NATIONAL Commercial Bank Jamaica (NCBJ) said smaller banks must start investing more in their automated banking machine (ABM) networks to help ease the pressure off its own network. But at least one of those ‘smaller’ banks is seeming to suggest that it is the closure of branch networks across the island that is causing the pressure on ABM networks, including its own.

“You’re getting to a pet peeve of mine,” Bruce Bowen, chief executive officer of NCBJ, told the Jamaica Observer in a recent interview when the issue of investment in ABMs was raised. NCB has approximately 300 of the 824 ABMs across the country – the largest network amounting to about 36 per cent of the total. That statistic roughly reflects NCBJ’s dominance in the local market. With 38 per cent of commercial banking assets, NCBJ is the largest bank in Jamaica. Its asset base is also larger than every other commercial bank combined, except for Bank of Nova Scotia (BNS). The spread of its ABM network brings customers into close contact with them, including those from other banks.

“Thirty per cent of the withdrawals on our ABM network are [done by] other banks’ customers,” Bowen continued as he added, “and the average person doesn’t care about this, but we lose money on every one of those transactions.”

Bowen said NCBJ earns about $15 to $17 on the transaction when a customer of another bank uses its ABM. That transaction, he said, costs about $70.

“I would like that to be changed to make sure our costs are covered because that would help NCB. We’ve been speaking with the Bank of Jamaica, we’ve been speaking with [Finance] Minister [Nigel] Clarke and he’s saying why aren’t there more ABMs in the country and we and the other large bank have been expanding our networks,” Bowen said.

The other large bank Bowen refers to is BNS, the second-biggest bank in Jamaica by assets, holding 24 per cent of the total. It has 292 ABMs, about 35 per cent of the total. BNS declined to share similar information but said the cost of operating and maintaining them has gone up over the last two years. The country’s third-largest bank by assets, JN Bank, with 10 per cent of commercial banking assets, has 146 of the 824 ABMs, about 18 per cent of the total. Efforts to ascertain the level of investments other banks put in their ABM networks proved futile, with information not forthcoming up to press time.

Still, of the responses received from banks about their investments in ABMs to improve customer satisfaction and reducing downtime, JN Bank pointed to banks closing their branches as one of the reasons behind the heavier use of ABMs.

“Over the past year, we have observed an increase in transactions at JN Bank ATMs,” the bank said, while indicating that its machines were used 23 per cent more in 2023 than they were used in 2022. Listing reasons for this greater demand for its ABMs, the bank said it could have been “due to an increase in the demand for cash, as inflation and other factors in the economy support higher demand for the Jamaican currency locally to meet expenses”. However, it was this other reason that outlined its suggestion that branch closures are also impacting the demand.

“In addition, several banks have also transitioned their presence in some locations from banking halls to ATMs and other alternative channels, which have also contributed to greater usage of our ATMs, as we are a member of the MultiLink network and facilitate transactions via other bank debit cards,” the JN Bank continued.

Several banks have been closing branch networks in recent years. In 2022, NCB closed five branches while BNS closed two across 2020 and 2021 while it transitioned six branches into digital locations, no longer processing cash. Both have been encouraging their customers to use the ABM networks instead.

Continuing on the matter of the cost to run the ABMs, Bowen adds: “The reality is, once it becomes profitable for a bank to put out more ABMs because they are being paid for them sufficiently when another bank’s clients uses it, then you would see the smaller financial institutions putting out ABMs rather than relying on ours and the other large bank, between the two of us, we are almost 70 per cent of the ABMs in the country.”

Bowen said the matter has been raised with the Bank of Jamaica, the Ministry of Finance and with the Jamaica Bankers’ Association to get all banks to invest more in their ABM networks to share the burden of customer demand for using them.

He also wants to see other banks paying more to cover the cost of their customers using NCBJ ABMs, a move that would certainly increase the cost consumers pay to access cash.

“We and JETS (the operator of the MultiLink system) are in agreement that it’s an issue that we have to deal with, and there are solutions there, and I am confident [that] pretty quickly we can come to those solutions so that it is not negatively impacting the public, our customers, but is creating the right incentives so that we and other banks, private companies can go out and put out more ABMs to make them more economical to operate,” Bowen said.

Still, the banks say they are investing in rolling out more ABMs. BNS said it will replace 58 of its ABMs this year while it will invest in increasing its fleet by seven, bringing its total to 299. JN Bank said it will be introducing a new series of machines to replace those which experience repeated downtime.

“We have engaged our partner, MC Systems, to acquire new ATMs, which are faster and reliable, to replace machines that have reached end of life or that can no longer meet the requirements of the location,” the country’s third-largest bank said.

CIBC Caribbean (formerly CIBC FirstCaribbean), the sixth-largest bank by assets with 7 per cent of the total, said though its “current ABM coverage/network size complements our client base and demand for cash via this channel”, it will be adding seven new ABMs to its fleet this year. In addition to that, CIBC Caribbean said it will be replacing about one dozen ABMs with newer models across the island.

The issue of the availability of ABMs was put to BOJ Governor Richard Byles at the recently held Jamaica Stock Exchange 19th Regional Investments and Capital Market Conference at the Jamaica Pegasus hotel.

“In speaking to the commercial banks, they are acutely aware of the ATM problems, and they have gone out of their way to try to fix some of the issues. But that issue of being able to always go to an ATM and get cash, behind it is a whole lot of logistics that have to work very smoothly for you to get the cash when you want it, everytime. So, even when you have an ATM that is 95 per cent up time, the 5 per cent that is not up time is a problem and a cause for complaint and disorganises your day. But behind that stands who is delivering that cash? Is there any problem in the delivery of the cash? Does the machine have a glitch? Is the Internet operating at that time? So, there is infrastructural and kind of supply chain issues that lies behind you going to that ATM and getting the cash. The banks are very attuned to that problem and working to fix it,” Byles outlined.

The 95 per cent up time he quotes has been questioned and the central bank and commercial banks say they understand the frustration people feel when such statistics are quoted when the reality seems different on the ground. NCB itself said its ABMs work 95 per cent of the time for withdrawals, though it added that the deposit function operates 80 per cent of the time.

“But that’s not good enough because if I am the one who is standing in line when the ABM is not working, that doesn’t matter to me that it is 95 per cent; it has to be higher,” Bowen acknowledged.

JN Bank said its machines consistently measure above 90 per cent availability, and said it is “committed to always raising our standard and reducing any inconvenience to our members and other bank customers who rely on our machines”.

Then there are issues such as increased physical attacks on ABM service providers and vandalism of ABMs, as better technology makes it harder for criminals to operationalise fraudulent attacks on machines such as skimming attacks and they did in former years, as well as the misuse and wrong usage of machines by customers, which all contribute significantly to downtime and availability of machines. The banks also point to competing demand among deposit-taking institutions for services from only a few service providers, including ABM service providers and Internet service providers and the availability of ABM part to replace those that are damaged.

“The long-run solution is for people to use more point of sale. We have our Lynk product which is the only CBDC wallet in the country. Those are the long-term solutions but it takes people time to get used to them, and in the meantime, we need to ensure that, as the largest bank in the country, we are playing our role to ensure the public gets access to cash,” Bowen ended.