News

E*TRADE Access moves forward with new director

The ATM industry is watching E*TRADE Access, the ATM division of E*TRADE Group, even more closely now that Dale Dentlinger is in charge. The industry veteran brings a reputation for innovation and business savvy to his new gig.

January 17, 2002

The March 13, 2000 announcement that E*TRADE Group was purchasing Card Capture Services (CCS), at the time the country's largest and arguably most successful ISO, sent the ATM world into something like a frenzy.

Convinced that the acquisition was the first fire in what would be an ATM revolution, ISOs of all sizes prepared their portfolios for an E*TRADE buyout and vendors lined up to woo the newly renamed E*TRADE Access.

And then…. not a whole lot happened.

There were management changes – with CCS President and CEO Dave Grano and several other executives leaving the company in January 2001 – and some significant deals with the Target Corporation, but the expected revolution failed to materialize.

Dale Dentlinger, new director of E*TRADE Access

Now with a new general leading the charge, E*TRADE is making another move toward the front lines of the ATM business.

E*TRADE in November hired Dale Dentlinger, former head of Client Delivery at EDS, as the new director of its ATM division, E*TRADE Access.

Don Jarecki, who ran EDS' retail ATM program under Dentlinger's direction, said he "can't think of a better fit" than the one between E*TRADE and his old boss.

"We made our bones on ATM ownership and some of the innovative things we did at EDS, but (Dentlinger) knows the whole spectrum of the business, from processing to merchant contracts to vendor relations," Jarecki said.

Beyond the brokerage

Dentlinger's appointment capped a year of intense acquisition activity for E*TRADE, much of it applauded by financial analysts and the market. The company's shares rose 39 percent in 2001, despite a 40 percent drop in trading by its brokerage customers during the first three quarters and an economy that sent many stocks plummeting.

Analysts agreed that diversification was the key to E*TRADE's weathering the economic storm. The tactic has served the company well dating back to 2000, when it purchased Telebanc Financial Corp., then the nation's largest online bank. E*TRADE built the bank business from 130,000 accounts and $2.6 billion in deposits to 436,000 accounts and $8 billion in deposits as of Sept. 30, 2001.

After adding online mortgage originator LoansDirect in January 2001, a week after the Federal Reserve announced the first of 11 interest rate cuts, E*TRADE went on to generate more than $5 billion in mortgage loans.

In October, E*TRADE bought market-making firm Dempsey & Co. and announced an agreement to acquire 33,000 customer accounts with deposits valued at more than $1.5 billion from Chase Manhattan Bank USA. E*TRADE also purchased some 15,000 accounts valued at close to $400 million from Advanta National Bank.

"We understand that we need to get deeper into our customers' financial needs and become a total provider for them," Dentlinger said.

Also in October, E*TRADE inked a deal with Visa to add functionality to the Visa Check Card issued to E*TRADE customers. The new card will allow customers using selected ATMs to transfer funds between E*TRADE Bank and E*TRADE Securities accounts. That capability will play a key role in E*TRADE's goal of becoming a kind of one-stop financial shop.

Reputation for innovation

ATMs will become a key part of that strategy, if Dentlinger's appointment and the Visa deal provide any indication.

During his 17-year tenure at EDS, Dentlinger earned a reputation as an innovator by rolling out early versions of then-advanced ATM concepts such as advertising, ticketing, stamp dispensing and check cashing. Although they met with varying degrees of success, some set standards that have yet to be duplicated by other deployers.

The advertising program, for instance, which ran for 18 months on 950 ATMs located in 7-Eleven stores in 1997-99, is still seen as a benchmark. EDS used full-motion video, conducted a series of influential market research surveys, developed a rate card and earned about $650,000.

Yet Dentlinger is not an advocate of introducing functionality for functionality's sake. He expects that E*TRADE's ATM program will include 15 to 20 different products and services, segmented by retailer type.

"Obviously with Target, they have a need for a larger ATM with more products. But at a smaller c-store, all you may have to do is dispense cash," he said. "At pharmacies, which are some of the biggest sellers of greeting cards out there, it may make a lot of sense to offer stamps at the ATM."

One of E*TRADE's 11,000 "little billboards"

Dentlinger also believes the ATM is a logical place for cross-selling to E*TRADE customers and non-customers alike – especially as E*TRADE keeps adding new financial products and services to its portfolio. "It's a great way for us to get information on all of our products out there," he said.

One feature that will be seen on nearly all of E*TRADE's 11,000 ATMs: a prominent brand. "The way we see it, we've got billboards in 11,000 locations," Dentlinger explained.

Branding also has had a positive effect on transaction levels. E*TRADE Access saw a 15-20 percent boost in transaction volumes at some ATMs when they were re-branded, Dentlinger said. "I think it gives the consumer a comfort level that if something goes wrong while they're at the ATM, a legitimate company is behind it," he said.

Inside the Zone

The brand was rolled out first at some of the most prominent E*TRADE Access locations, including Target stores. The Target relationship marks E*TRADE's most significant effort to date at using its ATM network to reach its banking and brokerage customers.

In May of 2000, E*TRADE signed an agreement with Target to roll out 400-square-foot financial service centers called E*TRADE Zones at selected SuperTarget stores. ATMs are a key fixture at the Zones, along with Internet kiosks which allow customers to open E*TRADE accounts, get market updates and make stock trades.

After "working out the operational kinks" at the first E*TRADE Zone in suburban Atlanta in late 2000, Dentlinger said the company opened another 20 or so Zones in 2001. That number will "at least double" in the first half of 2002, he said.

E*TRADE further cemented its relationship with Target in April, becoming the discount chain's exclusive ATM provider. The agreement added another 1,000 ATMs to the E*TRADE network.

In addition to the Zones, Dentlinger said that E*TRADE has established other "strong physical touchpoints" with E*TRADE Centers in Los Angeles, San Francisco, Denver, Boston and New York.

"They're a different kind of bricks and mortar," he said. "Even if they never actually use the facility, customers need to know there's a place they can touch and feel their bank."

The E*TRADE Zones and E*TRADE Centers represent a recognition that even tech-savvy Internet banking customers value a real world presence – and one that extends beyond an ATM network. It's a shift from the all-virtual philosophy espoused by E*TRADE Chief Banking Officer Mitchell Caplan at an October 2000 trade show.

At that time, Caplan said that E*TRADE planned to offer its customers account access through ATMs, kiosks, PCs and handheld devices such as PDAs – but not at brick and mortar locations.

Cost control

E*TRADE earned kudos from financial analysts in 2001 for scaling back its marketing expenses, cutting staff and consolidating operations.

As part of consolidation efforts, Dentlinger said E*TRADE Access will move from Portland, Ore. (where CCS was headquartered) to Arlington, Va. (home of E*TRADE Bank) by the end of February. Only a few key staffers will relocate from the Northwest, he said, and a few more will telecommute.

Dentlinger expects there will be opportunities to leverage E*TRADE staff and facilities in Virginia. For instance, he said, existing call center representatives could be trained to field E*TRADE Access calls.

Not a duck

The 2001 EFT Data Book published by ATM & Debit News puts E*TRADE at the top of its list of the nation's 10 largest ISOs. Like most ISOs, E*TRADE does not own the majority of its ATMs – nor does it shy away from low-end hardware, merchant cash replenishment and other cost-control measures not commonly used by financial institution deployers.

Yet E*TRADE has something no other ISO has – a customer base.

When pressed to categorize E*TRADE, Dentlinger said, "In the ISO world, ATMs are placed totally for revenue and profit. Banks place ATMs for strategic reasons. We do both."

Though E*TRADE has few peers, there is a notable exception: Amicus Financial, the electronic banking arm of Canadian banking power CIBC. Amicus purchased a powerful ISO (San Diego-based XtraCash ATM) and has an in-store presence akin to E*TRADE Zones at Safeway, Winn-Dixie and Loblaw supermarkets.

Acknowledging that there are "strong parallels" in the companies' business models, Dentlinger said, "Our approach is somewhat different, but I think where we're going is very similar."