Article
Streamline ATM operations through outsourcing
ATM outsourcing is quickly becoming a global trend among banks and credit unions as a way to streamline operations and cut internal expenses.
April 26, 2009 by Tracy Kitten — Editor, AMC
The following is an excerpt from the ATM Markeplace/Self-Service World guide, "Self-Service Outsourcing Streamline operations, improve cost efficiencies and upgrade to advanced ATM technology," commissioned by Diebold Inc. To download this free guide, click here.
How can ATM deployers decide whether outsourcing is the right option? Let's examine four benefits of outsourcing to help companies better understand why they may want to investigate the option further.
ATM portfolio management: It's impossible to understand just how difficult the prospect is until it's been attempted. Much of the difficulty stems from having to organize and manage all of the separate — and in some cases, unrelated — processes that must work together to create a positive experience for the customer.
The challenge faced by the ATM deployer is in many ways similar to that of an individual who wants to have a house built. The idea of building a single home may sound simple enough, until the construction team, landscapers, roofers, electricians, plumbers and inspectors, to name a few, are taken into consideration.
The talents of each of these groups must be harnessed successfully if a home is to be properly built. It may be easier to build a home without having to round up electricians or plumbers, but a house without functioning light switches or running water isn't likely to be snatched up any time soon. Not only must these various professionals be managed in such a way that they produce quality work, but they must also work in concert.
That means making sure the work of one party doesn't interfere with the work of the other.
But sometimes resources, time and money are lost. That's why many people who have decided to build their own houses hire contractors to manage various subcontractors rather than attempting to coordinate the different parties themselves. They hand over the responsibility of coordinating services to another party so they can concentrate on what really matters to them: Preparing to move into a new home.
The concept of ATM outsourcing is similar. Like building a home, maintaining an ATM portfolio involves many different players. Someone must provide transaction processing, remote monitoring, service and maintenance, cash management, regulatory compliance assurance and software upkeep.
If complex applications such as prepaid card dispensing or deposit automation are involved, that list gets even longer.
Deployers are faced with two choices: They can either attempt to coordinate these service providers on their own or hire an outsourcer to orchestrate them. And some FIs see leasing hardware from an ATM outsourcer as a means of keeping their portfolios up-to-date.
If an outsourcer is chosen, that single point of contact streamlines all of the ATM services and simplifies portfolio management.
"Contract negotiations are very much reduced because we give them a contemporaneous contract," said Paul Fisher, director of Integrated Services for Diebold. "They only sign paperwork with Diebold. We have the relationships with the transaction processing entity, the cash handler and telecommunications carriers. So it's one contract for everything, one payment and one bill for what is typically a five-year term."
Greg Steffy, senior director of Diebold Integrated Services, says having a single point of contact that is solely responsible for the performance of the ATM portfolio eliminates not only confusion but also passing the buck when mistakes are made. For example, suppose an ATM malfunctions. The deployer contacts the manufacturer, who sends a technician, who in turn discovers that the problem is not with the ATM but with the telecom service.
The deployer not only has to pay the manufacturer but also has to contract — and pay — the telecom service provider, who determines that the fault lies with the transaction processor, and on down the line. The deployer has wasted both time and money.
Steffy says contracting with companies like Diebold to manage the portfolio eliminates these annoyances.
"Imagine if one company did all those things, and we had to deal with the finger-pointing behind the scenes," Steffy said.
Jacqueline Fechner, director of outsourcing for Wincor Nixdorf AG, summed it up in one word: harmonization. A single point of contact can ensure that all of the processes involved in ATM portfolio management work together.
"To enable you to have a harmonized process end-to-end around these ATMs, you need to find a solution that exists best in the strategy," Fechner said. "The software has to be the right one, the hardware has to be the right one and the processes have to be the right ones. That makes it complex, and sometimes for the bank, maybe not efficient, because they haven't really invested to find an engineering model to optimize the operations there."
Steffy said a single-source provider like Diebold can optimize those operations and free up human resources. And freeing up human resources by transferring the tasks involved in ATM upkeep to someone else, says Brian Bailey, vice president of financial industry marketing for NCR Corp., has become a top priority for banks that are now trying to get back to basics.
"Banks are more interested now in understanding transactional analytics of who and what and how consumers are interacting with their ATMs," he said. "They're less concerned with ‘Do I have enough receipt paper to get me through the next day?' or ‘Do we have enough cash to get through the next day?' They're more interested in making decisions around ‘How many deposit transactions did I do at the ATM, and what does that means in terms of my teller capacity?' ‘Can I make business decisions using real-time transactional data to manage my channel structure to my consumers?'
"So that's another key thing that we're seeing. They want to get back to basics around consumer interactions and transaction analysis and rely on a partner to make sure those channels are up and available."
The bottom line is that banks are no longer willing to allocate manpower to fixing ATM malfunctions. Outsourcing to a service provider eliminates these time-consuming tasks, and also improves return on ATM investments.
Banks and credit unions are doing everything they can to maximize ROI.
"All of a sudden there's a huge amount — especially today, with what's happening in the financial services industry — of compression of capital and operating expense that the FIs are going through," Steffy said. "Everything you do is looked at, and everybody is trying to mitigate the expenses and risks associated with credit portfolios that are exposed or sinking."
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