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With Profits Decreasing, ATM Owners Will Have To Focus on Costs

November 9, 2003

Mr. Kett is president of Triton Systems of Delaware Inc.

The ATM industry in North America and a growing number of regions is highly segmented and supports a number of different and sometimes competing business models. These business models include ATM deployers that provide ATMs primarily as a service and those who provide the ATMs as a means of generating income. Current trends in the ATM industry are forcing these segments to review and evaluate the economic feasibility of their ATM estates.

Recognizing the trend of decreasing transaction volumes per ATM in more mature markets, organizations will have to look at methods to increasing those volumes while reducing the cost associated with deploying and maintaining their ATM base.

For some major industry segments, profitability is not necessarily their primary focus, and as such the deployers of ATM estates in these segments will continue to focus on the ATM's principal function of providing a convenient channel to service their customers' needs. As one delves into ATM estate management, this will include looking at an improved, more cost-effective means of introducing customers to additional services and company-sponsored offerings.

For instance, theories have evolved in which financial institutions will consider evaluating the need to outsource their ATM estate to reduce their own overhead and manage their ATM tracks more effectively. By potentially allowing businesses focused solely on ATMs to manage their estate, financial institutions ideally reduce overhead and gain the expertise to provide their consumer a more defined product mix as well as the traditionally offered cash dispensing and financial services. As their focus remains centered on maintaining profitability through lowering the cost of ATM ownership and implementing value-added, the methods by which they manage their ATM estate will continue to evolve.

Other major market segments are more retail driven and focus on operating their ATM estate to generate profit. Maintaining site profitability as a result of decreasing transaction volumes challenges this market segment. Here, future trends in the ATM industry will continue to surround the development and implementation of strategies to maintain and generate profit. Thus, this segment will need to increase the number of transactions made at an ATM by increasing the range of services available and expanding customer demographics.

The decrease in transaction volume per ATM has forced off-premise and financial institution ATM deployers to review the economics and profitability of their estates. Maintaining profitability in the off-premise market segments and increasing the cost-effectiveness in financial institution ATM estates means attracting more customers and generating more value while reducing the overhead cost of delivering the traditional services and value added services.

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