The Smart ATM Could Mean More Business for ATM Owners

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Although ATM machines will be part of the financial industry for a long time, they can’t stay the same forever. ATMs need to evolve to meet the demands and expectations of the modern consumer.

Whether we like it or not, ATM machines are in the category of “technology.” And, people expect technological devices to do more than ever. Essentially, that means that people will continue to expect more services from ATMs.

And that’s the whole reason smart ATMs were created in the first place. So, what is a smart ATM? What does it do? And—most importantly—how will these new ATMs affect you, as an ATM machine owner (or future ATM owner)?

What is a Smart ATM?Happy Woman Using Smart ATM

Smart ATM machines aren’t new. They’ve been around for a while. But, they’ve been fairly uncommon for many years, because there hasn’t been a huge demand for them. And, they demand more capable banking and ATM processing networks.

As such, smart ATM machines have been slow to take off because the supporting infrastructure and consumer demand was a bit behind the smart ATM technology.

A smart ATM is just an ATM machine that’s capable of doing more than dispensing cash. Banking customers can use one to deposit funds, open accounts, transfer money, and other things that can usually only be done at a bank branch.

Smart ATM machines that offer all these services are called “microbranches” or “branch-in-a-box.”

Now, not all smart ATM machines offer complete branch-in-a-box functionality. Some only offer an additional service or two beyond dispensing cash. But, it’s possible for ATM machines to provide almost all the services that a physical bank branch offers.

More powerful ATMs bring us one step closer to true 24-hour, self-service banking.

If you own a smart ATM machine, offering additional services increases your opportunities for transactions, since people have more reasons to use your machine. And, that’s always a good thing.

Smart ATM Technology

An ATM needs slightly more advanced technology to achieve all the functionality that smart ATM machines require. The hardware and user interface on traditional keypad ATMs isn’t quite enough to perform more in depth financial transactions.

So, smart ATM machines must be equipped with a few key capabilities to deliver microbranch capabilities.

Touchscreens

Touchscreen ATMs can do a lot more than keypad ATM machines. And, the ubiquity of touchscreens on smartphones, tablets, and laptops means that customers are much more comfortable using a touchscreen ATM than in decades past.

A touchscreen also makes it possible to perform banking functions that require a signature, which is a requirement for true branch-in-a-box ATM service.

Cash Recycling

Cash recycling is a vital capability for smart ATM machines, since they enable users to make deposits.

In short, cash recycling is using deposited bills for dispensing cash for ATM withdrawals. It’s just common sense to do this if your ATM accepts deposits. However, there’s an additional benefit: the ATM owner doesn’t need to restock their ATM machine as often.

Intelligent Deposit

Intelligent deposit sounds fancy. However, intelligent deposit just means that customers can make cash or check deposits through an ATM.

ATMs that offer intelligent deposit usually make digital copies of checks. And, the ATM owner has no control over when the funds are available. That’s up to the bank.

Network Connectivity

All the additional services require that your ATM machines have solid connectivity with banks. If you run smart ATMs, that means that you need to choose your ATM processor carefully. There’s a lot more data transfer involved with bank-in-a-box functionality, and your ATM processor needs to support that connectivity.

Happy Older Couple Using ATMHow Smart ATMs Will Change the Banking Industry

Smart ATM machines aren’t going to cause some massive disruption. But, they’re creating a new channel for customers to access banking services.

A significant percentage of consumers already use ATM machines as their only method of interaction with their bank. And, better ATM machines will likely cause that number to increase, because there will be fewer and fewer services that are not offered through an ATM.

So, banks will want smart ATMs. These machines help them make more money (though, not necessarily through ATM fees). And, many banks will outsource their ATM services to avoid the upfront costs of purchasing new machines.

This presents new opportunities for third parties—ATM machine owners—to provide the software and infrastructure to support services through this expanding channel. At the end of the day, more capable ATM machines mean a larger, more profitable ATM industry, and more potential for ATM owners.

Do You Need a Smart ATM?

We’re all about owning ATM machines here. So, the important question to answer here is whether or not smart ATMs are a good idea for ATM business owners.

First, you don’t need to start transitioning to smart ATM machines or start with one as your first machine. Cash dispensing ATM machines will make plenty of money for ATM machine owners for decades to come.

However, smart ATM machines offer a lot of banking functionality that makes them attractive to banks. If you want to partner with banks to provide branded off-site ATM machines, being able to provide more banking services through your ATM makes your offer more attractive to the bank.

So, the viability of smart ATMs in your business depends on where you want to place your ATM machines. Most traditional locations don’t have a huge demand for branch-in-a-box services.

In the long-term, it may be wise to buy ATM machines with the core capabilities of a microbranch ATM, like touchscreens and cash recycling. But, there’s no hurry.

If you’re a new ATM business owner or looking to expand your fleet of ATMs, you can safely continue to use cash dispensing ATM machines.

ATM Outsourcing: More Opportunities for ATM Owners

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The Rise in ATM Outsourcing

ATM outsourcing is nothing new. Financial institutions have been outsourcing ATM services since the 90s. However, the demand for ATM managed services could spike as banks perfect their online banking services and regulations require more ATM updates.

ATMOutsourcing - Drive Up ATMsTraditionally, banks only outsourced off-site ATM machines that were difficult to keep stocked with cash and maintained. However, ATM outsourcing became such an attractive offer for banks that some banks outsourced their wall ATMs at drive-up and walk-up locations.

Now, ATM outsourcing is even more attractive in the wake of the EMV update, with another hardware update on the way with the Windows 10 transition. The update costs are significant. And banks are working to consolidate their physical branches, without limiting customer access to banking services.

Additionally, ATM machines aren’t a major source of revenue for most banks. They usually offer free transactions to their customers. So, most of the transactions generate no revenue.

Banks will likely have to eat the cost of the free ATM transactions for their banking customers. But, offloading ATM update costs, maintenance, and ATM vaulting to an ATM managed services provider could easily offset the lost transaction revenue.

And finally, banks don’t want to abandon their ATM services completely. ATM machines shorten bank teller lines and minimize stress on their customer service staff by enabling customers to self-serve for simple transactions.

So, handing the entire ATM operation over to ATM managed service providers is a cost-efficient move for most banks.

This is good news for ATM owners since it means more opportunities to provide white-label ATM solutions in very good locations. However, there are a few things you’ll need to make your services attractive to banks.

ATM Deposits

Most bank branch ATMs accept deposits. Now, the bank may be okay with losing the ability to accept deposits through the ATM machine when they outsource the service. But, that depends on the location and what percentage of the total transactions are deposits.

This means that you’ll be in the best position to scoop up an ATM managed services contract if you have ATM machines capable of accepting deposits and an ATM processor that can communicate with the bank’s system well enough for more than just cash withdrawals.

Banks have historically accepted outsourced ATMs that didn’t accept deposits. However, it’s likely that banks will prefer deposit capable ATM machines in the future as they look for cost-efficient replacements for full-service bank branches. So, accepting deposits will help future-proof your outsourced ATM operations.

Wall-Mount ATM Machines

ATMOutsourcing - Wall ATMs

Standing ATMs are appropriate for some off-site bank ATMs. However, it’s likely that banks will prefer bundled services for their ATM machines. Meaning, they’ll want their ATM managed services provider to supply their branch ATMs in addition to the off-site ATM machines.

Be prepared to offer a wall-mount ATM as part of your package when you’re pitching your services. Branch ATMs are likely to get a lot of traffic, and the bank will be paying the transaction fees. So, supplying a wall-mount ATM machine can be a big win for you.

Updated ATM Machines

You’re probably in the process of updating your hardware to accommodate Windows 10, if you’re already in the ATM business. But, if you want to take advantage of ATM outsourcing opportunities, you may want to speed up the process.

Avoiding update costs is a major reason that banks want to outsource their ATM services. So, it’s pretty much mandatory that you can offer ATM machines that will be compliant past 2020.

Fortunately, most new ATMs will be capable of handling Windows 10. But, future compliance is an important thing to check if you’re purchasing used or refurbished ATM machines.

Either way, the deadline for upgrading ATM machines to Windows 10 will be here sooner than you think. If you want to ride the ATM outsourcing wave, you should concentrate on getting your fleet compliant while banks are still looking for ATM managed service providers to take care of the update for them.

ATMOutsourcing - Signing SLAService Level Agreements

ATM owners are familiar with these. But, service level agreements are vital when working with banks.

First, the terms of your service level agreement can be a selling point for your ATM services. It removes the risks of ATM outsourcing for the bank and makes your offer more appealing.

But, you’ll most likely need to include things in your service level agreement that meet a bank’s requirements for any ATM, such as armored truck service for ATM vaulting.

Most banks also won’t accept an ATM managed services contract that doesn’t have a service level agreement.

So, if you haven’t developed one yet, you should create a template for your service level agreement. That way you won’t miss anything during your negotiations.

Other Businesses That Need ATMs

While banks may be a major source of ATM outsourcing business, they’re not the only ones who may need ATM machines from an ATM managed services provider.

Many banks have micro branches inside grocery stores, malls, and shopping centers. As banks consolidate their physical locations and move more services to online banking, many of these micro branches will close.

This leaves these locations without an ATM. And, that means opportunities for ATM owners to capture more high traffic locations with dedicated user bases.

So, even though the required ATM updates may present additional expenses for ATM machine owners, they also offer new ATM outsourcing opportunities. And, that’s new business that could more than cover the cost of ATM updates in the long run.