ATMs: The Bank Brand Sitting in the Footprint of a Microwave

Abstract

This newest report from Mercator Advisory Group' s Retail Banking Practice is focused on the ATM and the multifaceted role it plays in the retail banking market. While ATMs are no larger in footprint than a microwave, they are a strong tool for keeping customers connected to their money, and more importantly, to their bank. Automated teller machines in service today far outnumber traditional bank branches, and so can extend the bank' s brand well beyond its expensive bank branch system. Technology enhancements, footprint deployment saturation, surcharges/surcharge-free networks and transaction channel optimization are keys to banks leveraging their current and future installed base of ATMs.

Banks have long been committed to the ATM, growing the number of installed units steadily. But in recent years they have experienced competition from alternate channels - whether from potentially cannibalizing technology such as online banking or the rapid growth of the credit unions' surcharge free networks. In order to allay these competitive forces, there has been a surge in deployment of more technologically-advanced ATMs.

Report Highlights:

• With more than four times the number of ATMs than bank branches in the U.S., an ATM is both a billboard for the bank as well as an anchor to the customer' s relationship with their financial institution. With 2 million ATMs worldwide, the ATM has the potential to be the ultimate customer-facing technology and brand messenger.
• Fee surcharges for using other banks' /nonbanks' ATMs are just one barrier banks erect to drive their customers' loyal use of their own ATMs.
• As millions of bank customers involuntarily find themselves (post-merger or post failure) with new banks, the ATM provides the perfect platform for banks to introduce themselves to their new customers. Providing leading edge machines with enhanced services in convenient, surcharge-free locations might be the ultimate introduction.
• Mercator Advisory Group research has found that ATMs featuring technology capable of imaging bank notes and checks - a basic function of envelope free - can reduce costs a breathtaking $1 per transaction.

Table of Contents

INTRODUCTION 2

• MORE THAN JUST A BOX 2
• ATM INNOVATION - LEADING THE CUSTOMER TO THE ATM 2
• THE ATM SUPPLY CHAIN 2
• GROWTH OF ATMS 2
• ATMS REPRESENT A GLOBAL MARKET 2
• NOT ANOTHER MARKET HIT BY THE SUBPRIME CRISIS? YES, ATMS TOO. 2
• INNOVATION = ROI 2
• SURCHARGES: AN INHIBITOR TO GROWTH OR A DEPOSIT GROWTH STRATEGY? 2
• BEST IN CLASS - NOT! ATMS ARE STUPID! ERROR! BOOKMARK NOT DEFINED.
• BEST IN CLASS - REALLY! 2
• HARDWARE & EQUIPMENT2
• Unseating the Incumbents2
• BEST IN CLASS DEPLOYERS2
  • Wells Fargo and Chase: Move to Envelope-Free ATMs2
  • Surcharge-Free Networks2
  • DEPLOYERS - OFF-PREMISE2
  • Euronet: An international player2
  • APPLICATIONS & SERVICES2
  • Benefits Distribution2
• CONCLUSION2

Tables and Figures

• Figure 1: ATM Ownership & Use6
• Figure 2: Monthly ATM and Debit Card Use Per Month7
• Figure 3: Key Innovations in ATM Services8
• Figure 4: Rising Numbers of ATMs and Bank Branches (2002-2007)10
• Figure 5: Key Changes in ATM ownership, 200812
• Figure 6: ATM Manufacturer Market Share16
• Figure 7: Number of ATMs in Surcharge Free Networks20
• Figure 8: Euronet' s Revenues, 2003 - 200721
• Figure 9: Growth in ATM Installed Base, Western Europe vs. Central and Eastern Europe22