The automated teller machine maker Tranax Technologies Inc., which has long sold its machines to independent sales organizations, now is also focusing on community banks and credit unions.
Hansup Kwon, the Fremont, Calif., company's chief executive and founder, said in an interview Monday that the larger ATM manufacturers are so focused on big banks that they sometimes overlook small ones.
"When you're a small bank, you are at the lowest end of the totem pole, basically. They have to wait until the larger banks are served, and at the end they get their turn," Mr. Kwon said.
About 70,000 Tranax machines have been deployed at merchant sites since the company was founded in 1986, and in the past two years it has sold 450 to financial companies.
Mr. Kwon said his company got a foothold in the bank market in 2004 and 2005, when many banks were upgrading their ATMs to comply with the Triple DES encryption standard.
Tranax's typical full-service machines cost about $20,000; high-end machines from NCR Corp. or Diebold Inc. can cost more than $50,000. "A lot of our customers want to have the features they want at the price they can pay," Mr. Kwon said. "I'm not trying to be the ATM supplier to satisfy everybody. Bank of America probably needs $60,000-$70,000 ATMs, but a community bank on the street corner, they need a $20,000 ATM."
Some ATM industry watchers have said that the market is close to saturated, but Mr. Kwon said Tranax's sales continue to grow. The company shipped about 10,500 ATMs in 2004 and 13,500 last year, and it is expecting to ship between 14,500 and 15,000 this year.
Selling directly to banks is part of Mr. Kwon's growth strategy. "I don't see the saturation yet, but certainly it will come," he said. "We need to grow, obviously, and the retail ATM market is basically entering a zero-sum game, almost."
Eventually, he wants to sell ATMs to banks that own between 100 and 300 machines.
Freddie J. Deutsch, the president and CEO of Signature Bank of Georgia, has purchased two Tranax ATMs in the past six months: a walk-up one and a drive-through one that has yet to be installed.
Though the Sandy Springs bank already had an NCR machine, "we looked at the functionality and the needs of ... [an NCR ATM] versus the cost benefit and felt the Tranax was a better investment for us," Mr. Deutsch said. "It has sufficient functionality, but at a better cost."
However, Tom Hull, the chief information officer for Visions Federal Credit Union of Endicott, N.Y., said his company has used Diebod machines for 25 years, and plans to upgrade all its 82 ATMs over the next five years, with Diebold.
"Diebold has treated us as well as the bigger banks," he said. "We have service-level agreements with them. They are responsive. They do a nice job for us."
Also, Diebold offers imaging technology now, but Tranax does not expect to have it available on its machines until yearend.
NCR is also keen on small banks. Brad Lozier, the vice president of product management for the Dayton, Ohio, company's financial solutions division, said it has been "specifically focused" on the small-bank market in recent years and has gained share there.
"To imply that, because we also sell to large banks, we ignore the small bank and credit union segment, I think, is a bit naive," Mr. Lozier said.
