The market for automated teller machines may seem saturated, but some experts say there are still opportunities for banks that want to pursue deployment plans.

Speakers at last week's Retail Delivery Conference, sponsored by the Bank Administration Institute, said there are many ways to take advantage of what they view as a landscape still rife with viable sites.

The speakers conceded that many of the best sites for ATMs have been snatched up, but said banks could still make money from off-premises deployment if they cut smart deals with retailers.

"You have to think of the objectives you are trying to accomplish," said Gerald D. Verdi, president of Verdi & Co., Buffalo.

Before signing an agreement, Mr. Verdi said, deployers should research a retailer's customers-who they are, and what they buy in the store.

"We've seen nightmares because the deployer and the retailer did a horrendous job of implementation," Mr. Verdi said.

ATM deployers need to look for creative ways to trim operating costs and boost traffic at machines.

Mainly, that involves knowing and working closely with the retailer.

Richard G. Lyons, senior vice president of Comerica Bank of Detroit, said his department views ATMs not strictly as fee generators, but as "touchpoints" for customers outside of branches.

Mr. Lyons said Comerica had had a good experience with the 200 machines it installed in Arbor Drug stores. Not only have the machines generated revenue, but their presence in areas where Comerica does not have branches has built brand awareness.

Mr. Lyons said deployers can avoid headaches by negotiating up front for the best possible retail space in a store and convincing the merchant to install abundant signage. Comerica is now working to convince the drugstore chain to move the machines to walls outside of the stores, but it is uphill work, he said.

For the handful of machines the drugstore has moved, Mr. Lyons said, transaction volumes improved: After four months, the machines were fielding the number of transactions more typical of two-year-old machines, which tend to see more use than newer ones. He would not say what the volumes were.

Nevertheless, operating ATMs away from branches can be expensive and inconvenient. A recent study by Dove Associates of Boston found the average cost of operating a machine is $1,090 a month, most of which comes from the handling of cash in and out of the machine.

ATM deployers also need to persuade retailers to buy a machine that does more than just dispense cash, said David Grano, president of Card Capture Services, an ATM outsource firm based in Portland, Ore.

"If you let the retailer select it as just a cash dispenser device, it will miss revenue opportunities," Mr. Grano said.

Nonbank deployers can persuade retailers to share expenses, such as cost of funds, whereas banks can count their monies stored in machines as cash in the vault.

A nonbank essentially has its cash tied up in the ATMs, Mr. Grano said. He noted by shifting the cost to the retailer, monthly transaction break- even points can drop to 200 from 600.

"There is a lot of sex appeal in putting out a lot of ATMs," said Mr. Lyons.

But banks need to "keep in mind we are not in the off-premises business, we're in the banking business."

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