Shake-Up in ATM Market Coming with Megadeals

The recently announced bank mergers promise to bring consolidations of a different sort to automated teller machine networks.

As the banks get bigger, the numbers of regional ATM networks and the transactions they process could go in the opposite direction.

One merging company, BankAmerica Corp., is already the largest ATM owner, and its partner NationsBank Corp. is second. Together they would have more than 15,000 machines-a number more commonly associated with multibank shared networks.

Banc One Corp.'s combination with First Chicago NBD Corp. would create the nation's second-largest ATM base, with 8,200 machines.

In contrast to branch operations, loan administration, and other functions that pose integration challenges for big institutions, the splicing together of technically similar ATM hardware and software should be a relative snap.

Networking is already the name of this game, and the larger numbers of machines under a given bank's banner can constitute a potent marketing force-especially if the bank lets its customers avoid fees or surcharges when using ATMs within the proprietary network.

Conversely, that raises questions about the future of shared networks, which came into existence precisely because no bank was historically able to span the country the way the new BankAmerica would.

"We're very excited," said David W. Thomas, general manager of electronic delivery at Banc One in Columbus, Ohio.

Mr. Thomas said Banc One and First Chicago officials will start meeting this summer to hash out an ATM strategy. The merger is expected to be completed in the fourth quarter.

Though the larger ATM bases may be a boon to customer convenience, they may cause banks to forgo some of the interchange and surcharge revenue they might have otherwise reaped, said Mark Walter, an electronic banking consultant based in Birmingham, Mich.

A further repercussion, he said, might be the banks' ability to bypass network switches, which would "clearly reduce the utility of the regionals."

It is a trend already under way, said Thomas O. Bennion, president and chief executive officer of Honor Technologies, Maitland, Fla.

"That's one of the reasons why ATM growth has been flat-all these consolidations tend to take transactions out of the network," he said.

But Mr. Bennion said multibank network groups like Honor can play a role in members' integration of massive ATM systems. They can help route transactions before the two entities are fully combined.

Observers said a desire to reduce the multiplicity of brand names will add to the pressure on shared networks to consolidate. After their mergers, for example, BankAmerica and NationsBank would be in Star System, Pulse, and Honor.

First Chicago NBD is a member of both Magic Line and Cash Station, while Banc One participates in 11 regionals.

In 1997, when Honor merged with the Virginia-based Most network, it was partly because of pressure from First Union Corp. and NationsBank, both of Charlotte, N.C., which saw no purpose in multiple memberships.

"Where our owners have gone, we have tended to go," said Mr. Bennion, whose network, Honor, bought the St. Louis-based BankMate system after NationsBank acquired Boatmen's Bancshares.

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