Article

ATM managed services: The cure for a crowded plate?

It can take a whole lot of time, money and effort to run an advanced ATM network. And this can hinder a financial institution from doing more of what matters most: taking care of customers.

November 22, 2016 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

Larry Longhurst learned the value of dedicated expertise in a truly harrowing way.

Every year before winter started, the father of five routinely changed out the regular tires on the family car for studded tires designed to handle snow and ice. It wasn't rocket science, so he didn't see the need to pay a tire shop to do it.

But he does now.

Longhurst, a senior managed services consultant at Elan Financial Services, explained why in the Thursday afternoon webinar, "5 big hassles that can be alleviated with ATM managed services."

While the consequences of inexpert ATM maintenance aren't quite as potentially dire as, say, (spoiler alert) having a front wheel carom off an automobile traveling at highway speed, the moral of the story is the same: You do what you do best and let other experts do what they do best.

What banks do best — or should — is help customers achieve their financial objectives. What ATM managed service providers do best is operate ATM networks at optimum efficiency.

The webinar began with an overview of the reasons why the latter has become increasingly important and, at the same time, increasingly difficult over the past few decades.

Joe Walent, associate director with the customer interaction advisory service at Mercator Advisory Group, shared research from Mercator showing not only that frequency of use of ATMs is on the rise, but that millennials and mobile banking customers are driving much of the growth.

"The use of the ATM is most evidently picking up and [it's] becoming more of a useful device for many people," he said. " … [T]here needs to be constant uptime and [the ATM] needs to be effectively useful and have all of its capabilities functioning when they choose to use to interact with it. With the heavy users, you want to make sure that that device is one that they can go to without even thinking [about whether it is functioning]."

At the same time consumer use is ticking up, pressure is mounting for financial institutions to squeeze more efficiency, availability and functionality out of their ATMs, Longhurst said.

He cited the 2016 ATM and Self-Service Software Trends report, which found that deployers' No. 1 ATM pain point is cost management — followed closely by reliability and availability, and the need to improve the customer experience.

That's a difficult balance for many FIs to maintain, Longhurst said. "ATM’s consume a lot of resources, both financial and human. It is hard to stay ahead of regulations. Fraud is a significant problem — look at skimming increases just this year. Numerous vendors touch ATMs — it is inefficient to manage. They are much more complex than they once were when running OS/2 on dial lines."

He contrasted these hassles with benefits that FIs generally realize when they turn over management of their ATM fleet:

• cost management — ATM managed services providers can offer the FI to turn their ATM costs into a single fixed monthly fee that promises no budget surprises;
• simplified vendor management — the FI ends up with a single point of contact, rather than several different contacts, each with its own operational process, invoicing procedure and contract stipulations; 
• opportunity for growth — the FI can shift from a tactical stance, simply focused on simply keeping the fleet up  and running, to a strategic position focused on extending customer value and encouraging customer loyalty;  
• increased security — ATM security is "a big, complex animal," outsourcing it to an expert can eliminate the burden of keeping up with constantly evolving threats and security procedures; and
• ATM expertise — one of the fundamentals of outsourcing is recognizing that you can’t be excellent at everything — whether it's changing a tire or troubleshooting a card reader. The solution is to focus on what you are best at and what only you can do and engage others to help you with tasks that fall outside your area of expertise.

About Suzanne Cluckey

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Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally.