Non-bank ATMs have hidden opportunities amid challenges

Non-bank ATMs are a critical part of the industry, but they have also struggled significantly. Between dropping cash usage, soaring fees and other hardships, independent ATM operators have taken a lot of hits.

Big challenges

During COVID-19, IADs saw significant swings in transaction volumes, which gave them no ability to plan for the future, David Dove, president of Brink's Global ATM, said during a session at ATMIA, held from Feb. 14 to 16 in Las Vegas.

Another issue was the sudden increase in interest rates from the Federal Reserve, which caused the costs for ATMs to skyrocket.

"It's not just that Federal Reserve raised interest rates from near zero to almost 5%, but they did it in such a short period of time. None of us could respond quickly enough," Dove said.

Initial responses

In response to these pressures, IADs began drastically raising surcharge fees, but Dove pointed out these are not enough to make up for decreasing transaction volumes.

All that being said, there are still many hidden opportunities for IADs and many of them lie in meeting customer expectations.

True opportunities

First of all, while cash use has decreased, there are still many Americans who use it. Ben Bregman, corporate VP of NCR Atleos, said during a panel at ATMIA that 58% of Americans carry cash and 23% of Gen Z use cash regularly.

Second, customers want non-bank ATMs, and they are using them more regularly. Alicia Moore, head of US ATM product at Visa Inc. spoke about a study that Visa conducted on customer expectations and found more are using or want to use non-bank ATMs.

"Consumers are using non-bank ATMs," Moore said during the ATMIA session with Bregman. "This may not have been true ten years ago, but it is now."

When asked why they wanted to use it, customers gave the following reasons:

• 47% said they used a nonbank ATM because it was closer.
• 45% said they could compete it while running errands.
• 43% said ATM wasn't accessible outside of bank hours.
• 28% said they feel safer using nonbank ATMs in stores vs. unstaffed bank ATM after hours.

The safety issue is particularly important as customers are more aware than ever of the thefts that occur in drive-thru ATMs. A quick read through the Security topic center on ATM Marketplace will reveal story after story of people being robbed while using a bank ATM.

The study also revealed that customers don't just want a regular ATM, they want ATMs that deliver more advanced features such as accepting cash deposits.

62% of respondents said they would be very likely to deposit at a non-bank ATM and 69% said they would change their shopping behavior if there was a deposit-accepting ATM in a retail store.

This information reveals a key component that will set successful IADs apart: providing ATMs that offer more than just one service.

Death of the single function device

In a session at ATMIA, Leland Englebardt, president of e-squared systems Inc., said he believes we are living through the "death of the single-function device." For example, customers now compare every experience to their smart phones. They can download as many apps as they need to get the customized experience they want.

Englebardt believes that by embracing cloud-based technology, ATM operators can turn their machines into app-like devices. For example, an IAD could use cloud-based technology to turn features on or off based on customer preferences or market conditions, such as bitcoin purchasing and selling, dynamic currency conversion, loan payment and more.

"Think of it as Netflix for ATMs. You have a functionally infinite selection of content and it's all coming in one line," he said.

The bottom line is that customers still want access to cash and ATMs, but they want those ATMs to perform more than one task. The IADs that take advantage of this will prosper.