As automated teller machines become more complex, and more expensive to run, Diebold Inc. is stepping up its efforts to get banks to outsource them.
To help make the decision easier, the ATM company has set up a Web site featuring a tool to determine the costs of maintaining an ATM network.
Keith Lewis, Diebold's director of global software and services marketing, said few of the bankers he speaks with know what it costs to keep a network of money machines up and running.
"There's never a single person who knows the answer to that: How much do I spend on this channel?" Mr. Lewis said. "They just don't know," because so many parts of the bank are involved.
Diebold's outsourcing assessment center, as it calls the Web site and tool it announced Thursday, will "help them understand what their real costs are," Mr. Lewis said. (He said the average ATM costs banks about $25,000 to operate per year.)
Bankers can enter data about their ATM networks into the online tool, which compares the information to industry benchmarks. Mr. Lewis said the goal is to show banks how their own costs stack up against other banks'.
He said that Diebold has been offering ATM outsourcing services for years and currently manages about 30,000 machines worldwide. One customer in Brazil has several thousand ATMs, but most of its outsourcing customers range from community banks to regional financial companies, with about five to 75 machines, he said.
Diebold, of North Canton, Ohio, has found that more banks are considering outsourcing because the ATMs that have been introduced in recent years have become much more complex. Many of these banks, Mr. Lewis said, want a better understanding of the costs and the resources necessary to operate and maintain these machines.
The machines commonly used today are more powerful than older models and have more transaction and marketing capabilities, including imaging technology and bulk deposits.
Moreover, new industry standards such as the Triple DES format for ATM PIN pads can create "operational headaches," Mr. Lewis said.
"What we're finding is financial institutions don't want to expend the time and energy and resources to become subject-matter experts in these technical areas," he said. "That's why we're seeing such a strong appetite for outsourcing now."
Many bankers have told him that they "don't want to hire 10 more people." They say, " 'I don't want to become an operational expert; I want to deal with my customers.' "
Though many banks are outsourcing some aspect of their ATM operations — such as maintenance — they frequently end up outsourcing to multiple vendors, Mr. Lewis said.
Diebold wants to provide all those services to its bank customers, which he said can be more cost-efficient and easier to manage.
In October of last year Cross Keys Bank of Saint Joseph, La., outsourced its five ATMs to Diebold. (Cross Keys also uses Diebold machines.)
"We knew that Diebold would supply the expertise necessary for this state-of-the-art equipment," Jim Cuthbert, Cross Keys' marketing manager, said in an interview Thursday.
He said that the $240 million-asset bank could not devote employees to the increasingly complex machines, and that before signing the outsourcing deal it did not know how what it cost to operate its ATM fleet. Now it has a handle on those expenses.
"It's much less of a headache and we feel like we're getting our money's worth," Mr. Cuthbert said. "And the few minor issues that we've had were solved very quickly to our satisfaction."
Gwenn Bezard, a research director at Aite Group LLC in Boston, said it has become increasingly common in recent years for smaller banks to outsource part of their ATM operations, but large financial companies generally want to manage their ATM systems in-house.
Though Diebold said its new tool is aimed at all financial companies, Mr. Bezard said it probably hopes to land a "megadeal" in which a large customer would hands over its entire ATM operation.
Toronto-Dominion Bank signed such a deal in 2004, giving Hewlett-Packard (Canada) Co. control of its 2,400 ATMs. (Diebold was a subcontractor in that agreement, providing maintenance services.)
