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Russian remains one of the world's ATM-deployment hot spots, but plunging oil prices almost certainly will cut deployments there this year.
For the eighth consecutive year, Russia has reported the greatest growth in ATM deployments among European countries, according to a study by Retail Banking Research Ltd., a London-based strategic-marketing firm.
Last year, Russia had 70,500 ATMs after banks added 19,350 machines to the country's existing installed base of 51,150, Retail Banking Research wrote in a report issued in May. For its report, the company polled financial institutions in Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Kazakhstan, Latvia, Lithuania, Poland, Russia, Romania, Serbia, Slovakia, Solvenia and the Ukraine to determine the region's ATM-deployment growth. "The ATM market in Central and Eastern Europe showed exceptionally strong growth once again in 2008," Retail Banking Research says in its report.
"The number of ATMs in the region grew by 28%, and the number of new installations in the 15 countries studied was the highest ever," Retail Banking Research says.
Last year, the studied countries had an installed base of 152,840 ATMs compared with 56,375 in 2004.
With a 38% increase in its installed last year, Russia overtook France, Germany, Spain and the United Kingdom as the Europe's largest ATM market, Retail Banking Research says.
The UK had an installed base of 64,620 ATMs at the end of last year, ranking it second for all of Europe behind Russia. Retail Banking Research also polls banks in Western Europe.
Russia still has the potential for considerably more deployments because of its large geographic area and its large population (an estimated 146 million residents), the research company says.
But the deployment growth might not happen quickly.
Plunging oil, gas and metal prices have hurt the Russian market, and Russia's lifeblood is oil.
The Russian economy had been booming for about nine years on the back of soaring world prices for oil and commodities, Russia Economy Watch, an online newsletter, reported in April 2008 edition.
Russia's economy is closely tied to the price of its oil, and a collapse in oil prices dealt a severe blow to Russia's economy, says Gil Luria, an analyst with Wedbush Morgan Securities in Los Angeles.
As a result, all companies that do business there have been affected.
"I have talked to VeriFone and NCR, and they have reported a drop in sales in Russia," Luria says.
Dominic Hirsch, Retail Banking Research managing director, agrees.
"This is not a manufacturer issue. The market in Russia is much tougher in 2009 than previous years," Hirsch says.
Diebold Inc., a North Canton, Ohio-based manufacturer, discussed its problems in Russia last month.
"We have taken Russia off the table," Thomas W. Swidarski, Diebold president and CEO, told analysts during the company's first-quarter earnings conference call (ADN, 5/7). "We have a few orders there, but we expect zero from Russia for the rest of the year."
Rival NCR Corp. also says current conditions in Russia's market make business conditions challenging.
"We feel, however, that we are better placed than other ATM manufacturers because many of our customers are state banks that are less affected by the current economic conditions," Richard Maton, an NCR spokesperson, tells ATM&Debit News.
In May, Russian oil was selling for $48.57 per barrel compared with $106.95 per barrel on May 1, 2008, according to the Energy Information Administration, a U.S. government agency that tracks oil prices worldwide.
The worldwide economic recession caused the sharp drop in oil prices.
Russian oil prices have been recovering a bit.
On June 1, Russian oil was selling for $66.30 per barrel, but that was substantially down from $131.29 per barrel on June 1, 2008, the Energy Information Adminis-tration reports.
Because of climbing oil prices, the Russian economy should improved during the second half of the year, Hirsch predicts.
"We are confident the market will pick up," he says.
Although Russia has Europe's largest installed base of ATMs, Kazakhstan is Europe's fastest-growing ATM market, Retail Banking Research reports.
"Kazakhstan was once again the fastest-growing ATM market in the region during the year following a period of economic prosperity, which attracted foreign investment into the retail-banking arena and resulted in an increase in ATM expenditure," the organization says.
As ATM deployments have grown in Central and Eastern Europe, so have transaction volumes.
Consumers in Central and Eastern Europe made 4.2 billion ATM cash withdrawals last year, up 17% from 2007. Retail Banking Research did not provide specific data for 2007.
ATMs withdrawals per machine throughout the region declined in 2008 because of the increase in deployments, Retail Banking Research says.
Estonia reported the heaviest use at 4,961 withdrawals per machine per month, and Kazakhstan reported the lowest with 1,148. ATM
