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ATMs grow smarter, more accepted in the marketplace

Remember the days before ATMs? When if you didn’t get to the bank by Friday at 5, you didn’t have any money for the weekend?

ATMs are so much a part of the landscape now, with an estimated 350,000 in service across the U.S., that it may be hard to remember when there was no such thing as 24/7 access to your cash. Especially not just at home, but anywhere in the country, and almost any populated area of the world.

“When ATM’s were first introduced about 25 years ago, there was a small, core group of individuals who liked and used the service,” says Rick Looser, president and COO of the Cirlot Agency in Jackson. “Others were skeptical, didn’t trust them and saw no use for the technology.”

Now, based on recent research done by our research company, Precision Marketing Research (PMR), electronic banking has emerged as the number-one deciding factor for people searching for a financial institution.” Though wildly popular with consumers, with an adoption rate in excess of 80%, ATMs are not used much for deposits. Just 10% to 15% of total retail deposits occur via ATMs, Looser said. And less than a third of ATM users make a deposit at least once a month.

“We have found this statistic to be true locally,” Looser said. “In focus groups conducted by PMR, consumers revealed a deep aversion to putting money into a machine versus handing it to a teller. Industry authorities think that aversion seems to decline when ATM users can view digital images of their check — on the screen and/or the receipt. According to a recent ATM & Debit News report, deposit volume has grown from 20% to 30% at a number of Bank One ATMs equipped with check imaging modules.”

Check 21 bolsters future

Looser predicts the future usage of ATMs will be bolstered by the new Check Clearing for the 21st Century Act, or Check 21, which gives substitute checks printed from digital images, known as image replacement documents (IRDs), the same legal status as originals. The act, which will take effect in early 2005, encourages financial institutions to exchange digital images, rather than paper, to process checks.

“Authorities believe that up to 40% of retail check deposits could be moved to ATMs with the advent of check imaging — largely because deposits, like cash withdrawals, are a quick and intuitive transaction,” Looser said. “They are hoping that checks will be imaged at 50% of ATMs by 2010. It will be very interesting to see if banks in Mississippi lead this oncoming trend or lag behind it.”

Clyde Hubbard, BancorpSouth’s executive vice president responsible for operations, including electronic banking, said most of the bank’s ATMs accept customer deposits with some immediate access to some portion of the funds deposited, while other ATMs are only cash dispensers.

“Also, some banks offer mini-bank statements, sale of stamps, etc.,” Hubbard said. “People do trust ATMs and also have come to understand the security issues and protection offered under Federal Banking Regulations relating to electronic transactions.

Delivery channels today must be 24/7 with ATMs, Internet banking and debit/credit cards growing in volumes as paper checks decrease.” Hubbard said convenient locations and easy access are two primary features that make one type of ATM superior to another. BancorpSouth primarily installs drive-up ATMs at their banking locations.

Still a demand for tellers

ATM transactions are less expensive than human tellers. But while many customers are totally satisfied with non-human contact, Hubbard said other customers prefer a human teller for personal contact.

“The reduced cost to the bank must be countered by the loss of an opportunity to cross-sell and provide additional services to the customers,” he said.

Paul Maxwell, corporate communications manager for Hancock Bank, said that when ATMs were introduced, there was talk of a teller-less banking world. “That isn’t the case,” Maxwell said. “In fact, today’s customers expect both tellers and ATMs for convenient banking options wherever they live, work or travel. In the last 10 years, ATM transactions nationally have increased from approximately eight billion to 14 billion, indicating that ATMs are important to many customers.

“Customers’ decisions to use ATMs are based on convenience and choice, and many customers choose to use ATMs more frequently than tellers for basic daily banking transactions. The cost of an ATM ranges from $12,000-$50,000, depending on the functions, and annual maintenance can run from $12,000-$15,000 annually. So, the cost-savings tend to balance out in the long run, especially as manufacturers enhance ATM functions and tellers remain integral to Hancock Bank’s full-service community banking concept.”

Trustmark National Bank pioneered the first free-standing ATM in a grocery store in the United States in 1974, and developed the first mobile ATM in the United States in 1989. Gray Wiggers, senior vice president and marketing director for Trustmark, said the bank has two mobile units that serve the Jackson and Memphis markets at many events throughout those trade areas.

“Customers depend on technology to make their life ‘hassle free,’ and ATMs are a way to bank at your convenience,” Wiggers said. “ATMs have become a utility and are essential in everyday life.”

ATMs are actually considered one of the best technological innovations in history, says Anita Nobles-Arguelles, marketing manager for Triton in Long Beach, one of the largest ATM manufacturers in the country. A recent study depicted ATMs as one of the top 20 innovations in recent history.

“It is pretty safe to say ATMs have been embraced by consumers at every level of the economic chain,” Nobles-Arguelles said. “Most of ATMs in the U.S. are not in bank locations. Off-premise retail ATMs are one of the things that has facilitated the uptake in ATM transaction volumes. Retail ATMs have been one of the factors in spurring consumer growth in confidence in ATMs. They are everywhere. On every corner you have access to ATMs, which means you have access to cash in any city or country.”

In foreign countries, using an ATM can mean getting a better exchange rate than using the official currency exchange offices at banks and airports. And not every exchange is open hours conducive to when cash is needed.

While there is a strong trend in the market for ATMs to do more types of activities, they tend to be financial type transactions.

“Our belief at Triton is that ATMs are going to be doing more financial activities,” Nobles-Arguelles said. “For example, instead of just withdrawing, they can be used to recharge your prepaid cell phone card. ATMs will increasingly be used to do short, quick financial transactions that don’t require a lot of input.”

One current trend with ATMs is to make them smaller and more streamlined and more colorful to attract the attention of consumers. Screens can be used to advertise. For example, a bank might advertise a low interest rate on used car loans.

“Therefore, the ATM becomes part of the messaging, branding and marketing business,” Nobles-Arguelles said. “ATMs can be used as a channel to customers. That is pretty important to the banks.”

As the number of ATMs has increased, the transactions per ATM have declined. ATMs at banks aren’t getting as much business because more ATMs are being used at retail outlets. And even at retail outlets, competition is fierce. So there is interest in value-added offerings from the ATM that attract more transactions.

In the future, ATMs are expected to get increasingly smart.

“The time will come when you go to an ATM and it will recognize you,” Nobles-Arguelles said. “The ATMs will be customizable. Screen sets will welcome you by name and might say, ‘You withdrew $60 last time here. Would you like to do this again? And by the way, your homeowner’s insurance is due. Do you want to pay that?’ ATMs are going to get to know their consumers. Programs are coming for ATMs that are going to allow that to happen not just at your bank location, but other ATMs locations. ATMs are going to get smarter, there will be more types of transactions, and it will interact on another level of intelligence with consumers. Literally whatever your bank wants you to do, you will be able to do on an ATM.”

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.


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