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19 Why Do Bank Automatic Teller Machines Shut Down at 7 P.M.? Shyam Sunder The day after I arrived in Kobe, Japan, in May 1995, I opened a bank account. My English-speaking secretary patiently explained to me the routine rules of banking . She informed me that the weekday service hours of the bank’s automatic teller machines (ATMs) are as follows: From 9 a.m. to 6 p.m.: No charge for ATM transactions From 6 p.m. to 7 p.m.: 103 yen per transaction From 7 p.m. to 9 a.m.: Closed Saturday: Limited hours Japan has been a leader in both the development and adoption of ATM technology. From 1969 to 1995, private banks in Japan installed about 105,000 machines. In addition, the Postal Savings Office (see chapter 22) has about 23,000 machines. In 1975, private banks started a joint venture company called Nippon Cash Service to allow some banks to share machines. Japan’s ATM machines represent an investment of over one trillion yen (10 billion U.S. dollars). ATMs cut the cost of handling routine cash withdrawal and deposit transactions by a factor of 137 about 10. Consequently, banks in Japan, as elsewhere, prefer that customers conduct their transactions on machines. Many Japanese machines offer advanced technical features (e.g., hot pressed and cleaned notes) and bank customers, especially the young, like to use ATMs. Having incurred the substantial fixed costs of putting machines in, why would the banks limit their service hours? In contrast, machines that allow you to borrow money against your credit card, or even take out a car loan, are open twenty-four hours a day. Over my three months’ stay in Japan during the summer of 1995, I asked the same question of many of my friends and acquaintances. They suggested several possibilities. Why Such Limited ATM Hours? • It would be inconvenient for the bank staff to keep ATMs open at night. • It would be unsafe to have ATMs open at night. • Bank employees oppose longer hours for ATMs because it will reduce employment. • Japanese people do not need to withdraw cash from ATMs in the evenings or weekends. • Banks have insufficient computing capacity; they need the computers at night to update the ledgers, so they shut down the ATMs. • It is no problem for my wife to go to the bank during the day to withdraw the cash we need. • If the ATM runs out of cash in the evening or weekends or breaks down, there will be no one to service the machine. • Japan’s government (Ministry of Finance) does not allow the banks to extend ATM hours. • The six major banks in Japan, instead of competing by offering better services to consumers, act like a big cartel. There is at least some truth to most of these explanations. 138 Japan: Why It Works, Why It Doesn’t [18.217.8.82] Project MUSE (2024-04-26 05:55 GMT) Convenience of Staff It would indeed be inconvenient for the bank staff to keep the ATMs open after hours. The ATM lobbies in Japanese banks often have attendants who greet customers on arrival and offer any help that may be needed. The need for help has generally disappeared as customers quickly learned to use the machines for routine functions soon after they were introduced, but the staff and the greetings remain. If around-the-clock ATM service also meant around-the-clock staff attendance, it would indeed be inconvenient for the staff. Why staff the ATM machines? Having staff at the machines eliminates a good part of the economic advantage of ATMs, and also limits their hours. The explanation offered is that the Japanese demand and expect a high level of service from their retail establishments. It is easy to confirm this level of service and quality in department stores, hotels, restaurants, and shops, and virtually everywhere else. For example, department stores assign women employees to push elevator buttons in automated elevators and to announce the floor level and the major departments on each floor even though there are lighted signs in the elevators and just about everyone in Japan is literate. Demand for High Level of Service Whether Japanese consumers actually demand this high level of service with the attendant high prices is not clear. We would not know until retail establishments that deliver low-quality and less service at lower prices enter the market. Crowds at Daiei discount supermarkets seem to...

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