Spotlight on the ATM: regulations, innovations and prognostications
The ATM sector today is a business in flux, so it's no wonder that everyone associated with the industry has a multitude of questions about what the future holds and how to prepare for it.
At the recent ATM, Debit & Prepaid forum in Las Vegas, ATM deployers got to ask some of their burning questions during the panel session, "Spotlight on the ATM Channel: New Technologies, New Services, and New Regulations."
The Q&A session was moderated by Ed O'Brien, director of banking channels advisory services at Mercator Advisory Group. Panelists included:
- Suzanne Galvin, director of product management at Elan Financial Services;
- Laura Jones, SVP of compliance and risk management at Elan;
- Scott Post, SVP of Hanscom Federal Credit Union; and
- David Tente, executive director of the U.S. chapter of the ATM Industry Association.
Following are their perspectives on just a few of the topics fielded during the session:
EO: Is the ATM still relevant in a mobile-digital era?
SG:I definitely think so. We've done a lot of studies where we looked at customers and their channel preferences. And if you look at the studies that exist … they all indicate that consumers still select a financial institution based on proximity to the ATMs and the functionality of those ATMs.
And also when we look at the usage by customer segments of various channels that are offered to them, we see that customers expand their touch points with their financial institution rather than restricting their focus to one channel or another.
So by enabling functionality at the ATM through mobile and cash-out service … I definitely think that the ATM is still a very relevant channel in the total mix and definitely will continue to play a role in supporting our customers from a payment perspective.
EO: What are some of the new regulations on the horizon?
LJ: Just recently the CFPB has come out and is looking at putting new legislation in for the next legislative session for overdrafts and ATM.
[It requires] notification to the cardholder that if they take out $20, that’s going to put them into overdraft and they agree that they’re going to accept that fee, whatever their financial institution may charge.
Also, the [proposed] Harkin Amendment — which you may remember from when Dodd-Frank got rolled out. The Harkin Amendment was the limitation on surcharge, and that is rearing its ugly head again.
Senator Harkin is about to retire and is thinking about getting that passed. From what I hear, it will not be successful. But definitely keep your ears open for that in the next legislation.
EO: With ATM interchange fees eroding and new regulatory issues cropping up what can deployers do to manage costs?
SP:First of all, if you can’t increase the revenue, you can decrease the costs. We have 22 ATMs and we estimate that we’re saving over $100,000 a year by having Elan manage them. …
Secondly, we believe in distribution ubiquity. So we have our own ATMs but we use a lot of surcharge-free and we belong to MoneyPass, which is Elan; we belong to the Cardtronics Allpoint network and a few others. We have over 100,000 surcharge-free ATMs. We find that model helps us save money vis-à-vis putting in our own ATMs or doing a reimbursement model.
Thirdly with the new generation of imaging ATMs, we’re deploying those strategically in branches where we’re taking out teller stations. So we might not be removing ATM cost, but we’re removing transaction cost. …
And what happens is we don’t have tellers, we have MSRs in that branch that work at pods with cash recyclers. And they basically can do everything from cash a check to close a loan or take an application.
We want them to own that member when they come in. So … using automation, we’re actually building the relationship and driving revenue from that relationship.
EO: Which direction should deployers look for new revenue sources?
DT: I think the consensus is that everyone has almost resigned themselves to the fact that interchange is going to continue to erode and they’ll have to find other sources of revenue to take their place. And, you know, that’s kind of a good thing and a bad thing.
You know, on the good side, it’s also going to help drive and motivate some folks on the technology side and on the ATM deployer side, to look at new applications and new types of things that can be handled on ATMs. …
I think we may see some other options coming out — the new dispensed prepaid cards that are authorized at the time of dispensing that are out there now and some pilots that I think will be a big potential revenue source for both financial institutions and independents.
We just have to start being very innovative and looking for any source of revenue that we can. The models for both the banks and the independents are going to change over time.
Read more about ATM innovation.
Photo: Tim Edwards
Suzanne Cluckey / 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. She is now the editor of ATMmarketplace.com and BlockChainTechNews.com