ATM Outsourcing - How Can It Help Your Financial Institution?
During pandemic or non-pandemic times, as banks grapple with branch closures and improving customer experience many are outsourcing their ATM operations — handing over tasks, such as cash management, system updates, compliance issues and, in some cases, even ownership to someone else.
According to industry experts the trend started catching on around the mid to late 1990s. It started with banks outsourcing ATM management at off-site locations that were difficult for them to maintain. Many banks proceeded to outsource ATMs at their island branch units, on the drive-through lane or in the parking lot. At this point, many banks now outsource their wall drive-up and walk-up units, too.
Industry experts feel that financial institutions actually enjoy being able to get out of the ATM business, and that outsourcing relieves bank employees of the stress of maintaining the ATMs.
A factor that has also contributed to the move to outsourcing has been the recent migration to Windows 10. Financial institutions had to upgrade their ATM’s software to Windows 10 by January 14, 2020 or they would be found in noncompliance. They were required to make this upgrade as Microsoft stated they would no longer support security measures on Windows 7.
Many banks felt that it was a headache as well as costly to go through the process of upgrading their ATM’s operating system. A headache further exasperated by the recent move to use of chip software on cards, EMV.
EMV (short for Europay, MasterCard and Visa) refers to the new smart chip cards that have replaced the old magnetic strip ones. When the credit cards made the conversion, ATM operators had to renovate their hardware at extensive costs to read the chips.
As a previous example of the hassle the Financial Institutions and Banks had to go through was the most recent upgrade to Windows 10. All of this is also happening at a time when banks are considering branch consolidation, as patrons move to online banking.
"Basically, the banks have said, 'I'm not getting any more revenue if I do it, because it is a cost. I'm not sure I want to keep my branch open, but I still need to service my customers,'" industry experts stated. "It is an ideal situation for banks now to partner with independent ATM deployers, who make their livelihood out of fleet management and taking care of machines."
“As far as saving money, outsourcing could actually reduce the cost of upgrading or servicing the machine,” she said. “The bank may still have to pay an interchange fee for "on-us" transactions — meaning, transactions carried out at an ATM of the card issuing bank — but that's minimal compared to machine upkeep and fleet management costs,” she added.