash is replenished by a third party fell slightly to 21 percent in 2008. The low proportion of CEE deployers that outsource this function can be explained by the fact that in many markets, dedicated registry departments provide in-house ATM-replenishment services.

First-line maintenance is outsourced for a somewhat higher share of the CEE installed base. When it is not kept in-house, the region’s deployers tend to call on their CIT partners for the services. Second-line maintenance, which encompasses more complex repairs, including the replacement of parts, is almost universally outsourced. The small share of the market that does not outsource this function comprises mainly ATMs belonging to IADs, which, in some cases, perform all their own maintenance.