Flying in the face of conventional wisdom that suggests the automated teller machine market-place is saturated, U.S. banks continue to install machines at a fast clip.

The top 50 banks increased ATM penetration by 9.12% in the 12 months ended June 30, according to the 1994 American Banker ATM survey. Other sources say overall ATM growth is only 5% or 6%.

But the real story behind this year's statistics is the growth in off-premises ATMs. The top 50 banks boosted the number of ATMs outside of bank offices by 20.58%, compared with only 5.43% growth for branch-based ATMs. (Tables start on page 14.)

"This growth is happening primarily because of consumer demand," said Anne Morgan Moore president of Synergistics Research Corp., Atlanta. "Consumers want convenient locations: near home, near work, near shopping." The top 50 banks boast nearly 8,000 off-premises ATMs: 664 of these were added in the last year. By comparison, these banks added 547 in-branch ATMs, bringing that total to more than 21,000.

"Our customers are busy people; they really want convenience," said Deborah Doyle McWhinney, senior vice president in consumer electronic banking at Bank of America in San Francisco.

"To serve this need, we need to put more units in nontraditional places," she added, "so customers don't have to go out of their way to do their banking."

The subsidiary of BankAmerica Corp., which leads all U.S. banks with 5,650 installed ATMs, declined to break out how many were in-branch versus off-premises installations. Ms. McWhinney confirmed, however, that the big push is toward off-premises installations.

NationsBank Corp., Wells Fargo & Co., Citicorp, and First Interstate Bancorp round out the top five. ATMs at the five banks total nearly 13,000, about one-third of all installations by the top 50 banks.

Electronic banking consultants say it's not surprising to see three California-based banks in the top five because the nation's most populous state is also the most ATM-advanced.

"California leads the nation," said BankAmerica's Ms. McWhinney. "That's because we were the first ones to realize you can't separate the ATM from the point of sale,

California banks are also among the most likely to place ATMs in nontraditional spots or to offer additional products and services through the ATM, say bankers and consultants.

"I think the branches are saturated, but there's a whole new menu of places, some of which we've only started thinking about in the last few years," said Ms. McWhinney. "Our customers are ready for this. In some ways, they are getting there faster than my banker friends."

Bankers do recognize this consumer desire. To this end, they are putting ATMs and POS terminals anywhere potential customers might be: in grocery stores, convenience stores, malls, amusement parks, sports arenas, office buildings, airports, college campuses, highway rest stops, post offices, casinos, fast-food restaurants, hospitals, hotels, racetracks, and the occasional bank branch.

And although networks estimate that 75% of all ATM transactions remain cash withdrawals, banks have been doing a good job of extending the menu of things people can do at an ATM.

"Banks are trying for differentiation through expanded functionality: mini account statements, information on whether checks have cleared, deposits, even dispensing postage stamps," said Synergistics, Ms. Moore.

Wells Fargo is testing the delivery of postage stamps through ATMs, and last month, it started an innovative service through which customers can use the ATM to transfer money to friends or relatives in the Philippines.

Better customer service is certainly one component of any bank's ATM strategy, with potential fee income an equally compelling focus for many banks.

Charging customers for ATM use will become an ever-bigger issue as the number of off-premises ATMs grows. Already, say consultants, many banks are charging for use of off-premises ATMs, even if they are bank-owned

That risks action by consumer advocacy groups, say consultants, who warn specifically of fee-capping legislation at the state level. Three high-risk states, they say, are New York, California, and Florida.

Several other factors could affect ATM deployment trends, including the growth of national and regional networks, nonbank ATM deployers, the Americans with Disabilities Act, and ATM safety concerns. For the most part, say electronic banking experts, these factors inhibit ATM growth.

"You simply cannot create an ATM strategy without considering these issues," said Bank of America's Ms. McWhinney. "Take ATM safety, for example. It isn't sexy, but it's important because it's important to the customers."

This month, a handful of banks nationwide announced plans to test a "911" emergency button at ATM sites. When pressed, the button would alert local police of a potential or actual crime.

Customers concerned about crime are unlikely to use free-standing or through-the-wall ATMs in less protected public locations, say industry watchers. But ATMS in certain retail locations, like supermarkets or general merchandise stores, are perceived as very safe, they say.

"We believe safety and security concerns actually make off-premises locations more attractive for customers, especially if you pick the right retailer," said Tom Kunz, vice president and manager of electronic banking for PNC Bank Corp., Pittsburgh.

"We perceive security issues as much less of a factor than ADA," he added, referring to the Americans with Disabilities Act.

Banks are now three years into their efforts to comply with the law, which requires that ATMs accommodate people with disabilities wherever such accommodations are "readily available" and do not place an "undue burden" on a financial institution.

Because many off-premises ATMs are new installations, they were designed with ADA requirements in mind. In many cases, however, banks had to retrofit branch-based ATMs - a costly proposition. Losing prime sites to nonbank ATM deployers can also be costly - in terms of lost revenue opportunities.

The three most significant nonbank ATM players are Electronic Data Systems Corp., with nearly 2,000 ATMs; Affiliated Computer Services, with more than 1,600, and Fiserv, with about 860.

"We consider them a threat," said PNC's Mr. Kunz of nonbank ATM deployers. "They're doing a fair job of cornering premium locations.

"We're fighting with them, especially now, as banks look to more off-premises installations."

Regional and national ATM networks, while having some small effect on total ATM deployment, are not perceived as a threat.

"The primary impact of the networks is that they assist us in helping to convert traditional branch users to ATM users," said Mr. Kunz.

Mergers and consolidations in the industry also affect ATM deployment.

Citicorp, which has held the No. 1 or No. 2 spot for the seven years American Banker has compiled rankings, slipped this year into fourth place, behind NationsBank (2,087) and Wells Fargo (1,842).

The New York-based money-center, long regarded as an AT innovator, added no units to its total in the past 12 months, staying at 1,800 machines.

A Citicorp spokeswoman said the bank has added ATMs in some areas but that, because it sold its Arizona bank and some other subsidiaries, the ATM total was unchanged.

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SAN FRANCISCO - Visa launched a new promotion called "Visa Rewards for Gold Medal Achievement" to boost its brand in the Atlanta area.

Merchants who display Visa's point-of-purchase signs are eligible to win various Olympics-related prizes.

This program rewards Atlanta business owners and managers as well as employees for encouraging Visa usage leading up to the time of the 1996 Summer-up Olympic Games," said Visa executive vice president John Bennett.ATM GrowthAt a GlanceTop 50 banks ATMsOverall growth Current New(*)9% 7,944 664Growth outside banks21% 38,699 3,234Growth in branches5% 21,378 547 (*)Installed between June 30, 1993 andJune 30, 1994Not all banks provided on- and off-premisesbreakdowns Source: American Banker

Trust Us, the U.S. Has Lots of ATMs

How many automated teller machine are there?

The answer depends on whom you ask.

The 1994 American Banker ATM survey counts 38,699 ATMs at the top 50 banks but does not provide data for the rest of the industry.

American Banker also omits major nonbank ATM deployers like Electronic Data Systems Corp., Affiliated Computer Services, and Fiserv.

Atlanta-based ATM consulting firm Speer & Associates counted 94,000 ATMs in the United States at the end of 1993 and predicted annual growth of 5% or 6%. The Nilson Report, a twice-monthly newsletter covering ATMs and credit cards, estimated 102,093 ATMs had been installed in the United States by midyear.

The Oxnard, Calif.-based publication predicted that the total would grow 50% by the year 2000, nearly all at off-premises locations.

The Nilson Report also said ATMs in the United States account for 220% of the world total. Right now, 511,356 ATMs are deployed worldwide, and there will be 937,000 by 2000, the newsletter said.

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