Changing ATM strategies to increase revenue opportunities
Financial institutions may be inhibiting their growth if they devise strategies based on the premise that ATMs are simply cash dispensing machines.
June 28, 2010 by ATM marketplace
Since the introduction of surcharges in 1996, ATMs have served as an important source of revenue and cost recovery for financial institutions. Changes in consumer behavior and market saturation have led to declining ATM profitability in recent years, but the ATM remains the No. 1 customer touch point for most financial institutions. In fact, when cardholders evaluate their bank relationship, ATM access often is a top priority in making a final decision.
Financial institutions may be inhibiting their growth if they devise strategies based on the premise that ATMs are simply cash dispensing machines.
In order to compete in a difficult economic environment, financial institutions should view their ATM fleet as an important mechanism to build and enhance customer relationships. By taking advantage of new technologies and various marketing techniques, financial institutions can shift the ATM experience from a homogenous customer encounter into a more targeted user experience that can ultimately increase revenue.
Available technologies to enhance the ATM experience
Even though the basic functionality of ATMs has remained relatively unchanged since their introduction almost four decades ago, recent technological progress is giving ATMs new life—and providing important opportunities for financial institutions to profoundly change the ATM's role in customer interactions.
The following can enhance the ATM's role in customer interactions:
Transaction Personalization: This feature gives financial institutions the opportunity to provide a more engaging and less time-consuming ATM user experience by customizing the most frequent transaction conducted at the ATM — the withdrawal. To speed up transaction times, this service allows cardholders to set their preferences at the ATM with the ability to choose their "fast cash" amount, as well as language and receipt preferences. ATM users simply enter their PIN and confirm the transaction instead of inputting an average of 17-20 keystrokes per transaction.
Microsoft Windows-based ATM Operating Systems and TCP/IP Communications:The introduction of TCP/IP (the Internet Protocol suite that includes Transmission Control Protocol and Internet Protocol) communications for ATMs provides much faster connections for processing transactions, which gives financial institutions the ability to send and receive more data, such as real-time promotional messages, without slowing down the total transaction time. This results in an increased capability for banks to use highly customized target marketing to cross-sell products to ATM users.
Graphics Capabilities: The introduction of Microsoft Windows software and TCP/IP communications make it much easier for financial institutions to distribute graphics to their ATM fleets. Now it is relatively simple for a financial institution to remotely modify marketing messages across its ATM fleet or at individual ATMs to cross-sell banking products and services, and promote the financial institution's brand.
Many ATM deployers integrate rotating graphics and marketing messages, or even use video to communicate with ATM users while the customers wait for their money or receipt to dispense. With this capability of tying into the financial institution's CRM application, the ATM is suddenly transformed from a stand-alone cash dispenser into a one-to-one direct marketing vehicle.
Deposit Automation and Check Imaging: Advanced ATM hardware and check imaging technology for scanning checks have paved the way for check imaging at the ATM. The benefits associated with imaging check deposits include cost savings, extended deposit cut-off times, reduced check fraud and increased ATM deposit volumes. Implementation of the technology typically requires a significant investment, but the resulting operational savings can be substantial.
Turning the ATM into a marketing vehicle
Financial institutions that do not leverage their ATMs as marketing channels risk missing opportunities to mitigate the accelerating decline of direct ATM revenue and profitability. Consider the revenue opportunities presented by replacing the "Please wait" screen with marketing messages.
So, how can ATMs be turned into loyalty and marketing vehicles that can enhance customer relationships? Various marketing techniques can be applied that may help turn the ATM into a profit center. Examples include:
- Customization: Through transaction personalization options, customers can preset their preferences for the types of transactions they want to perform and the information they want to receive, which leads to feelings of personalized relationships and loyalty.
- Brand reinforcement: ATM screen graphics and messaging can be made consistent with the financial institution's other marketing channels, reinforcing messages with each ATM transaction.
- Cross-sell opportunities: One-to-one targeted messaging via an ATM can result in higher response rates than from other marketing channels. Additionally, financial institutions have the opportunity to cross-sell to non-customers who use the financial institution's ATMs.
- Customer data: Marketing programs can be refined even further to target customers based on user information and specific responses (i.e., customer data) captured at the ATM.
- Cost savings: ATM marketing campaigns can be less expensive to create and distribute than marketing through traditional direct channels.
- Advertising: Some financial institutions have partnered with local merchants to deploy ATMs in their locations, offering coupons and other incentives to drive ATM traffic and increase merchant ticket sizes.
Measurement
As ATM strategies evolve, measurements of success must also evolve. Traditional metrics for measuring ATM profitability — revenue per machine, transactions per machine, etc. — may no longer apply. Rather, the effectiveness of an ATM fleet or an individual ATM becomes tied to more complex measures like cross-sales per machine, retention of ATM users versus non-users, new customers per machine and others.
For many customers, the only significant interaction they have with their bank is via the ATM — making it is essential for this contact to be convenient, engaging, persuasive and profitable for the financial institution. Financial institutions need to re-examine how their ATM fleets can change with customer habits — allowing users to efficiently conduct their financial business while increasing revenue opportunities for the financial institution.
Mary Knich is vice president of ATM services at First Data.(Photo by Jessica Mullen.)
