When CoreStates announced in July that its MAC ATM network would be merging with the networks of three other superregional banks, thereby forming a mega-network called Electronic Payment Services Inc., shock waves reverberated throughout the industry.
And though executives at EPS are keeping mum pending Federal Reserve approval of the merger plans, there's no doubt that the new network,is one of the first signs of major changes ahead for ATM networks.
Consolidation of the nation's ATM networks was inevitable, and in fact was already under way. From a high point of about 150 in the late 1980s, there are now 86 across the country.
"We'll probably end up with a few superregionals. If I had to hazard a guess, I would expect about a dozen to survive," said James B. Moore, president of Mentis Corp., an Eden, Md.-based research and consulting firm.
EPS will replace at least four network names on the current industry list: Banc One Corp.'s Jubilee; PNC Financial Corp.'s pair, Owl and Trinet; and Society Corp.'s Green Machine. The alliance is expected to keep CoreStates Financial Corp.'s MAC brand as its own.
Though ATM analysts are sure there will be more acquisitions within the alliance, EPS is studiously avoiding any comment about where and when.
As it stands now, the network would link the machines of 1,400 financial institutions in 16 states, In time, annual volume is expected to reach 670 million point-of-sale payments, including both debit and credit transactions, through about 150,000 terminals in 48 states.
As for the marketing thrust at EPS, past and current performance by MAC, the alliance's apparent lead brand, suggests to analysts that it may be more consumer oriented than most networks have been.
Traditionally, networks have marketed to banks, which in turn have marketed to consumers, Mr. Moore noted. But MAC, more than most ATM networks, has worked to make its name known to consumers.
Whereas network logos are usually small icons on ATM faces and on the backs of ATM cards, the MAC logo frequently appears on large signs outside bank branches. And this fall, just as the nation's holiday shopping spree gets under way, "MAC vans" are traveling to stores participating in a sweepstakes promotion that offers a family trip to Walt Disney World as the grand prize.
The promotion encourages consumers to use their MAC cards for purchases made through Dec. 31. Their signed purchase receipts will be accepted as entry slips for the sweepstakes, and can be turned in to the MAC vans, which will also distribute "loads of holiday surprises."
Franchise Value
MAC's established franchise with consumers could give EPS an edge in signing up more banks, either as customers or new partners, if it sticks to contiguous markets where that recognition has spread.
And that edge is likely to make consumer marketing one of the hot areas for network competition.
Mr. Moore agreed: "I would expect to see networks begin to market to the consumer. But marketing to banks won't disappear."
Whether MAC is the first to offer it or not, he expects to see value-added service - signage, training, and marketing support, for instance - used as a differential among the competing networks.
Its consumer orientation may lead EPS to address the issue of consumer re-education as networks take banking even further into a fee-based environment, said John L. Buschmann, a senior product manager at NCR Corp. There may be some consumer resistance to the fees charged for ATM-generated bank statements, for example, until consumers are made aware of their advantages.
New products, or new ways of delivering old ones, will also be a major facet of marketing to banks. EPS officials have already said that they will launch a smart card in mid- 1993. A few hundred select customers will test the cards, which are equipped with their own computer chip memories.
The executives have projected EPS's annual growth, in terms of point-of-sale payments processed, at between 20% and 30%. MAC's POS transaction volume had already reached 1.5 million by mid- 1992, according to Richard Speer, president of Speer & Associates, the Atlanta-based ATM consulting firm.
There are a lot of people who will be watching how EPS's debit card business develops, said Roger C. Jensen, a senior product manager at NCR. But banks are also interested in what marketing advantages EPS - or any ATM network - can offer in other emerging areas of electronic delivery.
"Every bank has decided which market - affluent or blue collar - it will cater to. And MAC is doing a lot in both," he said.
Unsnarling Branch Traffic
MAC's automated check cashing, for instance, is primarily a service for the blue-collar market. Providing that service can move a huge amount of Thursday and Friday branch traffic out of a bank lobby. And that leaves room for other services - such as electronic investment transactions - which appeal more to the affluent market.
Regardless of the market segment, MAC - and now EPS - has been in the forefront of the movement that is making access a competitive issue and taking banking to the consumer. That head start can even reach into the next generation, Mr. Jensen pointed out.
Ms. Ferring is a senior editor in the American Banker's newsletter division.
