Fee income and lower costs are driving banks to locate more and more of their automated teller machines away from their branches, American Banker's annual ATM survey shows.
In the 12 months through June, ATMs deployed by the top 50 banking companies rose 13%, to 52,164.
Among the institutions that provided location details, off-premises units increased by 23%, to 13,353, while ATMs at bank sites grew only 6%, to 24,363.
The full number of ATMs in the United States, which includes those of nonbank deployers like Electronic Data Systems Corp., rose by 13% to 139,134 in the last year, according to the newsletter Bank Network News. The American Banker survey ranked only the top 209 banks in ATM ownership; their growth rate was 14%, to 62,741. (Tables begin on page 14.)
Surcharges on ATM transactions by customers from other banks, which went into effect nationally last April 1, increased the service's profitability and spurred off-site deployments at tourist locations like airports and resorts.
Despite the risk of customer backlash, "most consumers are more time- sensitive than price-sensitive," said Anne Moore, president of Synergistics Research Corp. in Atlanta. "They're willing to pay for the convenience."
New services, such as dispensing of stamps, phone cards, or statements, can add even more fees from ATMs.
The American Banker survey shows Charlotte, N.C.-based NationsBank Corp. increased its off-site ATMs by 236%, to 1,371. Even so, with a total of 3,333 machines, it dropped from second to third, behind BankAmerica Corp.'s 6,800 and the combined Wells Fargo & Co.-First Interstate total of 4,640.
"We're aggressively adding remote ATMs, primarily in convenience stores, gas stations, malls, and airports," said John Brennan, NationsBank's manager of automated banking. "We want to be where (our customers) already are."
Though he acknowledged "a greater revenue flow than there has been," he said the company is going off-premises "to attract new customers and keep our (current) customers."
Rounding out the top five ATM deployers are Banc One Corp. of Columbus, Ohio, with 2,183 machines, and First Union Corp., of Charlotte, N.C., which jumped from 11th to fifth with a 7% increase, to 2,119.
Tom Swidarski, director of financial industry marketing for ATM maker Diebold Inc., said profits for ATM owners continue to improve. Aside from the fee opportunities, new technology lowers the cost of telecommunications by allowing for dial-up connections in place of more expensive dedicated phone lines.
The cost of the hardware is also dropping, due to the proliferation of limited-service cash dispensers that don't take deposits.
Cash dispensers can cost less than $10,000; full-service ATMs can cost more than three times that much and are more expensive to service.
Shrinkage of the volume necessary to break even opens more locations to ATMs, Mr. Swidarski said.
Summit Bank Corp. of Princeton, N.J., increased its off-premises ATMs to 200, a 250% increase from 1995, mostly through the acquisition of Palisades Park, N.J.-based Berkley Federal Bank and Trust's ATM network. "We have them in retail stores, colleges, malls, hospitals, amusement parks, and bank-at-work locations," said George Nichols, senior vice president of electronic banking. "We're trying to be as creative as we can be. It's an extremely competitive arena right now."
