Banks are confronted with what seems to be an impossible puzzle to solve. Even as more customers go cashless, banks are under greater public pressure to provide access to cash, but the cost of delivering this is too high. The answer seems to be ATM pooling, but how do you go about doing this?
Stefano Cipollone, Business Development Manager at Auriga, has over 30 years of experience in providing ATM software solutions and has expert knowledge on ATM net design and deployment. With his extensive background, he provides specialist insight into how ATM pooling can help address the UK’s access to cash dilemma based on his experience in ATM acquiring projects.
First of all, what exactly is ATM pooling? It involves transferring ATM fleet ownership of two or more banks into a separate entity. This will operate a shared fleet of ATMs, but there are different ways of achieving this. For instance, banks can integrate this initiative into their business plans by using it as an opportunity to rationalise their ATM services or as a method of reducing operational costs – or both.
One of the challenges of ATM pooling is that some agreements can be difficult to set up and evolve, especially if they are amongst competing banks in larger markets where cash is still commonly used.
Once an agreement has been struck, how can the banks’ extract the most benefits from ATM pooling?
The prime focus is on how sharing ATM fleets delivers operational cost savings and simplifies how banks manage and secure their ATM network. Joining forces on ATM services provides banks with an opportunity to radically rethink their ATM network, enabling banks to remove duplicated ATMs and optimise where and how they are deployed. Many existing bank ATMs are located either in or just outside branches, however, these might not be the most popular locations for customers. So, ATM pooling can create the opportunity for banks to redraw the map of their ATM locations, choosing retail and office parks or public transportation hubs as better locations to ensure ATM coverage meets social needs.
Having the freedom to re-site ATMs also allows banks to respond to social pressure on maintaining access to cash. For example, the Batopin ATM pooling initiative in Belgium allows four banks to meet the requirement for an ATM to be located within five kilometres of 95% of the population. Batopin is a great example of how ATM pooling is not about the crude reduction of ATM services. They are undertaking a painstaking analysis of geographic and demographic data to identify the optimal locations for their new ATMs. As evidence of how this process is about improving ATM services, Batopin is committed to having multiple ATMs in those locations where access to cash demand is expected to be highest, minimising queues.
What is exciting about ATM pooling is how it could allow banks to undertake a root review of their ATM fleets and infrastructure. This could involve a total revision of the ATM infrastructure and break the ATM channel out of its technology silo that inhibits cost savings and innovation.
It can open the door to introducing a new architecture and next-generation infrastructure. For example, in addition to cash withdrawals there are additional functionalities that are worth taking into consideration when deploying ATM pooling – depending on the bank’s strategy. Dynamic Currency Conversion (DCC) for international customers, surcharge fee management for customers of other banks, advertising, marketing, and couponing are all relatively easy to integrate into an ATM network and could add value.
ATM pooling can also be integrated with the mobile channel. This gives obvious and immediate benefits to the customer in terms of a sleek customer experience, quicker transactions, and the ability to leverage mobile applications for a number of other relevant initiatives, such as mobile top up, third-party payments or other services offered by home banking.
In general, having software to support and make additional functions possible is essential and usually a worthwhile investment if banks are to find value to add within their ATM networks. An end-to-end solution is required to support all the requirements of ATM pooling and helps banks and financial institutions to also move towards an assisted self-service branch model. These lean self-service branches assisted by local staff, with the use of a tablet or remote 24/7 operators, can be the next evolution for these types of initiatives. This can also provide a solution that manages the operation of branches on behalf of a financial institution or even multiple brands in a pooled environment. Hence, the solution’s capability to manage a much wider set of transactions and support corresponding hardware devices (cash and coin recycling, scanners, video cameras, etc.) is fundamental.
This alternative approach will grow in popularity as more banks are pressurised to maintain access to cash but also reduce costs and attempt to make their ATM networks break even or become profitable. Countries where the political pressure on this issue is getting ever hotter, can draw on the proven success of ATM pooling in some European countries, learn valuable lessons about best practices and how to avoid the pitfalls. Yet, ATM pooling should not be seen as simply a cost-cutting measure as examples like Batopin show how this approach can revitalise ATM networks for the public good and make this channel more relevant for the long term.