William G. Raymond keeps a lot of customers in touch with their money. The Bank of America senior vice president presides over the largest automated teller machine network in the country.

Mr. Raymond, head of interstate retail distribution for the San Francisco-based bank, said the ATM has outgrown its historical status as an alternative delivery channel and "has become very mainstream."

With almost 11 million BankAmerica Corp. Versatel cards in consumers' hands, Mr. Raymond said, the 6,900-machine network is "a competitive weapon" that brings customers to the bank.

In a recent interview, the 44-year-old executive was close-mouthed about strategic matters but not about proclaiming ATMs "an attractive business" for Bank of America.

With an ATM system spanning 13 states, Bank of America is by far the biggest bank deployer. Wells Fargo & Co., its closest California-based rival, had 4,280 machines as of April, when it merged with First Interstate Bancorp.

Electronic Data Systems Corp., the data processing company, owns and operates 5,900 ATMs, mostly at retail sites like 7-Eleven stores and gas stations. A revenue-sharing arrangement on 1,000 California ATMs that EDS bought from Bank of America makes the two companies "allies," said Neil Marcous, executive vice president and general manager of EDS' electronic commerce division.

The two may compete to sign up far-flung machine locations from time to time, Mr. Marcous said, but they have different objectives.

He mentioned a joint venture, TransAlliance, which includes Bank of America, Wells Fargo, U.S. Bancorp, and several other western banks, as another example of cooperation.

Though he keeps an eye on the competition, Mr. Raymond isn't obsessed with numbers. He said the goals of his $239 billion-asset parent company, BankAmerica, are "to create incremental income, reduce transaction costs, and create more reasons for noncustomers to bank at Bank of America."

The strategy seems to be working. ATM revenues are not disclosed, but company earnings for the second quarter were rosy. Net income was $723 million, a 12% increase from the same period last year. Net income for the past six months was up 15%, to $1.44 billion. Noninterest income increased 16% in the second quarter, to $182 million.

A large network of ATMs will become an even greater asset as surcharging becomes more widespread, said Mr. Raymond. Under national network rules that took effect in April, machine owners can collect fees from cardholders in addition to what those customers' banks might charge.

Though it waives surcharges at many locations, Bank of America imposes them in states where they have become established, notably Nevada, where consumers have shown few qualms about paying for cash to gamble.

One consultant noted that Bank of America is deploying unbranded ATMs away from branch offices "so they can surcharge without looking like Bank of America is doing it."

Mr. Raymond said many retailers expect to share the income from the charges. To win contracts for ATM placement, the bank must pitch a lucrative proposal to landlords. "We lost business because we didn't want to surcharge," the executive said.

Though acknowledging that rising costs could slow consumers' migration from tellers to ATMs, Mr. Raymond predicted "most markets will surcharge" eventually.

Regardless, Bank of America is finding opportunities for installing the machines and is testing new sources of fee income.

Through its acquisition of Seafirst Corp. in Washington state, where Mr. Raymond began his career in 1984, Bank of America owns more than 700 ATMs that dispense postage stamps. That successful program was expanded to Idaho and Alaska. California may be next.

Testing of phone-card sales in Tucson, Ariz., and Seattle has met with marginal success and is being monitored. In other markets, the bank offers coupons, check cashing, and ministatements.

Raphael Soifer, a banking analyst at Brown Brothers, Harriman & Co. in New York, said both Bank of America and Wells Fargo are "ahead of much of the competition" when it comes to advanced functions in ATMs and electronic banking generally.

He said consumers in California and other western states are "more attuned to technology than bank customers in many other places." The receptive audience lets California banks "be more experimental." It comes with the territory, he said, considering that Silicon Valley is just an hour from BankAmerica's or Wells' headquarters.

Lawrence R. Vitale, managing director at Bear, Stearns & Co., agreed: "California is known for being a place where innovative ideas find root, grow, and extend to the rest of the country."

At least partly due to customer demand, he said, Bank of America's ATM network is "much bigger than NationsBank's" 3,600 machines, though the companies are similar in asset size.

The California bank is steadily expanding its network, which had 6,400 machines at the end of 1995.

A leader in supermarket branching, Bank of America has put branches or stand-alone ATMs in more than 750 stores during the past two years, including Lucky supermarkets in California and Jewel Osco in Chicago.

Airports, universities, malls, theme parks, and casinos are other targets.

Banking centers without tellers are proliferating as consumers increasingly turn to them at all hours. "The economics of that type" of unit "is pretty attractive," said Mr. Raymond.

Some industry observers predict declining ATM demand as new services - point of sale debit and electronic cash cards - reduce the need for cash, but Mr. Raymond said he isn't "holding my breath." He said he is confident the bank will continue finding ways to make ATMs "compelling for consumers."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.