Thanks Ezyrider.
My thoughts with small to mid sized banks wanting to sell this part of their business would most likely be due to any number of factors.
1. They just don't want to manage these ATMs on their own anymore (out of their league).
2. This ATM side of business is costing them too much and therefore isn't profitable for them.
3. It's taking them away from their core business.
So taking the above points into account, how could a company such as TSI India provide value for these banks ATM business?
My thoughts are that I just don't believe they're getting enough transactions coming through their ATMs daily. As I highlighted in my previous post, if all the banks are bringing in are 25 transactions per day, it just wouldn't be cutting it for them. They need a solution and fast - sell the ATM business or have a 3rd party manage this side of the business for them to see what improvements can be made.
Let's work out this hypothetical calculation per one bank with 500 ATMs that for the purpose of this example are bringing through 25 transactions per day at $0.30c transaction fee (little lower fee than bigger sized banks?).
Let's assume this example below is how they're currently performing....
25 transactions per day per ATM x 365 days = 9125 transactions per year per ATM.
9125 transactions per year per ATM x 500 ATMs = 4,562,500 transactions total per year.
4,562,500 x $0.30c = $1,368,750. (Note, I don't think a small to mid sized bank would be getting $0.40c per transaction, do you?)
Now let's look at how these figures could be improved if TSI India came onboard to manage fleet.
100 transactions per day per ATM x 365 days = 36,500 transactions per year per ATM.
36,500 transactions per year per ATM x 500 ATMs = 18,250,000 transactions total per year.
18,250,000 x $0.30c = $5,475,000.00. (Note, I don't think a small to mid sized bank would be getting $0.40c per transaction do you?)
Bank share of figure above = $0.20c.
18,250,000 x $0.20c = $3,650,000.00.
TSI India share of figure above = $0.10c.
18,250,000 x $0.10c = $1,825,000.00.
Obviously this is gross revenue, but illustrates what a few simple metric improvements could potentially do for the business long term. Now multiply this by 5 to 10 small to mid sized banks and you have an exciting, immediate exponential recurring revenue growth business. As I said, all a fun hypothetical exercise whilst we wait.
Tony
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