ust for quick cash anymore.
While many CU insiders might think of technology, cash, and maintenance costs when discussing ATMs, experts and users told the Credit Union Journal that cash-dispensing machines, especially networks, have the capacity to offer much more to both the member and the credit union. Any ATM can be used to expand and develop a CU's brand and membership while generating added revenue during this era of tight margins, some suggested. In short, a smaller CU can quickly take the field of play with larger banks or credit unions due to advances in ATM technology and their networks, analysts noted.
After all, noted First Data SVP of Debit Service Kirk Ergang, the creation of ATM networks was a response to larger banks and branches. A small CU or community bank with only one branch couldn't compete by adding ATMs. Networks changed that and the consumer now wants and expects a financial institution to offer ATMs.
Flat (But Important) Growth
"The ability to compete when ATMs came out wasn't practical," Ergang said. "Customers are used to using ATMs. While it's had flat growth, it's still there, millions and millions of transactions."
Ergang said CU members and consumers love to use ATMs: they're "open" 24 hours a day, seven days a week; they're private; ATMs now take check and cash deposits, even coinage. Ergang said a big factor in the public's acceptance of ATMs were the reputations of manufacturers such as NCR and Diebold. Small business owners were very familiar with NCR's long history of building and marketing cash registers and Diebold had been building bank vaults and safes as early as 1859.
Today, Ergang said credit unions aren't satisfied with ATMs in the drive through or at a SEG-related shipyard, hospital or manufacturing plant. While credit unions can obviously use ATMs to better serve members who work away from the main office, ATM networks and distributors have allowed even small CUs to enter the ATM arena for as little as $500 before transactions and annual fees. Ergang said both a participating credit union and ATM distributor can, and should, both profit from a successful machine placement, whether it's in public, a retailer or factory.
"I've seen parking lot ATMs three miles from headquarters in a shopping center," he said.
Ergang said after-hours transactions and CU members on their way home or out during the weekend increases foreign transactions revenue-and of course, all this is done while serving the existing membership.
Ergang said financial institutions place ATMs for a variety of reasons and goals: revenue, co-branding or seeking new business are among them. Just where to place an ATM is a bit of an art form that depends on human behavior. Ergang cited one ATM that was one of the most used in the entire Star Network. Located at Chicago's Wrigley Field it made sense that the machine saw strong volume from Cubs fans and passersby during the summer. But in winter? In the snow? Ergang said Second City consumers knew the machine was there, it was accessible rain or shine (or snow) and they could hop right onto "The L", Chicago's famous elevated train system near the machine.
"It was busy in February and it was in Chicago. Independent of whether the Cubs were winning or losing, or even there," he said.
While Star Network is happy with the busy baseball-connected ATM, ironically, Ergang said too much foot traffic can also be a problem. Busy CU members walking or driving by an ATM with long lines might start to avoid it altogether.
Cash-Back Feature A Driver
When asked about the impact of POS cash transactions versus ATM usage, Ergang said First Data doesn't see POS as a competitor to ATMs or their networks. If a consumer has been shopping at a local market for 25 years, they trust the business owner, but also want modern products and services, such cash-back or POS use, from a debit card.
"It's not an 'either or.' Consumers want both. They want choice," he insisted. "The financial institution that supports that will keep that customer."
Star Networks provided a 2005-2006 Consumer Payments Usage Study that surveyed 14,000 consumers about ATM and debit card practices. The study reported that 57% of respondents reported using their cards more often because of a cash back feature.
(c) 2007
