This is the question posed — in so many words — by ATM Industry Association President Chris Chandler last Thursday to representatives of 10 leading French retail banks.
France's retail FIs weathered the 2008 financial crisis relatively well, and their operations are leading the French banking system back to financial health. However, they have not been immune to the challenges of maintaining strong financial returns under pressure from regulators, capital requirements and market conditions.
At the same time, rapid technological innovation (e.g., Apple Pay, Square, etc.) is forcing banks to react and be proactive in maintaining and growing their customer relationships.
Also at the same time, ATMs remain an important consumer banking channel in France, where cardholders make more than 1.5 billion cash withdrawals per year, representing almost 125 billion euros ($133 billion).
But while some efforts have been made to optimize operating expense at the 58,000 bank-owned ATMs in France, these costs remain stubbornly high.
France has a handful of independently owned and operated ATMs, however these are not connected to the national ATM network, Carte Bancaire. Exclusion from the national ATM network, along with a series of other regulations, restrictions and fee structures has effectively "locked out" independent ATMs from the French market, and prevented the nation's retail banks from realizing the significant operating savings and increased customer ATM access enjoyed by more open markets such as the U.K., the U.S. and Canada.
Chandler, who is also the CEO of Canada's branded-ATM operator Access Cash Holdings Ltd., shared with the group aspects of the Canadian ATM model and its successes in providing secure, cost-effective ATM distribution and bank branding throughout Canada.
The French and Canadian markets share several key characteristics, including a concentration of leading retail banks (fewer than 10 in each country controlling more than 75 percent of the market) and central national ATM networks (Interac in Canada and Carte Bancaire in France). Cardholders in each country make, on average, 25 ATM withdrawals per annum:
The Canadian model, which has been open to independent ATMs since 1997, has allowed the banks to deploy relatively few ATMs in the market, about 18,000 in total, while cardholders have outstanding access to their cash through combined bank and private deployments of approximately 65,000 ATMs. The result is that Canadians have twice as many ATMs per capita to service them as the French have:
Chandler argued that it is, in fact, time for French retail banks to rethink their market and considering pushing for changes to allow independent ATMs to flourish in France.
Effective ATM service by experienced independent ATM operators such as Access Cash, Cardtronics, YourCash and Euronet could contribute significantly towards the banks objectives to:
- reallocate capital from the ATM channel to "future bank" investments;
- materially reduce operating costs for the ATM channel; and
- improve customer convenience through the provision of more access points for cash.
To realize the benefits of independent ATMs and ATM operational outsourcing and co-branding, the French banks would have to push for material changes to their structure including:
- open access for independent ATM operators to the Carte Bancaire network, which today is effectively closed to all but its 130 bank members;
- a review of interchange, issuer fees and other funds flows from cardholder withdrawals in order to ensure a sound economic model that would support effective independent ATM operations; and
- reevaluation of approved methods of cash loading, which currently are highly restrictive and inflexible. Significant changes to cash handling and loading requirements would be necessary in order for operators to realize material cost savings while preserving a secure model.
While the work required to open the French market to independent ATMs would be significant and the leading CIT operations and unions would likely challenge the required changes, Chandler argued that the benefits to both the retail banks and French cardholders are there and would be worth the effort.
MBA, CA, CPA, B.Comm
Chris Chandler has more than 25 years' experience in financial services including positions at Accenture, KPMG and Bank of Montreal. Since 2005, he has served as CEO of Access Cash Holdings, Canada's largest IAD, with more than 9,000 ATMs, including more than 700 bank-outsourced machines.
Chandler was elected president of the ATM Industry Association in 2014, and is only the second individual to hold the office since the association's founding 18 years ago. He succeeds ATMIA president emeritus Tom Harper, an ATMIA founder and CEO of Networld Media Group, publisher of ATM Marketplace.
cover photo istock
/ 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.