The Customer Effect
Why big banks are exploring shared ATMs
- One major coalition of credit unions is sharing ATMs and branches as a means to expand their reach and offer customers more access to services.
- Analysts say big bank brands are less interested in shared ATMs because of the cost and the risk of watering down the differentiated brand experience.
Shared ATMs have been the norm among community credit unions for the last few years, but major banks are starting to dip a toe into the water. "We are exploring shared ATMs, as they could help lower distribution costs and provide ATM access in places that wouldn’t otherwise be economically feasible for us, but choosing the right partner is critical," said Troy Cullen, evp ATM and Debit Services, U.S. Bank. "We want to ensure the machines are surcharge-free for our customers, we want our customers to easily know that they're surcharge-free and we want the experience to be consistent for them." It's a common tactic for community credit unions. For the past five years, Co-op Financial Services, a California-based network of community credit unions with reach across the U.S., has worked on eliminating outside ATM fees by creating a network of shareable ATMs among affiliated institutions nationwide. It's a play to get more customers. "It allows more account access -- there are some credit unions that have deployed these solutions to expand their geographic area through a self-service model where it would have cost them to install a brick-and-mortar branch," said Terry Pierce, senior product manager at Co-op Financial Services, noting that credit unions that are part of the network often have a small number of branches. Any customer of 1,800 participating credit unions can access a network of ATMs nationally along with over 5,000 brick-and-mortar branches that serve customers' needs. Customers can access a network of 350 ATMs nationally by logging into the shared branch network with their account number and a piece of identification. The shared ATMs don't have specific branding, but the infrastructure lets customers carry out deposits, withdraw funds, transfer money and pay loans. It's a way credit unions can differentiate themselves from the bigger players, cut costs and expand their reach at the same time. "Most credit unions have a small number of ATMs and their footprint is very small," said Heather Gibbins, senior director of global software product management for Diebold Nixdorf, the ATM manufacturer Co-op Financial Services worked with to develop the shared branch and ATM network. "We partnered with Co-op to allow members of institutions to get the same level of service as they would get from their own institutions." While offering additional access points for customers may seem like an option that customers of major banks could benefit from, analysts say bigger players don't have the same incentive, both due to the cost and the risk of watering down a differentiated experience from a brand. "It's like a bait and switch in the view of the brand operators because it's like saying the brands are interchangeable, and they're saying, 'Heck no, we're not going to do that; we want to be in control of the experience,'" said Bob Meara, senior analyst at Celent. The banks also have to cover the costs of the transactions on the network, which could be significant for big institutions, he added. Others add that the fees that derive from non-customer transactions at ATMs are a revenue generator for the banks. "Larger banks don’t have as much of an incentive because they already have well-established ATM networks and can generate fee income when non-customers use their machines," said Aubrey Hawes, senior director in the Financial Services Global Business Unit at Oracle Financial Services. Regardless of the convenience of shared ATMs, Pierce said user adoption of them has been slow, which is prompting Co-op Financial Services to relaunch the service next month with a new marketing push. "It's really about effective communications, marketing, training and education -- a lot of the time technology is deployed with no follow-through," she said. "There needs to be a lot more collaboration as far as training and educating the staff along with the members."