What Roles Do Remote ATMs Play In A Local Network?
ATMs have been around for more than 50 years yet are often overlooked as an option to a branch in certain situations. The ATM of 50 years ago was limited in functionality, but today they can perform many of not most of the transactions your customers can do at the teller line, including withdrawals, deposits, transfers, and some account management activities.
Remote ATMs, or those machines not located at a branch site, historically have been limited to cash dispensing. Most were operated by third-party ISOs (or Independent Service Operators). Most still are today as banks have been slow to realize the potential of building out a branded, owned remote ATM network.
However, we learned a while ago in our banking careers that a well-sited, deposit-taking ATM could act as an extension of a nearby branch, especially in neighborhoods of busy branches. In those settings, these remote ATM sites can offload some of the transaction volume from the branch. Cash withdrawals and cash/check deposits are still the two most common branch teller transactions. Branch ATMs still tend to be busier than remote ATMs, so more likely to have queue lines. By taking pressure off the nearby branch. they improve the customer experience at both sites.
Sometimes it doesn’t make sense to infill a small gap in branch market coverage because there isn’t enough incremental potential today or a new branch would create too much branch overlap. In these situations, these remote ATMs described above can be used as infill service touchpoints. In our experience, if executed well these infill satellites can improve nearby branch sales performance. While its hard to measure direct sales at the remote ATM, there are techniques for analyzing sales lifts within the remote ATM trade area over time.
One other aspect about remote ATMs is that they provide another branding opportunity to increase overall brand awareness in a market. The key is that their sites need to be chosen carefully to maximize that visibility. If your branch strategy is creating a “thin” network, and there is a lot of online discussion of that approach in retail banking publications, then these remote ATMs create a greater illusion of mass and density without the same cost structure or capital commitment.
Finally, many firms are looking to close some branches as customer behavior shifts more to digital channels. If you are leaving a local market “uncovered” (i.e., no branch trade area serves that local market) then you want to consider adding a remote ATM as a leave-behind touchpoint, in order to leave you local customers and easy to use site for their routine transactions.
Many firms manage branch and ATM channels independently. We believe that is a mistake, at least from a distribution strategy perspective. Both are the physical manifestation of your brand. Both offer convenient transaction sites for the things done most frequently. If your customers treat them as one, shouldn’t you?