STRATEGIC PARTNERS
Despite the possible loss of US Trust, leaders of SUM, an alliance of surcharge-free ATMs, remain confident that the program will endure. by Katherine L. Sears, associate editor
August 29, 1999
With Citizens Financial Group's recent acquisition of Massachusetts-based US Trust Bank, some industry officials have questioned US Trust's future participation in SUM, a surcharge-free program sponsored by an alliance of smaller banks. If Citizens, based in Rhode Island, eventually decides to pull US Trust out of SUM, the program would lose over 200 ATMs, many of them located in high traffic areas of downtown Boston. After the merger was announced, Citizen's chairman Lawrence K. Fish issued a statement declaring the bank's commitment to honor its current contract to maintain its ATMs within the program. Those involved with SUM greeted Fish's announcement with a sigh of relief. However, even if Citizens were to yank its machines from the program, some believe that SUM will have no trouble carrying on. "The value of the program is so great that I'm extremely confident that value will motivate institutions to maintain their affiliation and participation in the program," said William Peirce, director of network services for NYCE, SUM's network administrator. Although Peirce declined to comment specifically about the US Trust and Citizens merger, he said that SUM offers enough flexibility to allow financial institutions that operate in multiple states to participate if they agree to meet certain provisions. "Whether Citizens and U.S. Trust would take advantage of that, I certainly couldn't comment on," Peirce said. Small banks, credit unions and thrifts in Massachusetts -- with the help of the Massachusetts Bankers Association and NYCE -- formed the SUM alliance to maintain surcharge-free ATMs for their customers. Currently, there are 221 financial institution members with 1,358 ATMs, Peirce said. That's a significant market share in a state with 4,200 machines. Robert Fichter, senior vice president of the Massachusetts Bankers Association, said he believes that Fish's commitment to maintain the US Trust machines in SUM indicates that "SUM has offered an important option and it has gained a lot of credence." In fact, Fichter predicts that the number of SUM ATMs will grow by 50 to 100 machines over the next couple of years. For the smaller banks, the program has given them a new marketing tool to help them keep existing customers from defecting to larger banks. "I can only speak for us, but our customers have been very happy with it," said Derek Delano, public relations manager for Eastern Bank Corp. in Lynn, Mass. Delano believes that SUM is an ideal option for the small bank operating a limited number of ATMs. Eastern's membership in SUM was prompted when BankBoston and Fleet Financial began levying surcharges. Because Fleet and BankBoston own the majority of ATMs in the Boston area, Delano said Eastern's customers were in a situation where they would likely have to use a Fleet or BankBoston machine to get cash. "We didn't feel that was fair that they should be getting surcharged," Delano said. "We felt that we owed it to our customers to come up with an alternative for them." SUM wasn't set up to attract new customers, Delano said. Rather, it is geared toward keeping existing customers satisfied. While it may give smaller institutions a marketing edge over a larger bank in terms of surcharge-free service, Peirce said SUM was not set up to "pit the large bank against the small bank." Rather, the program provides a "meaningful infrastructure of ATMs" that cardholders from the smaller banks can access free at a "reasonable cost to the financial institution." However, Delano said he believes it may be difficult for a large bank like Citizens to co-exist in such an alliance. "I don't think larger banks that have thousands of ATMs really see a benefit in being in SUM." While US Trust's possible departure wouldn't kill SUM, Delano said he hopes it will remain in the program because of the number of machines it maintains. He attributed the aggressive marketing efforts by NYCE, and the Massachusetts Bankers Association with creating a sound alliance. "That marketing program is going to continue and that's going to help boost the awareness of the SUM (program)," Delano said, adding that if Citizens were to later pull the US Trust ATMs out, "the network will be more ingrained into the fabric of our customer base by that point." NYCE isn't planning to beg Citizens to remain in SUM, Peirce said. "We'll leave it up to them to decide how and if they want to participate in the program."
