More financial institutions are considering ATM outsourcing as a way to rid themselves of maintenance, service and operational headaches, but some have been reluctant to make the leap.
Matthew Burns, vice president of electronic banking for Cleveland-based National City Corp., said FIs like National City have been reluctant to outsource anything beyond vault-cash replenishment and second-line service.
"When you outsource the whole enchilada, you've got your name and you're branded, but you really have no means of supporting (or controlling) it," Burns said. "It feels like you're in a little less control there."
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Maintaining ownership of the ATM is important, but when it comes to off-premise locations, FIs are increasingly willing to let go. There are a few reasons for that: Namely, they don't have the time or resources to develop and oversee major off-premise deployments.
But what if an FI could have the cake and eat it, too? What if the FI could maintain ownership of its off-premise ATMs but outsource the operational hassles?
John Christensen, former director of Toronto-based Travelex Inc.'s ATM division, said ATM deployers are finding ways to work with third-parties for ATM management and operation, yet maintain network ownership.
Travelex is not your typical ATM deployer. The company, whose core business is foreign-currency exchange, in 1997 created an ATM division for deployments in airports along the East Coast. But keeping up with the fleet, which peaked in 2003 at approximately 200 ATMs, got to be more than the Travelex wanted to deal with.
"At that time, Travelex was doing everything," Christensen said. Now, through a deal with California-based Palm Desert National Bank, Travelex still owns the machines but doesn't deal with any of the day-to-day decisions.
A driving force
The advantage for Travelex: The deal cuts its annual ATM operational expenses, and it's driving the company's ATM growth and development.
"The ATM market has become so saturated … you need to take time to grow and develop the ATM business," Christensen said.
"That was something that Travelex was not able to put forth, but it still was an important component. (Also) they didn't want to sign a deal that would require them to put their name on a machine that they didn't own and have some control over."
Don Jarecki, senior vice president of marketing and business development for PDNB's Electronic Banking Solutions division, said Travelex's situation is similar to that of many deployers. "They want to keep the ownership and they want to keep their branding, but they don't want to bring anybody in-house to handle that part of the business," he said.
To meet that need, PDNB created in early 2005 a department dedicated to operating and managing customers' ATM deployments.
PDNB is not the only third-party service provider to expand its vision. Over the course of the last 12 months, Jarecki said, the lines that divide independent service organizations and third-party providers are blurring. They're all getting into the outsourcing game.
