Deploying ATM terminals are a cost that most banks do not want to incur.  Independent ATM deployers (IADs) are a current solution to fill this gap as well as deliver so much more.

When Seven Bank, the banking business of the 7-Eleven Group in Japan, announced that they will deploy automated teller machines (ATMs) at 7-Eleven outlets in Malaysia, members of the media as well as C-suites from financial services institutions like Kenanga and YTL Digital Bank were also in attendance.

How has Seven Bank achieved ATM deployment in Malaysia?

A joint venture between Seven Bank Limited, 7-Eleven Services Sdn Bhd, HQZ Credit Sdn Bhd, and SMRT Holdings Bhd, operationalized this endeavour with a business entity called Reachful Malaysia, formerly known as Abadi Tambah Mulia International Malaysia Sdn Bhd.

Why will it do this?

Masaaki Matsuhashi, Seven Bank President

President of Seven Bank Limited, Masaaki Matsuhashi, stated, “We have established a new brand name, Reachful, as a strong start in Malaysia and a continued growth of our overseas business.” He added that by collaborating with their partner companies to deploy ATM services in 7-Eleven stores in Malaysia, it hopes to enrich the lives of the Malaysian people and contribute to further social development and economic growth.

Co-CEO of 7-Eleven Malaysia, Wong Wai Keong said, “We are constantly looking at ways to enhance convenience for our customers. With the introduction of self-service terminals, or in our case the cash recycler machines (CRM), that’s a step closer in ensuring customers have financial access at any time of the day.”

He alluded to more innovative services that 7-Eleven Malaysia could deliver like cardless transactions via the ATM terminals, and even rewards and loyalty programs in collaboration with tech and business partners. “That is something that is in the works.”

The bigger story at play

Reachful’s CEO, Jin Sudo, explained that the CRM terminals they deploy is a kind of branding partnership model as well. ”So, a particular customer bank can use our cash recycler machine as if it is their own.”

The Q&A session at the launch of Seven Bank’s ATMs in Malaysia.(L-R): Wong Wai Keong, Executive Directors, Co-CEOs of 7-Eleven Malaysia Sdn Bhd; Jin Sudo, CEO of Reachful (formerly PT Abadi Tambah Mulia Internasional); Masaaki Matsuhashi, President and Representative Director of Seven Bank Limited; Tsuneo Nagashima, Managing Executive Officer and Head of Overseas Business, Seven Bank Limited; Kit Au, Group CEO SMRT Holdings Bhd; Gretel Griselda, CEO of PT. ALTO Network 

Instead of allowing end users to only make balance inquiries and withdraw cash, a CRM terminal can also receive cash deposits and this removes the need for banks to constantly replenish it.

To ensure all this can happen without a hitch (ie. sending alerts when cash levels are low), Jin explained, “That is why this time, we have decided to use OKI and Hitachi machines; both are Japanese hardware and we are really quite confident about their functionality.”

The deployment of these machines in Malaysia seems to point to a gradual divestment of ATMs by the local banking industry. This is suggested by Euronet’s acquisition of MEPS (Malaysian Electronic Payment System) ATM terminals from Payments Network Malaysia (PayNet), last May.

What does Euronet’s acquisition of MEPS terminals mean for the local ATM scene?

For one, Euronet becomes the largest non-bank operator of ATM terminals in Malaysia. Secondly, this ensures 24 hours seven days a week access for millions of consumers in the country. There is also the promise of financial inclusion as Euronet not only maintains but expands its IAD (independent ATM deployers) network across Malaysia.

Reachful’s foray into the Malaysia market is via a joint venture between 4 different entities.

Flexibility and innovation

How will ATM services like Seven Bank’s continue to provide innovation whilst remaining compliant in a regulated industry like financial services?

A Reachful Cash Recycling Machine by Hitachi

There are two models via which banks or an entity like Reachful can deliver ATM services.

A verified source explained that the first model involves ATM terminals being linked to PayNet for it to do centralized ATM transactions clearance. “When you do so, you are a generic or agnostic ATM provider. This is what Reachful is today.”

However, Reachful can potentially have its ATM system create peer-to-peer, bilateral connections with individual bank systems like Maybank’s or CIMB’s. This is technically and commercially feasible.

“At the surface it seems that ATMs are sunsetting, but as I understand this partnership and its impact deeper I find it is actually strategic because the entry of a non-bank player that is agnostic, means it is here to manage the existing ATM footprint, as well as expand it.” – Kit Au, SMRT Holdings

Seven Bank already does this in Japan, and Reachful’s CEO described, “(Seven Bank) haven’t experienced any big obstacles to connections like this. In Japan we have already built up such connections with as many as 600 parties. So, connection-wise, we are pretty much confident about it.”

Is Seven Bank governed by local banking regulations, and/or will it transition to operating locally as a bank and hence be regulated by Bank Negara?

As of now, these bilateral connections between Reachful and banks can be done and it is allowed as long as banks adhere to regulations mandated by local regulator, Bank Negara Malaysia. Jin had opined that the ATM business is perceived to be a cost center by most banks and Reachful’s ATM terminals gives them the option of reducing cost.

Group CEO of SMRT Holdings, Kit Au, commented, “I find it exciting. At the surface it seems that ATMs are sunsetting, but as I understand this partnership and its impact deeper I find it is actually strategic because the entry of a non-bank player that is agnostic, means it is here to manage the existing ATM footprint, as well as expand it.”

A growing ATM footprint can help further financial inclusion initiatives and independent ATM players like Reachful, Euronet, Silverlake Axis plus Safeguards Corporation offer flexibility when building new products and services due to bilateral system integration with each individual bank entity.

Convenient services like express opening of bank accounts via facial recognition, or even hotel check-ins – these are just samples of the capabilities that Reachful’s terminals could enable. Ultimately, what terminal-based services are delivered would depend on the local market’s appetite for innovation as well as the partnerships Reachful forges.