Pub. 12 2022-2023 Issue 2

ATM Pooling: Solving the ATM Puzzle for Community Banks

At its inception over 50 years ago, the ATM fired the starting gun for the self-service banking culture and quickly gained steam as a crucial touchpoint that freed account holders from the shackles of business hours and banking at a single branch. Today, a myriad of factors including trends accelerated by a global pandemic, social/political pressures, and rapidly advancing ATM technology are again shifting self-service expectations and changing the framework of the traditional ATM network.

For community banks, the recent changes surrounding the ATM have created a quandary in regard to their ATM network strategy. On one hand, cash usage decline and scares of a “cashless society” have put a microscope on escalating ATM costs, usage, and regulatory compliance for community banks, and understandably so. But, simultaneously, access to cash remains relevant, accounting for roughly 20% of all transactions in the U.S., and the pressure for community banks to serve even the smallest of communities remains constant. All while new ATM technologies continue to add functionality and deeper account access for consumers, giving way to hybrid or fully self-service branch models.

So, to sum it up — If you reduce or stop investment into your ATM fleet, you risk a critical self-service channel becoming obsolete and your institution failing to effectively serve your customers and community, likely costing you accounts and goodwill. Conversely, if you continue to invest in your ATM fleet to meet the rising demand for self-service, the cost is high and the return is low, in other words, putting more capital into a loss leader. So, where do we go from here?


Shared Infrastructure:

Across the globe, community banks faced with this same dilemma have turned to a solution commonly referred to as “ATM Pooling”, a strategy that delivers operational cost savings while expanding the ATM footprint and simplifying the management and security of the ATM channel as a whole.

By definition, ATM pooling involves transferring ATM ownership and operational responsibility to an expert third party, resulting in significant cost reduction for the individual financial institution, and allowing them to continue serving consumers in locations where low demand would otherwise render an ATM uneconomical.
Prime examples of the success of this strategy are the Geldmaat Network in the Netherlands, and Batopin in Belgium. In both cases, several of the country’s largest banks have joined forces through shared ATM infrastructure aimed at optimizing the network and providing a safe and efficient service to their account holders. In short, these community banks are less attached to the headache and heartache of ATM ownership and operations, and more interested in the efficiency and performance of the shared infrastructure.


The U.S. ATM Pooling Blueprint:

In the U.S., ATM pooling might not yet be on the radar of our country’s largest community banks as it is in Europe, but organizations such as banking associations, leagues, and other membership-based advocate programs create opportunities in the ATM pooling space at the state and regional level. With widespread reach and member bases typically consisting of hundreds of community banks, opening a shared ATM infrastructure program would create significant cost savings, network optimization, and operational efficiencies for participating community banks, while passing along convenience to their account holders.

Dolphin Debit (Euronet Worldwide’s North American ATM Services Division) has been “pooling” ATMs since 2005. Currently, the Dolphin ATM Alliance consists of 2,000+ ATMs spread throughout the U.S. With a blueprint already in place, this is a shared infrastructure service model that is poised to rival the ATM pooling initiatives of our foreign banking colleagues.

Service models like the Dolphin ATM Alliance combine the operational simplicity and cost-cutting elements of a pure play end-to-end ATM outsourcing solution with the “pooling” effect of shared ATM infrastructure. A combination that effectively solves the ATM puzzle for community banks: less capital investment into the ATM fleet, streamlined ATM operations, an expanded ATM footprint, and seamless adaptation to everchanging regulatory compliance requirements and rapidly advancing ATM technology.

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