As part of the CGAP IT Innovation Series, this technical note examines the use of Automated Teller Machines (ATMs) as a technology that can be utilised by Microfinance Institutions (MFIs). The potential advantage to an organisation of utilising ATM technology is its capacity to perform many of the transactions that typically require staff attention. ATMs can furnish account information, accept deposits, draw down on pre-approved loans and transfer funds. The machines are also attractive to rural finance in particular, in their ability to bring basic services and products to currently non-serviced areas and enable clients to access their account information during non-business hours.

The author conducts a basic cost-benefit analysis for the adoption of ATMs and indicates what type of institution should consider incorporating the use of ATM technology. For example, the technology only becomes attractive if an institution accepts savings, as the up-front investment in an ATM network is too high to justify using it only for loan disbursements. A single machine can cost up to US$ 35,000 and requires reliable electric and communications networks.

Through the presentation of case studies from Prodem FFP in Bolivia, Banco Ademi in the Dominican Republic and MEB Kosovo, the author has created a list of lessons for implementation and additional resources that will assist a MFI in the decision to adopt ATM technology. The lessons compiled are:

• Identify a provider committed to your market
• Leverage existing resources
• Test feasibility with a pilot or phased implementation