Financial institutions are making considerable ATM investments these days. Helping pry open the vaults are the needs to comply with regulations such as Triple DES, meet ADA standards and capitalize on market trends such as one-to-one marketing.
The level of activity bodes well for outsourcing, say companies offering related services.
Financial institutions are looking "at a huge upfront capital investment for adding Triple DES and voice capability to their ATMs. So they're saying 'why not take a look at (outsourcing)?'" said Kevin Carroll, director of ATM Services for Concord EFS, which recently began offering turnkey ATM programs.
FIs also are girding for the implications of Check 21, which will require significant hardware and infrastructure upgrades.
In the face of service overload, an ironic blanching effect has struck the spreadsheets: "The ATM has gotten left out of a lot of IT budgets," Carroll said.
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Celent Communications lists concentration on core banking services as a driver of outsourcing in its report, ATM Outsourcing Services: A Global View. But there is an added factor, too, one impossible to understate as a motive to outsourcing: Celent also says FIs could reduce total operational costs by 15- 25 percent by letting someone else do their ATM dirty work.
Three other drivers cited by Celent:
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The importance of the ATM as a self-service channel·
Performance improvement·
Meeting client expectationsManaging ATMs becomes more complex as services they offer become more advanced. Because of that, said Keith Myers, executive vice-president of financial services for Cardtronics, it may be easier for a banker to let someone else handle his company's ATM channel.
"Financial institutions are focusing on their core business and realize the value of the ATM is not in the ownership, but rather in the ability to provide their customers with convenient access to their bank accounts," he said.
Cardtronics, an independent ATM operator that deploys and manages off-premise units for a number of FIs, also brands some of its own machines at retail spots with the names of FI clients.
"The customer experience and service at the ATM will be similar to using a bank-owned machine," said Myers. "This reduces the bank distribution costs and provides their customer with more convenient access points to strengthen the banking relationship."
