STRATEGIC PARTNERS
Coast-to-coast ATMs? Several financial institutions came closer to that goal in 1998, the year of the big bank merger. by Ann All, editor
March 11, 2002
A number of the nation's largest financial institutions gave in to the urge to merge in 1998. One result of these mergers: the concept of a nationwide bank ATM network came much closer to reality.
Where to locate ATMs and what services to offer customers are just two considerations for the newly combined companies. While their strategies differ somewhat, all seem to agree that bigger is better for their ATM customers.
Firstar: The super ATM and souped-up service
For Robin Nenninger, senior vice president and manager of alternative delivery for Firstar Corp., combining the ATM networks of Firstar and Star Bank is "like putting pieces of a puzzle together."
That's not a bad thing, because she relishes the challenge of a good puzzle. She's finding that discipline and attention to detail, two traits of puzzle devotees like herself, come in handy for a task as complex as uniting the ATM networks of two major banks.
Last November's merger of Milwaukee-based Firstar and Cincinnati-based Star Bank created the nation's 21st largest bank holding company, with assets of $38 billion. It also resulted in a network of more than 1,400 ATMs, mostly in the Midwest. The new Firstar has an ATM presence in nine states: Indiana, Illinois, Ohio, Kentucky, Wisconsin, Minnesota, Tennessee, Georgia and Arizona. Firstar is the 16th largest bank deployer of ATMs, according to American Banker.
The biggest challenge of creating a unified network is deciding which type of ATM to use in all nine states while "making sure customers are the winners," Nenninger said.
She helped design Star Bank's "super ATM," which offers a wide range of special features in addition to basic functions. A super ATM user can purchase stamps or phone minutes, print out full account statements or mini-statements, order new checks or change a PIN. Super ATMs are outfitted with large color monitors and attractive surrounds.
Most, if not all, Super ATM features are available throughout the Star Bank network. In some rural areas, customers may have access only to mini-statements rather than both full and mini-statements, for example. "We try very hard to give a pleasing ATM experience to everybody," Nenninger said.
Nenninger thinks it's likely that Super ATMs, or some version of them, will become the model for the Firstar network. "We think it's very important from a retention standpoint to deliver as much improved functionality as we can to our customers in these newest states," she said.
While Nenninger is an advocate of increased functionality, she doesn't see a widespread need for smart card or Web-enabled applications. "Everybody's dabbling at it, but there's not enough mass interest or enough of a business case for it yet."
Typical consumer usage of an ATM is like a "touch and go landing," she said. "You touch down, do what you have to get done and then move on."
Wells Fargo: ATM customers get a lift with ski tickets
Barry McCarthy, vice president of marketing and business development for Wells Fargo Bank, said that targeting and meeting customers' ATM needs, with options as unusual as discounted ski lift tickets, continues to be an important strategy for Wells Fargo after last November's merger with Norwest.
San Francisco-based Wells Fargo is now the seventh largest bank holding company in the U.S., with $196 billion in assets. It added more than 1,500 ATMs to its network when it joined forces with Minneapolis-based Norwest, bringing its total to more than 6,000 ATMs in 21 states west of the Mississippi. According to American Banker, Wells Fargo is the third largest bank deployer of ATMs.
And, McCarthy said, "We fully intend to leverage that to improve customer satisfaction and add value to our customer relationships."
While increasing the size of a network presents some exciting possibilities, it doesn't automatically increase value for bank customers, McCarthy added. "We don't think size alone matters. We think having the right locations to meet customers' needs and providing the right products and services is the way to add value."
Wells Fargo is taking what McCarthy calls a "very slow and methodical" approach to combining the two banks and their ATM networks. For instance, new signage will be phased in over a three-year period. He said the bank doesn't want to foist change onto its new customers until it can offer a full range of services to them.
Both banks, hoping to gain early customer acceptance, began offering reciprocal, no fee cash withdrawals at their ATMs last August. The free withdrawals were of special interest to customers in the five states where the two companies' systems overlap: Arizona, Colorado, Nevada, New Mexico and Texas.
McCarthy said the two banks' ATM networks were similar in several respects, including the tendency to provide a variety of services -- not all of them financial. Stamps are sold at 3,700 original Wells Fargo locations, and the discounted ski lift tickets are available at 500 ATMs in Northern California. The bank sees these services as a key to customer retention, as well as a way of drawing new customers.
Marketing research is under way to determine what types of services are of interest to the bank's newest customers, McCarthy added. "We want to fulfill their needs in ways customers tell us are appealing."
McCarthy said Wells Fargo is interested in both on-site and off-site locations for its ATMs. "Our primary driver is where customers are located and where we can add convenience and value."
Bank One: Re-evaluating Rapid Cash
Patricia Shafer, senior vice president of communications for Bank One, said that the bank's Rapid Cash program, which deploys cash dispensers in retail locations, is still alive after last October's merger with First Chicago NBD.
Columbus, Ohio-based Bank One added about 1,600 ATMs to its network when it acquired First Chicago. Bank One now has ATMs in 40-plus states, along with full service banking centers in 14 states. It's the fifth largest bank holding company in the U.S., with more than $240 billion in assets. Shafer said the merger will help Bank One beef up its presence in Illinois and Michigan, while First Chicago customers will gain access to a much larger ATM network.
Of approximately 9,000 Bank One ATMs, 4,000 are full-service machines in banking centers and 5,000 are Rapid Cash dispensers. Shafer said that press reports hinting at the demise of Rapid Cash are premature. "We believe in the Rapid Cash concept and are committed to it, but as in any sort of retail delivery experimentation, there is learning to be had and adjustments to be made."
The program's first year and a half was rocky, with Bank One scaling back its original plans for deployment and canceling contracts with several retailers. Rapid Cash ATMs accounted for part of a fourth-quarter charge of $150-$200 million, along with the revaluation of auto lease residuals.
Bank One will consider eliminating or repositioning ATMs at some Rapid Cash locations that didn't offer high enough foot traffic. As part of the bank's evaluation, Shafer said, "We want to make sure we have the right number of machines in the right locations, delivering the right number of transactions."
Shafer sees the Rapid Cash program as an indicator of the bank's willingness to take risks. "If you're going to be an aggressive retailer, then you've got to experiment with new products and services," she said. "Part of experimentation means being aggressive, being first to a market, and making adjustments as you see what customer needs really are."
For now, Bank One continues to surcharge both customers and non-customers at its Rapid Cash locations. Generally, customers pay $1 and non-customers $1.50 for cash withdrawals.
Shafer said the majority of Rapid Cash users are not regular Bank One customers. And, she added, "Our own customers accept there's a value being provided with cash dispensing in remote areas."
Bank One is aiming for "ubiquitous distribution," Shafer said. "We intend to be in every channel where customers expect to find us."
With the First Chicago merger, Bank One became one of the nation's largest commercial lenders. Shafer mentioned small business lending and online banking as two other key areas for growth following the merger.
She said Bank One will continue to be a major player in the ATM market. "Having such a broad, sweeping ATM distribution is really part of our total strategy of being a national provider."
