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Swapping secrets over the Pond

July 5, 2005

What's the best way to build a customer base? Get your name out there in front of consumers, of course. That's called branding - and financial institutions are applying to the ATM what they've learned about promotion.

Over the last 24 months, FIs have rediscovered the importance of their ATM channels as touchpoints, said Keith Myers, executive vice president of the financial division for Houston-based Cardtronics LP. FIs are trying new things, like branding contracted ATMs in retail locations, because they've learned consumers are more comfortable using ATMs with recognized names.

And that's where branding and outsourcing come in.

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Outsourcing can include anything from service and maintenance to management and branding. It's a big business throughout the world, and everybody is trying to get a piece of the action.

Westley Horton, Cardtronics' vice president of marketing and financial services, said FIs are fighting for prime retail real estate, which pushes them toward agreements with independent sales organizations that already have ATM placement deals with retailers.

"These retailers are building in areas that are typical bank-branch real estate," Horton said. "So the banks say, 'If we can't have our own branch there, we can at least get a presence there (with an ATM).'"

For example, in June, New York-based J.P. Morgan Chase & Co. announced a contract with Cardtronics. Cardtronics is branding 216 ATMs in Duane Reade stores in New York City for Chase. Chase gets to widen its footprint and Duane Reade gets to offer its customers the convenience of a recognized-brand ATM.

Learning experience

Outsourcing may be a big business throughout the world, but in general branding is unique to the U.S., said Ron Delnevo, managing director of U.K.-based Bank Machine. But in the U.K., where "pure" outsourcing of service and maintenance isn't as popular as in mainland Europe, a branding model for off-premise ATMs is surfacing.

"The pure outsourcing of ATMs (for service and maintenance) is more common in Europe," Delnevo said. U.S.-based FIs, he added, have outsourced service and maintenance in mainland Europe for years. In fact, that's the way most European FIs operate, since the country where they're based is not the only country they operate in.

FIs in the U.S. are just beginning to catch on to outsourcing. But FIs are taking outsourcing even further in the U.S. by completely ridding themselves of off-premise ATM ownership. Now Europe may be looking to the U.S. to learn more about branding.

"There may be a trend in the U.K. - especially where off-branch ATMs are concerned - to outsource the operational side," Delnevo said. "They may actually work with a (cash-in-transit) company that does the maintenance and service, but they're very much looking at not having to deal at all with those ATMs themselves."

In the U.K., 50 percent of the country's FIs still operate their own ATMs, but a growing percentage is getting out of the business. "Thirty to 40 percent are outsourcing service and maintenance, and the remainder are disposing of running them entirely," said Delnevo.