Just because they are off-premise doesn’t mean they should be off your decision-making radar.
Robin Nenninger, former director of ATM Banking at U.S. Bancorp, told attendees at a financial services conference in late 2002 that several factors were combining to make it more important than ever to make long-range network plans.
She cited the slow death of the OS/2 operating system and looming Triple DES and ADA mandates.
"Sometimes you have to go slow to go fast," she said. "Look at the steps necessary to get your network where you want it to be in five years."
In contrast with the deployment-happy 1990s, Nenninger said, the early 21st century is an ideal time for "right sizing" ATM networks.
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"It's time to retrench. With the regulatory challenges, it's a critical time for us to be responsible and say some of these locations may not be keepers."
At least some financial institutions appear to have taken her words to heart.
Though no public announcements have been forthcoming, a few financial institutions are quietly divesting portions of their off-premise networks.
FIs are increasingly interested in outsourcing management of machines outside their retail footprint--or sometimes selling them outright--to independent operators.
J. Michael Brown, president of Innovus, said, "They’re starting to say, ‘I’m a thousand away (from the ATMs). How did I get there, and how do I get out?’ They’re looking to get rid of non-core locations. As banks pull back on their off-premise sites, ISOs are stepping in to take their place."
Bank merger and acquisition activity, which is heating up as the economy improves, is helping drive the trend, said Dan Tierney, executive vice-president for TRM Corporation, which recently earned its first bank ATM management deal.
When FIs divest ATMs, there may or may not be a continuing relationship with the new operator, Tierney said.
"If the sale results in the need for a write-off due to the sale price being under book value, then the FI might choose to rent versus selling."
Both Brown and Tierney said FIs want to partner with financially stable independents with proven track records.
"It all comes down to risk reduction. They want to hear good references from major merchants, industry participants and, hopefully, from other FIs," Tierney said.
