The new frontier in ATM deployments
Anyone that has a had pulse over the last 20 years realizes that "times have changed … and so quickly too."
From what we call a "phone" (today, they are really computers that also happen to make calls) to what really qualifies as a laptop PC (seen a tablet lately?) to the way we view a car (have you been inside a Tesla? It's basically a computer with wheels).
Does anyone remember something we used to call a "map"? (Garmin, Waze and Google maps took care of that). At the same time, we must wonder whatever happened to Nokia, e-machines and Rand McNally.
If you are wondering what any of this has to do with the ATM industry, well, quite a lot. Not only has the functionality and perception of these machines changed over the years, especially for larger FIs who now deploy these ATMs for a variety of functions, "oh, and they dispense cash too I am waiting for the day when I go to my bank's ATM and while I wait for the cash to be dispensed I also get to decide if I want a single or double shot of espresso and whether I want a blueberry or chocolate chip muffin. I am also waiting for day when I get to brush up on my math and step up to a Bitcoin machine … a BTM … and try out my wizardry in an attempt to mine Bitcoins …
While we wait for all of that, let's think about how we have traditionally behaved in the industry over the last few years and how things have "changed It used to be that we started an IAD (ISO back then) company out of our garage or trunk of the car, grew it to a few hundred or thousands of machines and then sold it off. Many early folks made a lot of money doing this and at least one of the large, very large, companies in our business became that way by buying portfolios and bulking up on market-share. Over time, the prices of the companies being sold became inflated and those doing the buying eventually got a huge case of indigestion. Those times, I strongly believe, have changed. First, those doing the traditional acquisitions are now sitting back, looking at all these portfolios they bought over the years and wonder if or how they fit into the overall scheme of things…. bigness for the sake of bigness is not necessarily a good thing. What is left is an industry with a huge player, a bunch of middle tier companies and thousands of small operators. So, as an industry what do we do now? Can't wait around for big checkbook to come around anymore since they must wait for the Alka-Seltzer to take its effects. Some organizations are starting to try and fill that void and have become aggressive in buying portfolios and there is a lot of haggling going on and a lot of "consultants" are being hired to figure out what is the "sweet spot" is in the multiplier, amongst a variety of other negotiating areas. Some are missing the fact that companies are sold based on actual income and projected growth and that the story of how hard it was to build the business has absolutely no value to the Excel spreadsheet calculating ROI, EPS, TGP, EBITDA, EBITA, ETC, ETC.
This is the old tried and true way of doing M&A, but, since I started this article saying how "things have changed," there are organizations that are looking at M&A in a more creative way, creating a hybrid between an acquisition and a partnership, allowing the owner to receive cash up-front but also allowing him/her the ability to continue running and growing their business, under their brand, without operating responsibility or using their own capital and allowing them the opportunity to get a larger payout in the future. As I have mentioned before, creativity will be the lifeblood of our industry, this includes the taking a fresh look at who we consider a competitor or a partner, the lines are getting more blurred by the day.
On the product side, the good news is that there are lots of options available for us in the industry to create value added solutions to the retailers and the consumers, all one needs to do is look around and identify the one that you want to differentiate your company with.
I am a firm believer that in five years we will be looking back at our industry and realize all the changes we went thru. Those that will have realized what was going on will enjoy the results of their vision and those that didn't will be perhaps in a new industry or upset they were forced to sell under a less than attractive valuation. The time to think five years ahead is now and we must realize that most of the time, by the time we realize that things have changed its after it has already occurred. Are you still fumbling in your wallet to find a credit or debit card? Apple Pay and many banks want you to forget the card…that change is already happening.
Jorge Fernandez is a 20-year veteran of the ATM industry. Currently he is chief development officer for Paramount Management Group, an IAD with 2,000 installations across the United States; he also has served in senior level management positions at Triton, FIS and Cardtronics.