It has been said around in this field that the future of ATM deployment is bleak. It has proven true now. Traditionally, ATM source of revenue comes from surcharge fees. Speaking in operations and management terms, ATM today is more of a qualifier rather than an “order winner” for a retail banking institution. We are very unlikely to open a bank account with a financial institution which does not offer any ATM service. In fact, in North Carolina, credit unions, especially State Employee Credit Unions are particularly favorable because of its fee-free cash access at Cashpoint ATMs.

More importantly, the cost of maintaining an ATM (over $1,400) outweighes the revenue generated by the ATM (over $1,100). Aiming to reduce overhead of having branches with full-time staff, banks are facing difficult marketing decisions on how to use these costly (losing money?) investment efficiently to cross-sell their products. Today we have seen ATM screens with marketing messages such as personal loans information. There are ATM machines that dispense stamps. Banks and ATM manufacturers are likely to come up with more of these new usage for ATMs.

Interestingly, Diebold, one of the major players in the ATM manufacturers field, has decided to go with voting machines instead, but the move has not gone well so far. Another issue that keeps bank managers up at night is the rising of frauds resulting from ATMs. Banks fraud detection policies are so tight that they probably block every foreign ATM transactions nowadays.

Regardless of all the issues above, ATM is here to stay. It is a qualifier in the retail banking industry. The good news is banks can utilize ATM to strategically position themselves in this competitive business environment. There are a few things banks can do to achieve its strategic goals through effective use of ATMs.

1. Improve security at ATMs: Many European countries as well as Asia-Pacific countries are moving towards EMV implementation now to fight against ATM fraud. US banks are still behind in this development even though Visa and Mastercard have made issuing banks responsible for fraud loses if the banks are not EMV-compliant.

2. Make ATMs an strategic investment: A strategic investment will not generate cash/returns immediately. It takes time to build the strategy that include ATMs as part of the planning. Cross selling bank products on ATM screens is the first step, but much more could be done. For example, as prepaid market grows, ATMs can serve as a top-up center for prepaid cards. ATMs can be used for wired transfer (a feature that is not available currently). Bank of America is currently deploying ATMs with check imaging capability to encourage consumers to cash checks at ATMs.

To utilize ATMs as an enabler for generating revenue growth, banks have to make the right decisions early to ensure that they can see the results a few years down the road.