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Tight budgets are keeping most banks from buying envelope-free ATMs, which can cost as much $35,000 each, suggest the results of a recent survey of 23 of the 80 largest U.S. banks based on ATM-network size.
Envelope-free ATMs enable bank customers to deposit checks and cash without the need to use a sealed bank-deposit envelope.
Boston-based consultancy Aite Group LLC, which conducted the survey, would not disclose the polled banks' names. However, Kate Monahan, an Aite analyst and author of the 39-page report "U.S. Bank ATMs: Rebuilding the Foundation," says the survey involved at least one of the three largest ATM networks.
The three largest bank-ATM networks are owned by Bank of America Corp. Wells Fargo & Co. and JPMorgan Chase & Co., all of which are buying envelope-free ATMs.
Of the 23 banks surveyed, only 12% of their 42,780 combined ATMs accepted envelope-free deposits at the end of 2008, Monahan says. Aite Group's study found, however, that envelope-free ATMs could grow to become 14% of total ATM deployments by the end of 2009, according to survey respondents.
This year, Aite Group estimates survey respondents will deploy a combined 43,380 ATMs.
Next year, deployment of envelope-free ATMs could grow to 26% of ATM deployments because bank executives expect to have more freedom to spend money on ATMs, and many banks will have to replace their aging machines, Monahan says. And more banks likely will buy envelope-free bulk-cash and bulk-check ATMs that can accept more than one check note at one time, she says.
Monahan estimates that survey respondents will deploy an estimated 44,390 ATMs combined in 2010.
The reason most banks have not bought envelope-free ATMs is because of tight budgets, the survey found. "I talked to a lot of executives, and they just don't have the money to spend," Monahan says. "I expected [the number deployments] to be to be higher because envelope-free ATMs are one of the most-talked-about areas in the ATM space today." One bank executive in constant contact with an ATM vendor says the company has not made a strong enough business case for his bank to buy envelope-free ATMs, Monahan says.
A proposed 20% assessment on domestic bank deposits by the Federal Deposit Insurance Corp. has kept community banks from purchasing envelope-free ATMs, according to Gil Luria, an analyst with Wedbush Morgan Securities in Los Angeles (ADN, 5/21).
However, two bank officials interviewed by ATM&Debit News said that was not the reason why they were not buying envelope-free ATMs. Grand Rapids State Bank in Grand Rapids, Minn., and Pendleton Community Bank in Franklin, W.Va., said they did not budget for purchases of new ATMs.
Executives of NCR Corp. and Diebold Inc., two ATM manufacturers that sell 95% of the ATMs used by the nation's banks, say they have not made much progress selling envelope-free machines to regional and community banks. Manufacturers contend envelope-free ATMs reduce the need for armored car pickups and for branch employees to re-stock deposit envelopes.
However, one surveyed official of a bank with ATMs clustered near each other said armored-car costs were not too high, Monahan says. Other banks, however, could not tell Monahan how much armored-car pickups cost. "I was really surprised by that," she says. ATM
