In a BAI Retail Delivery Conference summit session titled "Level the Playing Field: Reinventing Your ATM Channel Strategy," presenters discussed ATM customers' usage behavior, the surcharge fee landscape and ways in which FIs can leverage the ATM channel to remain competitive.

The session, held during the conference in Chicago this week, featured speakers Andy Hernandez, executive vice president and director of channel development for BBVA Compass Bank; David Dove, managing partner at Dove Capital Partners; and Steve Rathgaber, CEO, Cardtronics.

"What research shows is that consumers don't just go out to get cash from an ATM. They run errands, including stops at grocery stores, restaurants, gas stations, discount stores, convenient stores and the mall," Dove said.

Dove said that consumers' ATM usage behavior in the U.S. will begin to shift from the desire to seek out a surcharge-free member banks' ATM to machines that are more conveniently located. He emphasized the value U.S. consumers put on convenience and predicted that the value of convenience will only grow going forward.

Hernandez echoed Dove's sentiments toward convenience leading to growth of the channel and also pointed out the significant increase in the ATM industry presence at the show to demonstrate the returning interest.

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"The ATM vendors were noticeably absent from this event for many years. They're back now," Hernandez said. "We're guilty of this being the forgotten channel. Our budget dollars in recent years have gone to mobile and online, which are still important channels, but we've realized again the importance of the ATM channel."

Utilizing image deposit

In order to take advantage of customer demand for convenience, Compass Bank is currently undertaking an aggressive ATM deployment throughout its region, installing machines with image deposit capabilities. According to Hernandez, by the end of the year, more than half the projected fleet will support image deposit. This push to reconfigure the fleet was driven primarily by customer response and feedback, he said.

"Image deposit, in the last decade, has been the game changer. In my opinion, it's one of the best innovations that have changed the ATM business. We're able to extend our [deposit] cut-off times. The bank closes at 5 p.m., you want to make a deposit at 5:30 p.m.— how great is it that you have until 8 or 9 p.m. to make that deposit and get same day credit?" Hernandez said.

Hernandez compared getting customers to use the image deposit feature through the ATM for the first time to trying, in the recent past, to get customers to pay bills online. While it was a difficult sell, once customers tried it, they used it with increasing frequency, he said.

Leveraging B2B relationships through the ATM channel

Steve Rathgaber, CEO of Cardtronics, told the audience that the majority of the company's revenue doesn't come from surcharging but from business-to-business relationships through branding services.

"We think we can influence consumer behavior through the ATM through a variety of techniques before, during and after the transaction," Rathgaber said.

Cardtronics recently acquired the company LocatorSearch, a geo-locator service that enables customers to find the nearest ATM associated with their bank. Cardtronics has also tested onscreen advertising in the UK, driving candy bar sales within a convenience store setting. The company is currently working with i-design, a provider of ATM advertising and interface solutions, to develop a customizable user experience at the ATM.

"For example, if a user from Bank A sticks their card into the ATM, they would be greeted with a Bank A screen. So, it would be a way to have a timeshare ATM, if you will," Rathgaber said.

Among other new products on the horizon, Cardtronics has filed for a patent for a program it's calling "Fee Alert." In essence, the customer's bank statement would notify him or her that an ATM transaction performed the previous month could have been carried out at another ATM nearby for a lower surcharge fee. The statement would provide the location of the ATM to the customer for future reference.

"We think there are some opportunities to do some creative thinking to bring technology to the 40-year-old ATM that will create a very unique experience for the consumer, drive retail sales, extend the reach of financial institutions' brands and do it on the cheap," Rathgaber said.