Large Russian banks will start purchasing domestic ATMs

Banks will study the issue of using Russian ATMs with the Elbrus processor, which may appear in 2023. Now they mainly use foreign devices,

Large Russian banks, some of which are under Western sanctions, will start purchasing domestic ATMs, their representatives told RBC. Now only foreign manufacturers of ATMs are represented on the Russian market, says a representative of Sberbank. Already in 2021, according to a government decree, the share of Russian products in the purchase of such devices should be at least 18% for banks with state participation, from 2022 it has grown to 20%.

One of the suppliers of foreign terminals began its production of ATMs, and it was financed, among other things, by the Ministry of Industry and Trade. Not all components of ATMs will be Russian. Experts note that production may be difficult, and Korean devices remain the most technologically advanced in the country (their manufacturer did not stop working in RUSSIA).

Who and what will produce

The Russian company BFS, which has been supplying foreign machines since 2004, decided to produce ATMs, its CEO and co-owner Artem Zhilonov told RBC. We are talking about self-service devices with the Elbrus processor, it is planned to start production in early 2023.

“Large Russian banks, including VTB, have already become interested in our ATMs. Working groups have been formed, and we are planning the first shipments with our colleagues. One of the major banks plans to purchase about 1.5 thousand devices from us at the beginning of 2023,” says Zhilonov.

VTB sets itself the task of refocusing on Russian-made devices, and after the release of the first BFS ATMs, it plans to test them, a bank representative confirmed. “The decision on the full implementation of devices in the fleet of our ATMs will be made based on the results of the pilot project,” he said.

Sber is also interested in diversifying the ATM fleet and is ready to consider proposals from potential manufacturers, provided that they meet the technical, security, ergonomics and design requirements, a bank representative said.

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Rosbank is exploring the possibility of using Russian ATMs. Such a possibility in the future does not exclude the "Russian Standard", their representatives said.

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Other major banks did not respond to RBC's request. Russian ATMs were developed by Rostec back in 2021, and Novikombank, which it controls, decided to use them. ATMs are also produced by a small company, SFOUR. They did not respond to requests from RBC.

How much does it cost to develop domestic ATMs

The size of investments in the BFS project is estimated at about 1.5 billion rubles, it includes a state subsidy received as a result of winning a tender in the Ministry of Industry and Trade, Zhilonov said. He did not disclose the amount of the subsidy. According to SPARK, the net profit of BFS in 2021 amounted to 32.5 million rubles, a year earlier - 35 million rubles.

The company expects that the costs will pay off in no more than three years. The representative of the Ministry of Industry and Trade also did not name the amount of subsidies.

BFS plans to produce up to 15,000 devices per year, but the volume could potentially be doubled, Zhilonov said. Now the Russian ATM market is about 200 thousand devices. The average life of each device is seven years, which means that up to 15% of ATMs need to be updated per year. Thus, more than 20 thousand new ATMs per year should be purchased by Russian banks, RBC's interlocutor estimated.

Why do we need Russian ATMs

The need for Russian ATMs escalated after foreign ATM manufacturers, the American companies Diebold Nixdorf and NCR, decided to suspend operations in Russia in the spring of 2022 against the backdrop of Western sanctions against the Russian financial sector. “They are the leaders of the global ATM market and the leaders of the Russian market. In our country, their share of ATMs is about 60-70% of the total number of devices. Most banks worked with them,” says Zhilonov. Due to the departure of large ATM manufacturers, banks, for example, asked the Central Bank to postpone the introduction of new banknotes, which were supposed to appear in 2022. At the same time, GRG ATMs continue to operate in Russia, which are produced by the state defense holding of CHINA , as well as Korean Nautilus Hyosung, Japanese OKI, etc.

According to Zhilonov, BFS plans to hold a meeting with the Ministry of Industry and Trade in June to discuss the possibility of increasing the share of purchases of Russian equipment by state-owned banks. According to the company, it can be at least 50%. “The Ministry of Industry and Trade of Russia generally supports an increase in the share of purchases of domestic ATMs by banks with state participation,” said a representative of the department. But it is necessary to confirm the readiness of Russian manufacturers of ATMs to supply devices in the required volume, he added.

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Russian BFS ATMs will have a built-in Russian Elbrus processor. In addition to it, at the first stage of import substitution, Russian design, documentation, case elements and Russian software will be used. The cash recognition and processing module, as well as a number of components, will remain foreign for now (the company plans to replace the remaining foreign elements in ATMs within a few years). The operating system is Linux.

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What are the problems with import substitution?

Russia already has locally produced ATMs, but they are not popular with Russian banks, as they are less technologically advanced than foreign counterparts, while not much inferior to them in price, says Alexei Voylukov, vice president of the Rossiya banks association. According to his estimates, the cost of one ATM can reach 2 million rubles.

Korean ATMs remain in Russia, which are considered the most technologically advanced and difficult to get around, he adds. According to Voylukov, domestic ATMs can only be competitive if they meet the demand for manufacturability and at the same time cost less than ATMs from foreign manufacturers.

However, production with Elbrus processors now has difficulties, experts warn. Previously, these processors were assembled in Taiwan, but now he decided to close their production, Voylukov notes: “Now the developer of these processors plans to transfer their production to the Russian Mikron plant, but this may take time, which will slow down the production of equipment based on Elbrus ".

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According to the DIRECTOR of the APKIT association, Nikolai Komlev, Elbrus's capabilities for the operation of ATMs would be enough if this processor was still produced in foreign factories, where it was before. But since no one is releasing it now, it is impossible to evaluate the performance of the processor.

According to RBC's source in the information security market, the use of Elbrus with Linux OS carries potential risks, since pentests (methods for finding vulnerabilities) examined only the work of Elbrus with Windows OS and did not check with Linux OS, which can lead to a large number of unidentified security threats. But the process of operating an ATM on Windows is very slow, RBC's interlocutor adds.

The chief expert of Kaspersky Lab, Sergey Golovanov, believes that it is extremely difficult to create a new safe and efficient ATM. “The ATM uses a lot of different software. Now, in order for all elements to work without failures, only standard operating systems and a processor are used. Previous attempts to replace the OS with Linux or Android have not been successful due to the lack of drivers for the variety of devices used by different banks,” he says.

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