A partnership among credit unions across Austin, Texas, has helped small CUs in the city grow for the last 15 years and is believed to be the only such program of its kind nationwide.
Since 2004, nearly every CU in the city has participated in an ATM network allowing members of all of those institutions to use any participating credit union’s ATM free of charge.
“I know there are some credit unions that do ATM sharing, but I don’t think anyone else has done what we have done,” said Kerry S. Parker, CEO of A+ Federal Credit Union and one of the organizers of the initiative. The project arose as a result of Parker and a half-dozen or so other Austin credit union CEOs sitting down to lunch once a month.
“The idea started like Southwest Airlines – on a napkin,” Parker recalled with a laugh. What today is known as the
The CUs do not charge each other, Parker explained. She said when any credit union adds a machine it sends the configuration data to all the other credit unions, and the various IT departments take care of the back end details.
Asked about the costs involved, Parker replied, “It’s nothing, really.”
“It takes our IT folks 30 seconds to upload a new ATM address. It is not complicated,” she said. “We still earn something when the ATM transaction occurs, we just don’t charge our members a dollar to use another ATM. Maybe every once in a while a member complains about being charged for using another ATM, but that takes a staff member 15 minutes to fix it.”
While A+ has more than $1.5 billion in assets, other participating institutions are a fraction of that size, including $132 million-asset Capitol Credit Union. President and CEO Pierre Cardenas said he and other small CUs that participate in the program are grateful to their larger counterparts.
“I have worked at large credit unions, and coming to a small credit union you almost have to rely on your big brothers to help you grow,” Cardenas said. “It is getting almost impossible for credit unions to compete on the open market. We are losing market share to fintechs, while larger credit unions are holding their ground. The larger credit unions need to give support, and that is what I see in Austin. The larger credit unions allow us to operate in the network for free, which is tremendous.”
Nationwide competition
Credit unions pride themselves on their willingness to collaborate and work together, but if the program is so successful, why hasn’t it been replicated in other cities?
“I do not know why ATM sharing would not work in other places, but there would have to be people sitting down and talking with each other. They would have to want to collaborate,” said Parker.
David Tente, executive director for USA and the Americas for the ATM Industry Association, said he believes credit unions in other cities could replicate the Austin model. As proof, he pointed to shared branching.
“Shared branching has been around for a long time, and there are a few other shared branching networks. The largest is CO-OP Financial Services and its 30,000-plus ATMs,” Tente said. “It is just a matter of how you clear those deposits. You have to have the infrastructure at the back end to make it work, and credit unions are more amenable to spend that time for the benefit of their members than are banks.”
Tente said he is not aware of other credit unions looking to create a network similar to that in Austin, but he suggested in some geographic areas it might be beneficial for CUs to share access to ATMs.
“In big cities such as New York, Chicago or Los Angeles there might be good prospects for making something like that happen.”
Tente said the benefits of such a partnership would include expanding each institution’s footprint – especially small credit unions with just one or two ATMs.
“It adds a lot of ATMs to the list and exposes the credit union to a lot of potential members. It would not be a significant cost.”
One hurdle, of course, is that many CUs are already part of CO-OP ATM network from CO-OP Financial Services or other similar networks. However participation in those networks can vary and there is no guarantee every CU in a given area is a member.
“Most of the regional networks have actually dissolved in favor of joining the large networks, such as CO-OP ATM,” said Bill Prichard, director of public relations for CO-OP Financial Services. “We believe the best value credit unions can offer their members in terms of surcharge-free ATM access is the CO-OP Network, with 30,000 ATMs nationwide and about 9,000 of which are deposit-taking. In Austin, Texas alone, we have nearly 100 ATMs available to serve members of participating credit unions.”
Benefits to small CUs
A+ left the CO-OP network a few years ago, but Parker noted the credit union also is part of the Visa ATM Alliance, which allows its members to use “thousands” of ATMs all over the country. But members have a fondness for the Austin alliance, she said.
“[The Austin ATM network] is a great benefit for all members, especially the members of the smaller credit unions. It is a great collaboration and we love it. Austin is all about being local, and are part of that,” she said. “Our members don’t necessarily get the benefit of the smaller credit unions, but they do get the benefit of the larger credit unions because they have larger ATM networks.”
Capitol CU’s Cardenas said he became aware of the alliance when it began in 2004 while he was working at $957 million-asset Amplify CU. He agreed with Parker’s assertion the members of smaller credit unions see more benefit from participation than those of larger CUs.
“Why don’t other credit unions do something like this? For the same reason bigger credit unions leave the shared branching network – because they don’t get as much benefit,” Cardenas said. “But as you begin to take your focus off yourself and look at the credit union industry, you get a different perspective. I love how we do it in Austin. It would not happen if there was not consistent communication. They know our motivation – we are not out to steal anyone else’s members. Credit unions only have 15 percent of the banking industry, so there is plenty of room.”
