New ATM Study Reveals Evolving Business Model, Diverging Strategies
As traditional metrics for measuring ATM performance decline, bank, credit union, and independent sales organization (ISO) ATM deployers are redefining how they manage the ATM channel. According to a new survey sponsored by four electronic payments networks -- CO-OP Financial Services, NYCE, PULSE, and STAR -- and conducted by Dove Consulting, a division of Hitachi Consulting, the ATM industry is becoming increasingly stratified.
Stratification of the ATM IndustryIn 2004, findings from the ATM Deployer Study showed an industry at a cross roads. Deployment growth was outpacing transaction growth, resulting in declining per-ATM transaction levels -- particularly foreign acquired transactions (i.e., revenue-producing transactions performed by another deployer's cardholders). Declining revenues, coupled with fixed or increasing costs driven by regulatory requirements (e.g., Triple DES) and increased rent and cost of funds, were putting increasing pressure on ATM deployers' profitability. As a result, the ATM industry was in search of a new model.
Over the last two years, the search for a new model has prompted many deployers, particularly financial institutions, to re-evaluate the role of the ATM: is the ATM purely a cash dispenser, or is it a strategic customer delivery channel?
How deployers answer that question underpins their ATM strategy, and determines how they manage their ATMs -- from how many they deploy and where they deploy them, to what functionality they support and what software they run. As a result, we are now entering a third phase in the evolution of the ATM industry, one that is characterized by the stratification of deployers' ATM strategies: the search for a new model has resulted not in one new model, but many new models, with deployers bifurcating along two dimensions: ATM access (proprietary vs. shared) and user experience (differentiated vs. undifferentiated).
The 2006 ATM Deployer Study provides an in-depth look at the industry's key performance metrics (including transaction volumes, surcharge rates, and operating expenses), recent industry trends and developments (check imaging, ATM branding), and deployers' strategies and priorities. It also presents an outlook for the ATM industry over the next few years, as the industry's business model(s) evolve and deployers' strategies diverge. The 2006 ATM Deployer Study is available exclusively through the study sponsors.
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