News

In banking, smaller is sometimes better

October 26, 2004

Based on dollars spent, press releases written and speaking slots filled at industry trade shows, large financial institutions like Bank of America and Wells Fargo seem to be leading the way in advanced ATM functionality.

Yet some smaller financial institutions aren't far behind. Small banks enjoy some advantages over their larger counterparts, primarily a streamlined decision making process.

"The bigger you are, the more bureaucracy there is," said Chad Lynch, ATM services manager for Utah's $2.7 billion America First Credit Union. "Smaller financial institutions tend to be better at empowering people and getting rid of a lot of the red tape."

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In the past two years, America First has introduced check cashing to the dollar on 13 of its 85 ATMs, with plans to add more. Nearly 45 checks a week are cashed at one ATM at a branch in a Wal-Mart store, Lynch said, and three machines located near Brigham Young University cash a total of 200 checks a week.

In addition to empowerment, smaller banks also frequently enjoy an advantage in speed to market.

Tom Conroy, vice president of National Accounts for NCR, expects smaller banks may be among the first to implement check imaging at their ATMs - largely because they were early adopters of check imaging systems in their back offices.

"Many community banks and credit unions adopted (check imaging) in the mid-1990s," Conroy said. "It costs a major financial institution millions and millions of dollars to deploy the technology to capture, archive and print image statements of checks. For smaller financial institutions, it's an easier implementation at a far lower cost."

Small banks tend to have geographically compact networks, which makes it easier for them to add new transactions - across a network or only on selected machines.

Technology levels the playing field

Brian Hartline, president and CEO of $330 million Nova Savings Bank, said he sees offering advanced ATM technology as "a way for smaller banks to level the playing field against the bigger guys."

Nova recently installed three ATMs equipped with software that allows for targeted marketing campaigns and personalized transactions. Nova is also offering a specialized distribution system for basketball tickets via one of those ATMs, at Villanova University. The machine is branded with Villanova colors and its Wildcat mascot.

Al Tiley, president and CEO of Companion Systems Design and Manufacturing, a provider of ATM surrounds and enclosures, believes that bank branding should be emphasized at machines offering advanced transactions.

"A well-branded ATM incorporating advanced technology extends the banks' presence beyond the confines of a branch setting. The convenience of a highly visible ATM utilizing current technology, when located where customers shop or play, promotes brand loyalty," Tiley said.

"By necessity, ATMs are a commodity at a bigger bank," said Nova's Hartline. "Smaller banks can provide a different experience for their customers. It's one way to set themselves apart."