Radical Retail Change

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The role of ATMs as a high-value service channel

By Dean Theodore

The rise of electronic transaction channels has transformed the banking industry, making smaller, less expensive branches a reality. They have also sparked new opportunity for ATMs as a high-value service channel. Today’s advanced technology provides new ways to deliver a secure, enhanced customer experience, lower costs and increased revenues with ATMs.

A recent Cummins Allison survey of banks and credit unions showed just how important ATMs are with 83 percent ranking ATMs as very or extremely important. Yet many financial institutions do not capitalize on their unique benefits.

A well-executed ATM strategy isn’t just about meeting customers’ demands for services available 24/7 from the location and channel of their choice. It also includes migrating routine branch transactions to ATM stations, which allows tellers to focus on delivering a more personal, high-value interaction with their customers. That’s important, because while customers have embraced multichannel access, they also expect higher value from face-to-face interactions at their bank branch, according to research conducted by the management consulting for McKinsey & Co.

Self-service channels such as ATMs also help drive down costs, in this case by moving transactions from the branch teller line to the ATM. A study conducted this year by Financial Management Services Inc., a bank staffing software firm in Atlanta, notes that community banks and credit unions handled an average of just 6,400 teller transactions per month—that’s down 45 percent from 1992. However, while transaction volumes have declined, branch costs have steadily increased. According to Financial Management’s study, the per-transaction teller labor costs rose 133 percent from 1992 to 2015.

By migrating routine transactions away from the teller line to the ATM, community banks can help drive down labor and branch costs. Javelin Strategy & Research, a financial services industry consulting firm in Pleasanton, Calif., finds that it costs banks an average of just $1.25 to conduct an ATM transaction, versus $4.25 to conduct the transaction at the teller line.

Powering-up the often strategically under-utilized ATM can also lead to increased wallet share. This can be achieved in a variety of ways including on-screen education programs, marketing and advertising that increases brand awareness and sales by educating users on new product and services. ATMs can deliver messaging to include promotions for credit cards, CDs, mortgages, and products or services targeted to businesses.

A well-executed ATM strategy can transform the ATM into a high-value service channel, one that delivers a host of benefits ranging from improved customer service and experience to low costs and growth in product sales opportunities.


Dean Theodore (theodored@cumminsallison.com) is vice president of ATM operations for Cummins Allison, a bank transaction machine manufacturer in Mt. Prospect, Ill.