You're probably doing ATM outsourcing without realizing it … but are you doing it right?

By Paul Albright, Executive Vice President, Outsource ATM

Many financial institutions prefer to "run their own ATMs." For some, it is because that is how it has always been done. For others, it is because they believe they are best able to provide reliable service that meets their brand image and cardholder expectations. But the truth is they are already outsourcing at least some portion of their ATM operations — and likely losing money on the deal.

"We've always done it that way" seems to be the typical approach to running an ATM program. Owning and managing all of the support activities needed to run ATM operations, internally, is the method most financial institutions are familiar with. They have never really considered "outsourcing" their ATMs.

You purchased your ATMs/ITMs direct

The major automated teller machine and interactive teller machine manufacturers and resellers occasionally offer deals to banks and credit unions for their higher functioning machines and the software required for multifunction machines.

However, the overall cost per ATM/ITM still far exceeds the discounted volume pricing being paid by resellers and operators purchasing in bulk. And, that larger price per location adds up quickly — resulting in a great deal of capital tied up in self-service hardware.

The issue of capital is further exacerbated by the now seemingly revolving door of updates and upgrades. While compliance with the Americans with Disabilities Act has become standard and EMV is mostly put to rest, PCI and DSS continue to update.

And now, financial institutions are facing yet another operating system change with the announced sunsetting of Windows 7 in favor of Windows 10.

These constant upgrades are pushing the envelope for what many older machines can handle. In some cases, they are requiring not only software changes and updates to system drivers, but complete hardware upgrades as well. A few of the older machines may call for new operating cores, additional memory or new processing chips.

And while your capital is tied up with hardware, software and management of upgrades and updates, your staff is tied up managing multiple vendors — for hardware, EFT processing, ATM networking, cash loading and terminal servicing.

Terminal processing with someone else

The majority of banks and credit unions that operate their own machines do not have the ability to directly process transactions in-house. Instead, they partner with a processing company that drives the ATMs, provides gateway access to the various ATM networks and has a portal that allows visibility into the ATMs' status.

Financial institution staff must monitor transactional and alert information provided by this company in order to manage uptime and availability.

Service and maintenance with someone else

Very few financial institutions have ATM/ITM maintenance technicians on staff. Instead, they contract with one or more service companies to help keep their ATMs operational — including preventative maintenance, fault or repair servicing and system updates and upgrades.

Besides redirecting valuable staff resources to ATM service and maintenance, financial institutions must manage service calls, from open to close, in order to ensure that they are completed and that the ATM is back in service and running properly.

Someone has to load the cash

There are a series of detailed and repeated steps involved in preparing for a cash load, balancing machines and cataloging and resolving ATM disputes. While these steps can be somewhat routine for financial institutions that handle cash loading for ATMs located within the branch, they are still tedious because of the dual-controls and time demands they place on staff.

These steps and processes become more complicated still for ATMs/ITMs located in a drive-thru lanes or off-premises. They can also become dangerous and problematic when staff are charged with delivering large amounts of cash to and from ATMs or ITMs. In some cases, additional guards are required.

Some financial institutions have attempted to reduce these risks by instead ordering their cash and having the ATMs filled and balanced via armored carrier. But while duplicity of staffing has been reduced, someone is still responsible for the timely scheduling and monitoring of the cash throughout the delivery process.

Outsourcing done right

Complete ATM outsourcing, or ATM managed services, resolves the issues that many financial institutions may face with their current in-house ATM procedures.

ATM outsourcing companies are entirely focused on ATM management, spreading their equipment, software and operational costs over hundreds of units in a large fleet, as opposed to a small number of branch and off-premises terminals.

This volume and focus provides the leverage needed to drive down costs and increase efficiencies — improving uptimes and availability — while saving financial institutions a great deal of time, energy and expense.

Many community banks and community credit unions have come to realize that while the ATM delivery channel is an essential service to their cardholders, it is no longer part of their core competency.

So much has changed in recent years — requirements of the Americans with Disabilities Act, the Durbin Amendment, operating systems and EMV. And so much continues to change — ATM Network mergers, P2P and NFC.

It is next to impossible for the community financial institution to manage everything going on with ATMs, while at the same time, implementing new digital technologies that consumers have come to expect. Increasingly, these FIs are realizing that the ATM services they're now outsourcing piecemeal can be managed much more effectively and cost-efficiently through a formal outsourcing program with a single trusted provider.

A professional with more than 20 years' experience in payments, Paul currently is executive vice president at Outsource ATM (www.outsourceatm.com), a full-service ATM management company that has been partnering with banks and credit unions since 2001.