Today’s ATMs: Delivering More Than Cash
According to the ATM Future Trends 2017 report, Automated Teller Machines (ATMs) are still consumers’ number one bank self-service channel; and their value is only increasing. What’s more, the “one-dimensional” tools of the past are quickly being replaced by Interactive Teller Machines (ITMs) capable of handling additional interactions such as dispensing cash in multiple denominations and currencies; managing cardless (via smartphone) withdrawals; and issuing prepaid cards, stamps, and even lottery tickets.
With the rapid advancement of innovations like these, new software and hardware technologies are being released with greater frequency, triggering financial institutions to rethink the overall management of their ATM fleets. Factors influencing banks’ decisions to re-evaluate ATM management strategies include software upgrade costs and regulatory requirements, as well as increasing operational overhead and accountability issues related to ATM operation.
Customers Value Convenience and Brand Recognition
With many account holders stopping at an ATM at least once a week, maintaining numerous ATMs in high-traffic, convenient locations across wider geographic regions has become increasingly important, according to a recent paper published by Star Financial Services. While longtime accountholders may be willing to travel farther to access their ATM of choice, many consumers—particularly Millennials—find this practice inconvenient.
In fact, members of this younger generation, which are expected to make up 75% of the workforce by 2020, want a variety of banking self-service options available in multiple locations. To fulfill these rising demands, many banks and credit unions are turning to ATM outsourcing.
Hurdle on the Horizon
As most financial institutions are aware, effective January 14, 2020, Microsoft will no longer provide security updates, application patches, or technical support for ATMs running Windows 7. With more than 3 million machines currently operating around the world—and industry forecasts1 predicting that number to reach 4 million by 2021—countless ATMs will need to undergo upgrades within the next 15 months.
However, software migration is not the only option. Many banks, credit unions, and third-party ATM outsourcing services are considering making hardware upgrades rather than investing in upgraded software. For some institutions, the technology provided by brand new machines offers a distinct advantage over replacing the software in older ATMs.
About ATM Outsourcing
Typically, there are three types of outsourcing programs available, allowing financial institutions to choose the option that best suits their needs:
- Institution-owned Machine and Cash, Vendor Management: The financial institution retains ownership of its machines and loads its own cash. The ATM outsourcing provider is contracted to handle service, maintenance, processing, compliance, as well as other aspects of daily operation.
- Institution Cash, Vendor Owner and Management: The financial institution retains responsibility for the cash in its machines but pulls any depreciating ATMs off its books. The institution then leases ATMs from the outsourcing vendor who handles all service, maintenance, compliance, as well as other aspects of daily operation.
- Complete Vendor Outsourcing: Financial institutions wanting to use leaner processes often choose to completely outsource their ATM networks. In this program, the outsourcing vendor purchases the institution’s machines, and provides all services necessary to keep ATMs well-maintained, cash loaded, and operating at top performance.
What We Offer
In an industry where consumers prize responsiveness, convenience, and flexibility, it’s critical that their financial institutions adopt tools and technologies that reflect these values while also keeping pace with the latest innovations and staying a step ahead of the competition.
Since 1992, Strategic Resource Management (SRM) has been helping banks and credit unions navigate the rapidly-changing financial services environment. Our firm offers the following ATM-related services:
- Current ATM Fleet Evaluation: We use industry trend and peer institutional data to analyze clients’ current fleet structure and assess overhead and hard-cost reduction opportunities.
- Opportunity Quantification: We apply proprietary benchmarks to quantify opportunities existing within various areas such as asset ownership, service responsibilities, utilization fees, income share, and contract terms and conditions.
- Identification of Other Material Factors: We work with clients to identify specific elements that the client wishes to retain as part of the outsourcing arrangement (e.g., maintaining the client’s right to brand its ATMs with its own bank or credit union logo).
SRM is experienced in the costs of traditional purchase, installation and training, as well as on-going support fees and warranties of ATMs and ITMs. This practice allows us to advise our clients concerning the return on investment for full or partial outsourcing of an ATM fleet. Additionally, SRM has experience working with national, regional, and local vendors.
SRM is experienced in the costs of traditional purchase, installation and training, as well as on-going support fees and warranties of ATMs and ITMs.
The Bottom Line
A solid outsourcing strategy can help financial institutions save both time and money. After implementing an outsourcing program, it’s not uncommon for firms to see savings of $400-$600 per month, per machine.
Also, as the result of outsourcing, staff members often have more time to educate customers on new financial products or to assist them with questions about accountholder services.
Billions of Ways We Can Help You
As an independent professional services firm, SRM has helped more than 700 financial institutions realize $2.2+ billion in value by providing assistance with critical areas. In addition to ATM outsourcing services, our expertise also includes machine-learning automation, situational assessments, strategy development, gap analysis, implementation roadmaps, vendor evaluation/selection, and contract negotiations.