Article
Driving for dollars
While much of the ATM industry's focus has been on walk-up ATMs in recent years, the market for drive-up machines is still cruising along.
January 8, 2002
Despite the ongoing popularity of retail ATM walk-up cash dispensers in the U.S.-and despite the fact that most of Europe hears the phrase "drive up ATM" and probably assumes it's a reference to mobile missile deployments - the future of the drive-up ATM industry looks pretty healthy.
"Even though drive-ups are kind of a U.S. phenomenon, it's obviously a pretty strong market," said Henry Dorfman, vice president of the ATM Exchange, a refurb company based in Cincinnati.
Marketing experts for the big boys-manufacturers Diebold and NCR-concur.
"It's definitely holding its own," said Steve Kremer, marketing director for NCR and the lead marketing person on the firm's new drive-up Personas 90. Noting that nearly two-thirds of the exterior full-function ATMS NCR sells are drive-ups, he said, "We think 2001 will be a very big year. The early results show that. We tie a lot of it to our new products."
"It's been shown over the years that drive-ups do more transactions than walk-up ATMs," said Bob Nemens, senior marketing manager for Global Marketing at Diebold. "The national average is about 3,500-3,800 transactions per month on through-the-wall units and about 4,500 to 6,000 for drive-ups. People are used to them and like using them."
Interviewing bank customers around the world, Diebold Global Marketing found that financial institutions plan to deploy units in new locations at an aggressive rate for the next few years.
Just the cash, please
In the U.S., many of those units will be drive-ups-with an emphasis on cash-only machines. Not surprisingly, the popularity of cash dispensers in convenience stores and other retail outlets has not gone unnoticed by banks and other financial institutions.
The Diebold survey found that, for the next three to five years, banks plan on 59 percent of new deployments to be cash dispensers as opposed to 41 percent full-function ATMs. Even more telling, 73 percent of these purchases will be new placements.
Where will they put them?
"One key area is the express lane, usually the outside lane," Nemens said. "There may be a 3-5 lane drive-up situation with maybe only the first lane manned by a teller and the rest filled by ATMs. By making that outside lane an express lane with a cash-only dispenser, you're enabling much faster use."
It also should give drive-ups a distinct advantage over walk-up cash dispensers.
"You have to realize that the usage on those is not as destination points. People who use them are on their way to someplace else," Nemens pointed out. "The advantage with the drive-up cash dispenser is that you don't have to pay a surcharge, and you don't have to get out of your car. So it's much faster than an interior ATM. I can drive up in the express lane, get my 40 dollars and go."
He added, "There's also a perception of more security. If somebody approaches, I can always step on my gas pedal and get away, as opposed to the situation you can find yourself in with a walk-up."
NCR points to a report issued in 2000 by the Federal Highway Administration that says more than half of U.S. commuters make at least one stop on the way to or from work or school. Additionally, U.S. bank customers are 20 percent more likely to use an ATM if they can access it from their car.
A telephone survey of 1,000 people with household incomes of $15,000 or more, conducted by Synergistics Research Corp. of Atlanta, found that about 29 percent of those contacted said they liked drive-up ATMs best, while another 29 percent preferred walk-up ATMs.
Fifteen percent said they preferred ATMs away from bank premises, with retail stores mentioned most often as their preferred ATM sites. The two least popular categories, each preferred by 13 percent, were ATMs inside bank lobbies and elsewhere on bank premises.
Meanwhile, NCR's own customer feedback indicates that U.S. financial institutions generally plan for two-thirds of their self-service channel to be located outside of bank lobbies and vestibules, which includes drive-up ATM offerings.
While banks and financial institutions remain the key to drive-up market growth, there is some potential for use by independents.
Beyond the bank
WRG Services, an ISO based in Willoughby, Ohio, doesn't focus on drive-ups but has deployed a dozen or so in the Cleveland area. "We usually go refurbished because of the cost," said Mike Stevenson, vice president at WRG. "What we've done in some cases with our drive-up deployments is take over drive-up teller locations where a bank has moved out of a plaza and put in free-standing kiosks."
WRG has also begun a test with nine cash dispensers at McDonald's locations in the Cleveland area, with up to 360 other sites available to them if the pilot proves successful. These are all inside units. But might a McDonald's and other fast food or retail outlets prove fertile ground for drive-ups? The answer appears to be yes.
Dorfman at ATM Exchange said his company has installed refurbished drive-ups outside Skyline Chili parlors and a nightclub in the Cincinnati area.
"We put them in their parking lots," Dorfman said. "Skyline has a drive-up lane, so now you can pick up your cash as you're picking up your Coneys. At the dance bar, you can pick up drink money as you're pulling in or walk up to it as you're going to the door. It's a very large facility that has live bands on the weekend, so there's a big crowd. Originally, drive-ups were just the province of banks, but we're hearing from others as well now."
While the costs and limited-service aspects of these units make refurbished machines an attractive choice, Nemens said Diebold also is getting more business outside financial institution circles.
"There's a trend developing for large retail stores such as Wal-Mart and K-Mart that have a lot of parking space to install drive-ups," he said. "Shopping malls and so on also are requesting them-so that while I'm circling for a parking space, I can go ahead and hit the ATM and get my cash before I park."
There is another intriguing drive-up possibility: gas pumps. It's not a drive-up in the pure sense of the word, but close-since the cash dispenser would be located next to the pump. While refurbishers are having success installing through-the-wall walkups at gas stations where customers can get fuel and walk over to get cash without stepping inside the store, Diebold takes the idea one step further.
Diebold's 1075ixS unit can be mounted at the pump itself. Nemens said it's the only ATM that has UL certification for placement in "about 22 different types of hostile environments, including fuel. It has spark arresting sealants and other features so we can actually put it out at the pump island.
"Now, you might say that's not what a convenience/gas store wants to do, since they make money off gas and cigarettes and want people inside the store. But the formats for those stores are getting much smaller, and there's interest in going to more and more unattended gas stations.
"So when you talk about the drive-up phenomenon, it's not only ISOs but also retailers like K-Mart, Wal-Mart and Winn Dixie. They're putting more and more gas pumping services at their locations," Nemens said.
Chock full of features
While cash-only functions mark the big push, both Diebold and NCR are likewise calling on technology to expand special features on drive-up ATMs that should be particularly attractive to financial institutions.
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The NCR Personas 90's bells and whistles include a sunlight readable color display. |
NCR has created a new version of its Personas 90 that includes a larger sunlight readable color display. "It'll be a key piece as deployers Internet-enable their ATMs and also use them for advertising," Kremer said.
Because the Personas 90 is a stand-alone and its screen can be read in direct sunlight, the need for a kiosk enclosure and a canopy with supports is eliminated. "That's a key development, because it reduces the cost of total installation," Kremer said. "You can put up an ATM outside an existing building with no kiosk or enclosure cost."
The screen also addresses one of the top customer beefs about ATMs, drive-ups or otherwise. In the aforementioned Synergistics Research Corp. study, 47 percent of the people surveyed said ATM screens were difficult to read. This was the number-one complaint, edging out concern over excessive fees.
In addition to itslarger, flat screen that doubles the viewing area of a traditional beveled screen, the Personas 90 has dual replenishment areas that can eliminate the cost of daily deposit pickups by an armored car service, transferring that function instead to bank employees in some cases.
Similar to NCR's Personas 90, Diebold's 1074ix is a self-contained unit with heating and cooling that can be put in the outside express lanes or in a stand-alone location. Diebold's 1073ix, meanwhile, is a full-function drive-up and its 1077ix a through-the-wall drive-up. Here, too, new technology with better monitors and software allow for a host of special features.
"One of the things we're finding is that people are interested in expanding services and what content we can put on the machines," Nemens said. "For example, what if you were able to go to a drive-up ATM and there's a notification on the screen that there's a construction or detour on a nearby road, and it asks you if you'd like alternative directions? If you press "yes," it would print out directions. And of course, you'd have a message "this service brought to you by your financial institution.'"
Endless possibilities?
"Well, yes," Nemens said. "It has to do with what kind of services that person sitting in the car wants. That's the key."
Hey, cowboy
Drive-up ATMs remain largely an American phenomenon.
Diebold's survey of projected drive-up placements versus overall new placements for the next five years indicates that 20 percent of new deployments in North America will be drive-ups. Contrast that to Asia Pacific, where only 2 percent will be drive-ups, and in Europe and Latin America, where the figure is a meager 1 percent.
Added ATM Exchange's Dorfman: "We sell very few drive-up refurbished units overseas. Probably 98 percent of them are sold in this country."
Is it our love affair with the automobile that sets the U.S. apart? No doubt, but even here there are distinct areas of the country where drive-ups are a stronger market force.
"They're more popular in cold weather and very hot climates," Nemens said. "I lived in California for 10 years. I think if you're a pedestrian out there, the police can pick you up. But as much as they love cars, they don't use drive-ups that much. I'm surprised. You'll have good visibility and signage, and people will still park and walk up to the ATM. The weather is so nice, they just want to get out in it.
Nobody is forecasting a dramatic change in drive-up usage worldwide in the foreseeable future-particularly not in Europe.
"It's a cultural as well as physical situation," NCR's Kremer said. "Part of it is just that Europe has limited geography with its narrow roads and towns that have been there for a great deal of time."
The historic architecture in Europe has, in effect, turned many cities into virtual museums. "It really comes down to that," Kremer said. Understandably, few Europeans are keen on tearing down buildings or altering their profiles to add a drive-up.
"We have a lot more real estate available, and I guess it's our cowboy mentality for wide open spaces," Nemens added. "But in Europe you have a lot of old, historic buildings, and you just don't have the space. When you're designing a drive-up, you have to factor in things like the turning radius of a car in and out of the area, a design for at least five cars in the queue, and plotting the building."
Cultural differences also play a role. "People (in Europe) are used to walking in general or relying a lot more on mass rail transit," Nemens said.
"In the U.S. we have drive-ups for everything from dry cleaning to beer," added Kremer, "where that's just not done in Europe. So do I project a great boom in drive-ups there? I have not seen evidence."
Interest in drive-ups in Asia is tepid, Nemens said, because space is at a premium, and people there don't rely as heavily on the automobile for getting around.
What about Canada and Latin America? "We do see possible expansion there," Kremer said, "where some of the demographics and physical characteristics are more similar to the United States."
Price pressure
While cost of deployment is higher for drive-ups, their popularity continues to make the market promising. As Woody Alderman, president of the Atlanta Computer Group refurbishing company, notes:
"People like drive-up machines. It's just that the cost of them has not dropped dramatically like the cost of some of these little, walk-up cash dispensers. Five to 10 years ago when the only people selling were the NCRs and Diebolds, you couldn't buy a unit for less than $20,000-and the total cost takes it to $70-80,000. Now they're buying cash dispensers for $5,000. If you got drive-ups down to $5,000, you'd sell a lot. But I don't think that's going to be possible."
Nevertheless, the new self-contained units can drive down costs dramatically from the six-figure installations (Nemens said Alderman's $70,000-80,000 estimate is conservative) that can result from full deployments involving canopies, building construction, permits, planning and upkeep costs.
Banks replacing old pneumatic tube units at branch drive-ups, for instance, need only a stand-alone and existing superstructure to hook up the units, Nemens said. With technological advances and new applications such as advertising and more customer service features, banks don't appear to be balking at expanding their reliance on drive-up ATMs.
"A lot of people think that because of the proliferation of interior cash dispensers and retail that people aren't building more bank branches, but that's not the case," Nemens said. "They're building more and more, and being much more efficient. And they're taking existing locations and refurbishing them."
Nemens pointed to a dramatic example of how banks are changing their approach to battle competitors-and what that could mean for the future of drive-up ATMs. He mentioned a project in which Diebold collaborated with Bank One to change the entire persona of an Ohio branch.
"It was almost eight years ago, with a very traditional bank branch with a walk-up ATM located right across from a shopping mall," he said. "Since we provide architectural engineering design as one of our services, we helped them redesign the branch. Over a weekend, we converted the inside to a sales branch where there's a walk-in receptionist and only four tellers at the back. The rest of the building was set up for a myriad of higher function services such as investment counseling and travel services.
"In short, we made the branch a destination point for higher income financial services and converted the outside for emphasis on check cashing, deposits and the like. The interesting thing is that they got rid of the walk-up ATM and put up a 1074 drive-up. In 30 days without any kind of advertising or anything, their transaction volume went up 10 percent-just from visibility and people driving by who would see it and say, 'Oh, I can get cash and go to the mall.'
"As they started advertising it, they changed their entire face to the consumer. People knew now that when they walked into the branch, they had special services they could use. It's a way to let the banks compete more effectively with competitors such as online investment services and insurance and use the drive-ups for the traditional, lower end banking services.
"It was a fairly dramatic example of what's possible."
And an indicator that the future of drive-ups-in the U.S., at least-remains promising.
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