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2

Market size: What is the market size (in terms of revenue) of ATMs in your country?

Can someone please help me with this case?

Can someone please help me with this case?

2 answers

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Hi Anonym,

there are many different ways to calculate that. Depending on whether the question is used as a whole case or is only part of a case, you can solve it in different levels of detail.

A pragmatic solution could be the following:
Market size of ATMs = Number of ATMs / Lifetime of an ATM * Price of an ATM

Number of ATMs: Number of ATMs in your district * (inhabitants of your country / inhabitants of your district)

Lifetime of an ATM: Make an educated guess and explain it well. For example, you could explain that ATMs should always meet the latest security standards and thus only last 7 years due to rapid technology development.

Price of an ATM: Make an educated guess and explain it well. For example, you could explain that ATMs should always meet the highest technical standards and thus cost as much as a small car.

If you have further questions, do not hesitate to contact me.

Best regards
Marco-Alexander

Hi Anonym,

there are many different ways to calculate that. Depending on whether the question is used as a whole case or is only part of a case, you can solve it in different levels of detail.

A pragmatic solution could be the following:
Market size of ATMs = Number of ATMs / Lifetime of an ATM * Price of an ATM

Number of ATMs: Number of ATMs in your district * (inhabitants of your country / inhabitants of your district)

Lifetime of an ATM: Make an educated guess and explain it well. For example, you could explain that ATMs should always meet the latest security standards and thus only last 7 years due to rapid technology development.

Price of an ATM: Make an educated guess and explain it well. For example, you could explain that ATMs should always meet the highest technical standards and thus cost as much as a small car.

If you have further questions, do not hesitate to contact me.

Best regards
Marco-Alexander

Hi Anonym,

I would like to add to Marco's answer the following, I think that is required to have a complete answer.

As Marco mentioned, one component to calculate the Market size of ATMs is the Number of ATMs in your country. Instead of estimation for Number of ATMs in your district, you can calculate the Number of ATMs in your country with a bottom-up approach;

Since we try to estimate the market size, we can consider the demand for ATMs.

So, firstly we can start from the demand for one ATM daily. We can calculate that by considering the number of customers per ATM per day.

As you know ATMs are open for 24 hours.

From my own experience, I assume that there are 2 hours of peak time for ATM service.

There are many types of processes that can be done from ATMs such as payments, withdrawal or deposit, transfer money, etc.

And I take an average time a customer spends on ATM 5 min.

So now I can calculate the number of customers for ATM for peak times.

Which is (120 min peak time period)/ (5 min per customer) = 24 customers.

The next step will be for off-peak times. Again from my own experience and observation, I assume that there will be 2 customers per hour for off-peak time. So we have 22 hours off-peak time which gives us the number of customers;

off-peak times per day (22)* number of customer per hour during off-peak times (2)= 44

So we have the number of customers per day for an ATM. (24+44=68)

Now we need to consider what is the average frequency for using the ATM since we need the total number of unique customers per ATM.

I assume that again based on my personal experience, it is twice a month.

That means for 15 days we will have the following number of unique customers for an ATM;

68*15= 1020 unique customers for an ATM.

Lastly, we need to estimate the number of ATM users. I assume that every bank customer can use the ATM service. So we can consider 90% of people who are over 20 years old take into account as a bank customer. So let's assume 60% of the population is over 20.

so now we can conclude the calculation for the country by following;

(Number of ATMs in your country)= (population of your country * 90% * 60%)/ (number of unique customer for an ATM)

Let' do that calculation for Germany,

80 million population* 90%* 60% = 43.2 million bank customers

43.2million/1020= 42350 ATMs in Germany

Hi Anonym,

I would like to add to Marco's answer the following, I think that is required to have a complete answer.

As Marco mentioned, one component to calculate the Market size of ATMs is the Number of ATMs in your country. Instead of estimation for Number of ATMs in your district, you can calculate the Number of ATMs in your country with a bottom-up approach;

Since we try to estimate the market size, we can consider the demand for ATMs.

So, firstly we can start from the demand for one ATM daily. We can calculate that by considering the number of customers per ATM per day.

As you know ATMs are open for 24 hours.

From my own experience, I assume that there are 2 hours of peak time for ATM service.

There are many types of processes that can be done from ATMs such as payments, withdrawal or deposit, transfer money, etc.

And I take an average time a customer spends on ATM 5 min.

So now I can calculate the number of customers for ATM for peak times.

Which is (120 min peak time period)/ (5 min per customer) = 24 customers.

The next step will be for off-peak times. Again from my own experience and observation, I assume that there will be 2 customers per hour for off-peak time. So we have 22 hours off-peak time which gives us the number of customers;

off-peak times per day (22)* number of customer per hour during off-peak times (2)= 44

So we have the number of customers per day for an ATM. (24+44=68)

Now we need to consider what is the average frequency for using the ATM since we need the total number of unique customers per ATM.

I assume that again based on my personal experience, it is twice a month.

That means for 15 days we will have the following number of unique customers for an ATM;

68*15= 1020 unique customers for an ATM.

Lastly, we need to estimate the number of ATM users. I assume that every bank customer can use the ATM service. So we can consider 90% of people who are over 20 years old take into account as a bank customer. So let's assume 60% of the population is over 20.

so now we can conclude the calculation for the country by following;

(Number of ATMs in your country)= (population of your country * 90% * 60%)/ (number of unique customer for an ATM)

Let' do that calculation for Germany,

80 million population* 90%* 60% = 43.2 million bank customers

43.2million/1020= 42350 ATMs in Germany

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