Federal Credit Union & Cardtronics to Launch New ATM Strategy
The future of the humble ATM is constantly debated. Many experts question its value as a self-service channel in a digital world where online and mobile banking, cashless transactions, and even cryptocurrencies are gaining prominence - particularly amongst younger consumers who have never known anything but digital-first experiences. However, according to the 2018 ATM and Self-Service Software Trends report, these 50-year-old machines are still one of consumers' most preferred channels for self-service - and their value is arguably increasing.
Originally introduced to reduce branch congestion and avoid longer opening hours, ATMs have since evolved beyond recognition and are now central not only for access to cash but for enhanced banking experiences as well. The ATM, indeed, is now one of a bank's core channels, complementing branch, mobile, and online banking. Their range of increasingly sophisticated capabilities includes topping up prepaid mobile phones, making charitable donations, and handling credit card applications, express loans, and currency exchange.
However, the fact remains for banks and credit unions that managing and maintaining an ATM network is time consuming, resource heavy, and expensive, leading many to outsource their ATM strategy to dedicated third-party providers.
Security Service Federal Credit Union
One such financial services provider is Security Service Federal Credit Union (SSFCU), who in March this year partnered with leading ATM operator Cardtronics to manage its entire ATM footprint of nearly 120 ATMs spread across Texas, Colorado, and Utah. The deal means that Cardtronics will acquire SSFCU's ATM fleet and will begin replacing many units with upgraded machines that offer the latest technology, security measures, and better customer experiences.
"The ATM channel is a critical touchpoint for Security Service members, but managing our own ATM fleet in a way that could consistently provide the experience our members deserve was becoming increasingly expensive," said Executive Vice President and Chief Information Officer for SSFCU, Jay Winslow. "By partnering with Cardtronics, a recognized leader in the ATM industry, we are able to put more focus on our members while letting the experts ensure we are providing the best possible ATM service and best member experience."
Managing an increasingly sophisticated fleet of ATMs, along with staying on top of growing lists of regulatory requirements, means that the operational overhead that comes with properly managing the ATM channel has increased as well. And this is one of the key drivers behind SSFCU's decision to outsource its ATM strategy.
Under the agreement, Cardtronics will own and fully operate the credit union's ATMs, including providing cash management and delivery, ATM maintenance and updates, transaction processing, monitoring, and all other services required to maintain the highest possible ATM availability, compliance, and security.
"At Cardtronics, our entire focus is on operating a superior ATM network and delivering a world-class ATM experience. Our scale and expertise in operating ATM networks will directly help Security Service improve both the efficiency of its network and service experience to members," said Brian Bailey, Cardtronics' Managing Director, North America. "By partnering with Cardtronics, Security Service is able to focus its human and financial resources into building services and products that deliver a differentiated member experience, without the expense of staying current with the constant progression of new ATM technologies, including software, security, and new functionality. Cardtronics will deliver a superior experience for Security Service members while the credit union positions itself for efficient growth."
Outsourcing ATM strategies is becoming an increasingly common practice for financial institutions in the US and around the world. One of the biggest reasons behind this growing trend is the need for banks and credit unions to more efficiently deploy their retail banking resources. The ATM is one of the most expensive and resource-heavy channels for financial institutions to operate, yet it remains key as brands come under increasing pressure to improve efficiencies and offer increasingly sophisticated services and experiences.
Outsourcing can solve these problems by reducing operating costs and pressures on back-office resources, all while improving services, offloading regulatory compliance headaches, and gaining access to top-drawer ATM capabilities. A growing number of banks and credit unions are starting to realize the advantages of outsourcing ATM management - according to Bailey, Cardtronics has seen increased interest in its end-to-end outsourcing solutions over the past year.
Will this trend continue? For Bailey, while branches continue to disappear as digital banking gains an ever-stronger foothold, ATM outsourcing is the solution to keeping the channel relevant and customers engaged.
"Banks and credit unions are closing branches to reflect the realities of mobile and online-first banking, while creating smaller, thinner physical footprints. Coupled with this is the consumer's expectation of choice and control in almost every aspect of their lives. For financial institutions, this means providing consistent and available services across multiple banking channels - your ATM channel should be just as easy to use and accessible as your mobile channel, your physical presence just as engaging and exciting as your online experience. Simply outsourcing for the sake of cost optimization is no longer enough - outsourcing to redefine the channel, to tap into exciting innovations and new thinking is the future of ATM outsourcing."
ATM outsourcing is set to be a hot topic at Future Branches 2019, taking place this November at the Hilton Austin, Austin, TX.
Download the agenda for more information and insights.