How Banking Self-service in Uzbekistan is changing – the Main Banking Fusion 2019 Conference Insights

The Banking Fusion 2019 conference held at the end of November in Tashkent was dedicated to developing self-service banking channels in Uzbekistan. This conference showed that Uzbekistan is currently ready to implement and use innovations in the banking industry. The market of banking self-service in Uzbekistan has been actively changing for the past two years. New vendors and solution providers are coming to the country. This article will learn exactly what will affect the banking self-service channel and the end-user experience.

What does the market want?

For a long time, ATMs were scarce in Uzbekistan. Self-service devices began to flood the market only two years ago, but even today, the country is experiencing an acute shortage of ATMs. Therefore, there are only about 5,000 ATMs for the 34 million population of Uzbekistan. Moreover, they are located unevenly across the country: the main number of ATMs is concentrated in the largest cities.

In most countries of the world, practice shows that 1 ATM is enough for about 1000-2000 people. It means that Uzbekistan should have about 17,000 – 20,000 ATMs to close all the needs of its population in self-service devices.

Almost half of the country’s ATMs were acquired by the Central Bank of the Republic of Uzbekistan. The Central Bank connected these self-service terminals to the national payment system HUMO processing center, which recently appeared in the country.

“The Banking Fusion 2019 conference helped rethink the gained operational experience,” says Anton Valinčius, Director of BS/2 Tashkent (BS/2 Uzbekistan). ”Banking industry representatives discussed many aspects of the self-service device‘s operation, including the questions related to the technical availability of ATMs. Our experts answered questions of conference participants and showed how ATMs do various types of work. For the first time in the post-Soviet space, we presented the new Diebold Nixdorf ATM models: the lobby cash recycler system DN200H and the compact monofunctional DN100 ATM. Using terminal devices, we demonstrated the work of some of our solutions developed to expand the ATM functionality and solutions developed to enhance ATM security. “

What do bank customers want?

Today, one of the main global trends related to the development of banking self-service channels is ATMs’ changing role. People worldwide are beginning to use ATMs not only as devices for issuing cash but as a kind of bank branch. They pay utility bills, top-up their accounts, and exchange currency at ATMs. However, in Uzbekistan, the situation is still very different from other more developed countries.

Due to Uzbekistan’s relatively small experience with ATMs, ATM operational standards have not yet been entirely formed. People know that an ATM is difficult to find, their number is small, and terminals often have large queues and may not have cash for several days. Many ATM users in Uzbekistan do not know that ATMs can also be used for money transfers, paying bills, or other complex operations.

At the Banking Fusion 2019 conference, banking industry experts spoke about specialized software solutions that banks worldwide are actively using to develop their banking self-service channels. Uzbekistan has yet to introduce many innovative technologies, without which it is impossible to imagine banking self-service in other countries.

“Uzbekistan may skip some stages of banking development through which other countries have passed in recent years and immediately reach a new level,” says Anton Valinčius. “Uzbekistan is adopting today’s experience of neighboring countries in using the latest equipment models and innovative solutions. Many trends have appeared and disappeared. It would be strange if Uzbekistan focused on them.”

What do bankers want?

Banks of Uzbekistan, as a rule, consider ATMs as a potential source of income, while, for example, in Europe, banks consider ATMs as a necessary expense item. Uzbekistan is ready to implement new technologies to expand the standard ATMs functionality and make money on additional services fees. Even today, you can change the currency through some terminals. Also, it will be possible to make payments using ATMs in a short time since the development of the appropriate software solution is already in progress.

Due to Uzbekistan’s low exchange rate, there is a huge amount of cash in circulation in Uzbekistan. Simultaneously, the current interest rate in Uzbekistan is 16% – this is one of the highest rates in the region. Renting money is expensive for banks, but thanks to modern solutions for cash cycle management, banks can predict their need for cash more accurately and significantly reduce cash rental and cash collection costs.

 What do the merchants want?

Large amounts of cash and the low popularity of cashless payments in the country lead to rather large amounts of revenue stored at the merchants’ cash desks. It is quite expensive to store, insure, collect and transport this cash. Remote cash capture and high-capacity automated deposit machines could partially solve this problem.

The second problem of merchants, reported at Banking Fusion 2019, is accepting non-cash payments.

Today, many POS-terminals in Uzbekistan accept only HUMO and Uzcard local payment system cards and do not accept Visa and Mastercard ones. People do not know whether they can pay with their card at a store or cafe, even if there is a POS terminal. A specialized software solution certified in international payment systems and supporting the multi-banking function could solve this problem.

Now there are two processing centers in the country. The Common Republican Processing Center (the CRPC) uses the TransLink.iQ solution developed by the Lithuanian company ASHBURN International (a part of Penki Kontinentai Group) to route transactions. This solution allowed the CRPC to ensure different payment systems card acceptance at terminals and transaction delivery to different banks. However, Uzbekistan still has a great deal to do to make non-cash payments widely accepted in the country.