The Widespread Impact of Digitalization in Indonesia Leads to a Decline in ATM Transactions

The Widespread Impact of Digitalization in Indonesia Leads to a Decline in ATM Transactions
The Widespread Impact of Digitalization in Indonesia Leads to a Decline in ATM Transactions

As digitalization surges forward in Indonesia, propelled by the changing times and government initiatives towards a digital landscape, a discernible shift is occurring, impacting the traditional banking practices. Specifically, the prevalence of Automated Teller Machines (ATM) and transactions facilitated through ATM cards by banking patrons is witnessing a notable contraction.

Revealed in data disseminated by the Financial Services Authority (OJK) regarding Indonesia’s Banking Surveillance, the third quarter of 2023 disclosed a total of 92,829 ATMs, Cash Deposit Machines (CDMs), and Cash Recycling Machines (CRMs). This number marks a reduction of 1,006 units compared to the previous year’s figure of 93,835 units.

Parallelly, transactions conducted with ATM cards are experiencing a decline, as outlined by Bank Indonesia (BI). The recorded payment transactions, encompassing ATM cards, debit cards, and credit cards, amounted to Rp8,178.69 trillion, indicating a 0.81% annual decrease.

Several banking entities are registering a decrease in both the quantity of ATMs and the transactions conducted at these ATMs. For example, PT Bank Rakyat Indonesia (Persero) Tbk. (BBRI) observed a 14% year-on-year decrease in ATM transactions.

Delving into the intricacies of this decline, Andrijanto, the Director of Networks and Services at BRI, elucidated that the dip in ATM transactions is primarily attributable to a reduction in cash withdrawals. Intriguingly, activities involving cash deposits through BRI’s Cash Recycling Machines (CRM) have experienced an upswing, aligning with enhancements in business processes.

Andrijanto emphasized, “The decline in cash withdrawals at ATMs is partly due to the increasing habit of the public to transact through BRImo and digital channels.” This insight, conveyed on Wednesday (24/1/2024), underscores the evolving consumer behavior in favor of digital alternatives.

Expanding the perspective, Thomas Wahyudi, Senior Vice President of the Transaction Bank Retail Sales Group at Bank Mandiri, previously highlighted the discernible trend of diminishing card transactions, including those at ATMs. This trend correlates with the rapid pace of digitization, with an interesting note on the prominence of cardless transactions.

Wahyudi stated, “This [digital transaction] trend is also quite prominent, as seen from the relatively high growth of cardless transactions.” His observation, shared some time ago, accentuates the evolving landscape where consumers are increasingly inclined towards digital transaction modes.

Additionally, PT Bank Negara Indonesia (Persero) Tbk. (BBNI) has documented a 16.13% year-on-year decrease in the volume of ATM transactions during the third quarter of 2023. The recorded figure stands at 884 million transactions. Correspondingly, the total value of these ATM transactions amounted to Rp479 trillion, indicating a 6.81% year-on-year reduction. These figures emphasize the shifting dynamics in traditional banking practices as digital alternatives gain traction.