The Evolution of ATM Strategy: Managing Experience, Efficiency & Cost

Self-directed banking is quickly emerging as the future of the banking industry. As credit union members become increasingly comfortable with using self-service technologies and credit unions shift from using tellers’ time for everyday transactions to applying it to more valuable, consultancy-led conversations, a self-directed approach simply makes sense.

However, deploying, managing and maintaining an optimized self-directed channel is often complex and time consuming for credit unions to manage, especially when considering factors such as security, compliance and availability.

As a result, credit unions are determining how to optimize the self-directed banking channel to deliver the experience that members want while boosting efficiencies and simplifying operations in the back office. Outsourcing the self-directed banking channel via ATM as a Service has surfaced as a key strategy.

ATM Management for Today and Tomorrow

Savvy credit unions recognize their ATM endpoints as a critical part of their digital transformation strategies. ATM networks were built decades ago to dispense cash, but today, members can complete many everyday transactions at an advanced ATM, such as cash and check deposits, account opening, transfers, bill payments and more.

In a connected age of open banking, mobile access and ever-expanding accounts and services, the traditional model of ATM ownership, with its high capital needs, multiple vendors, constant cycle of upgrades and rapidly changing experiences, limits a credit union’s ability to innovate and respond to changing market forces in anything near real-time. Plus, increasing fleet support costs, aging technology and the fight for talent prevent most institutions from maximizing the full potential of this crucial self-directed channel.

Seeking to surpass the challenges of the traditional ATM deployment model, more credit unions are turning to an ATM as a Service model, outsourcing all or part of their ATM operations, from ownership to management. Shifting operational management of the ATM to a trusted partner frees credit unions from having to manage distribution, installation, maintenance and cash management, providing them with the bandwidth to focus on their mission-critical initiatives. Stratview Research estimated that the global ATM outsourcing market will reach $23.1 billion by 2026.

There are many key benefits of the ATM as a Service model, such as boosted efficiency. Credit unions no longer have to dedicate an inordinate amount of time, resources and employee hours to maintain expertise across every facet of the ATM channel. Plus, the ATM as a Service approach provides a more consistent cost model, consolidating operational costs into a single, predictable monthly payment and removing lumpy capital expenses associated with major hardware and software upgrade cycles.

The security and compliance benefits also can’t be overlooked, especially as the industry continues to recruit talent. Many credit unions report challenges with attracting and retaining the expertise necessary to effectively stay on top of these critical areas. An ATM as a Service model puts security and compliance in the hands of trusted, dedicated experts with the tools, law enforcement relationships and forensic skills to create a strong security barrier around the ATM channel.

Most importantly, the member experience is enhanced. Outsourcing ATM ownership is an effective way to improve the ATM interface from hardware to software to services, creating a consistently elevated member experience on par with that of the largest banks. An ATM as a Service program can also help ensure members experience reliably high availability. Such consistency is critical in maintaining positive member relationships. Plus, the right partner will help launch new innovations and enhance transaction capabilities over time.

While ATM as a Service models offer many benefits to credit unions, not all partners are the same. Credit unions must understand that true ATM as a Service doesn’t simply mean managed IT services, but rather the reliance on a trusted partner to run the entire ATM program including sometimes overlooked areas such as compliance, fraud prevention, business processes and asset ownership. Look for providers that have deep expertise, a proven track record of success and staying power over the length of the agreement and beyond.

Such a model, if approached correctly, can provide significant benefits to both credit unions and their members. Institutions can reduce costs and complexity, innovate more quickly, further mitigate risk and enhance their regulatory compliance. At the same time, members benefit from being able to leverage digital-first software and hardware, as well as expanded services and greater availability. The credit unions that adopt and embrace the ATM as a Service model will be well-equipped to compete with the largest traditional financial institutions and neobanks while simultaneously enhancing the member experience.

Don Layden is the EVP and president of the Atlanta-based NCR Banking, which offers solutions such as NCR ATM as a Service and the Allpoint Network to financial institutions.