Following a season of mergers and acquisitions among banks, JPMorgan Chase & Co. and Wells Fargo have at least some reason to celebrate these days. Their respective buyouts of Washington Mutual Inc. and Wachovia Corp. have given the two financial leaders bragging rights to the No. 2 and No. 4 positions among the top 10 U.S. banks.
Since its WaMu acquisition, which it won only after a behind-the-scenes showdown with Citigroup Inc., Chase has amassed assets of $2.2 trillion and a network of more than 14,000 ATMs. Chase now trails only Bank of America in assets ($2.8 trillion) and ATMs (17,000). Wells, with its addition of the Wachovia portfolio, which it also pulled from under Citi's feet, now falls in line with $1.4 trillion in assets and a network of 12,263 ATMs.
And while the ultimate impact of the acquisitions on the ATM industry will not be known for some time, industry experts agree that big changes are on the way not only to the balance of power among ATM manufacturers, but for the types of functions and services these top banks will offer through their self-service channels.
One contest to watch is whether the relationship among Wells, Chase and Germany-based Wincor Nixdorf AG will offset the link between Wachovia, NCR Corp. and Diebold Inc., and between WaMu and NCR.
Lana Harmelink, chief operating officer of ATM Industry Association, says doors of opportunity are likely to open for all ATM players.
"I don't think it's just with the manufacturers where we could see the dynamic shift," she said. "I think this could benefit the entire ATM industry. Industry consolidation on the bank side is making the environment more competitive."
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She believes prices may go down as the top two U.S. manufacturers—NCR and Diebold—face more competition, and that processors may face similar market pressure to drop prices.
One beneficiary of the changes will be Wincor Nixdorf, says Sam Ditzion, president and chief executive of Boston-based Tremont Capital Group, which provides a variety of services for mergers and acquisitions to the ATM and related industries.
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Hear an interview with Retail Banking Research's Richard Cummings about Wincor's future
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"Wells Fargo's purchase of Wachovia is the best thing to happen to Wincor in a long time," Ditzion said. "The combined Wachovia-Wells bank now operates more than 12,000 ATMs, and many of those machines are old and need to be replaced. Wincor, which has had a good relationship with Wells for a number of years, is in a good place to get a good piece of that replacement business."
Wincor may enjoy a secondary benefit as well: enhanced stature as ATM purchasers begin thinking of the top two U.S. manufacturers as the top three, even if not all of Wincor's offerings are immediately embraced.
"Wincor is pushing its deposit automation technology and has been working to build its services in the United States," Harmelink said. "I think many banks are looking to them now as being on the same level as NCR and Diebold. But with deposit automation, it's an educated process. It's not something people will jump into too quickly, so it could be several years out before we see a dominant player in that space."
"Think about that deal for a moment," Ditzion said. "If Citibank had gotten that (WaMu) deal, the scales could have just as easily tipped in Nautilus Hyosung's favor, since Nautilus Hyosung landed a big deal with Citibank last year. And with Cardtronics taking deposits at Citibank-branded Vcom machines at 7-Eleven, it raises even more discussion about new opportunities for the ISOs."
New opps for the ISOs
Harmelink says recent bank mergers and acquisitions could bode well for ISOs, too, since ISOs are more focused on profit. She also points to Citi's deal with Cardtronics as a benchmark.
"It's an outsourcing relationship, and I think we will see more banks follow Citi's lead," Harmelink said. "With all the consolidating going on, it's the best thing both sides can do — more marketing for the banks and more locations for the ISOs."
