South African banks closing ATMs – and some don’t have any

Many of South Africa’s major banks have been closing ATMs across the country over the past five years – a trend that is set to continue as technology develops and digital banks rise in popularity.

MyBroadband recently revealed that the number of ATMs in South Africa declined from 33,171 in 2019 to 28,967 in 2023/24.

The publication explained that this is largely due to a reduced demand for cash and improved technology.

Another reason for lower ATM demand is the increase in retailer cash points by digital upstarts like TymeBank.

Bank Zero chairman and banking expert Michael Jordaan told Daily Investor that the trend of reducing ATMs will continue.

He explained that this is due to two factors – firstly, there is a massive shift to card purchases and secondly, cash back at point-of-sale is less expensive than ATMs. 

The rise of digital banks in South Africa could also play a significant role in shaping this trend.

Over the past few years, South Africa has seen several new entrants into the banking industry – including some offering fully digital services.

One of these banks is Bank Zero, an exclusively digital mutual bank that launched in South Africa in 2021.

It is a fully digital bank, meaning it does not have any physical bank branches and relies largely on its website and mobile app for sign-ups and transactions. It also does not have any ATMs.

Jordaan told Daily Investor that one of the advantages of a digital bank like Bank Zero is that it has significantly lower operating costs which can be passed on to consumers as lower or zero fees.

However, he mentioned a disadvantage of a digital bank is that many customers don’t know how easy it is to switch to them. 

“They assume it involves a lot of time and paperwork, whereas it takes just a few minutes on a smartphone,” he said.

Jordaan believes the trend of reducing ATMs will continue, but they won’t be phased out completely.

“While they will probably not be phased out fully, they will become a last resort to transact when cards swipes and mobile tap purchases/ payments cannot be done,” he said.

Jordaan said incumbent banks did well when branches, ATMs and face-to-face interactions were required for banking. However, the modern world is digital and mobile. 

“Cash will go the way of cheques. Soon, nearly all banking will also be digital and mobile. And it will cost a lot less. Even zero,” he said.

This is a sentiment echoed by Hylton Kallner, CEO of Discovery Bank, another new, fully digital entrant in South Africa’s baking market.

“The world is more and more digital. What we see is that our clients have less and less of a need for cash,” he told Kaya Biz.

“Today, with instant payments and real-time payments, you can pay somebody instantaneously and at a very, very low cost.”

This is part of the reason why Discovery Bank does not have any ATMs or bank branches.

Kallner explained that, rather than relying on physical infrastructure, Discovery Bank ensured that its app is designed to be able to handle virtually anything for its clients.

He said the security risk that accompanies carrying, withdrawing and safekeeping cash is often borne by consumers, so phasing out physical cash and offering digital services at affordable prices is a good development.

“What we find is that more and more of our clients have just got a much more kind of digital economy that they’re working in, and that applies across the board.”

“With the emergence of really convenient devices like Yocos, you’ll find that people are accepting either tap and go cards or virtual cards using your phone.”

However, he mentioned that if any Discovery Bank clients need to withdraw or deposit cash, they can do so through any ATM in the country.

“Every ATM is accessible for a Discovery Bank client and at a very, very low cost. And so we’ve kind of leveraged the infrastructure across the country,” he said.

A fully digital bank that leverages some physical infrastructure is also a strategy TymeBank has employed.

TymeBank was launched in South Africa around five years ago and has racked up more than 8.5 million customers in that time.

Like Bank Zero and Discovery Bank, TymeBank is also a fully digital bank but uses existing physical infrastructure to add additional services for its clients.

For example, the bank allows customers to bank at over 14,000 till points across the country and has also installed over 700 kiosks in certain retailers.

Many of these kiosks are staffed by dedicated TymeBank Ambassadors who will assist clients.

At these kiosks, TymeBank clients can immediately print a Visa debit card, open an account and access their accounts. However, they do not have cash.