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The efficiencies of ATM-as-a-service

Outsourcing networks to third parties can help ease labor concerns while expanding availability and driving greater customer satisfaction.

May 19, 2023 / Consumer Banking

”HELP WANTED” signs have been everywhere during the past year, creating challenges for financial institutions and the economy in general. While war, inflation and rising interest rates have taken over front-page headlines, the persistent labor challenge continues to hit the financial services industry hard.

Inflation also continues to induce workers to seek higher wages. According to the Dallas Fed, slightly more than half of individuals experienced negative real wage growth in second quarter 2022, with a median decline of 8.6%. Inflation may be slowing, but it’s still having an impact on how far a worker’s wages will go.

Against this macroeconomic background, financial services institutions have many competitors for labor. As just one example of job opportunities that might compete for teller talent, Starbucks baristas earn up to $23 per hour. Many people are also choosing alternative work. According to Statista, over 57 million U.S. workers participate in the “gig” economy. A study from Higher Visibility found that more than a quarter of Gen Zers surveyed want to become social media influencers. In today’s market, there are many ways to earn a living.

Recent layoffs in tech and an increasing interest rate environment may cool the labor market, but trends do not favor a return to labor markets of the past. For many financial institutions, the answer comes not from finding elusive workers but from changing how service is delivered.

The delivery of everyday banking through digital channels has dramatically altered retail banking. Today, consumers can open new accounts on a mobile device in minutes. But the nature of the digital revolution changes dramatically when it comes to physical interactions, with most banks and credit unions still relying on a combination of tellers and ATMs in their branches, each of which introduces labor challenges.

One way to help address labor shortages is through ATMs and interactive teller machines, which can reduce the number of tellers required at the branch and free staff to pursue deeper customer engagements rather than routine transactions. Further, ATM services can now be fully outsourced to third-party providers through a combination of “ATM as a service” and access to an ATM utility network.

In an ATMaaS model, the financial institution provides the location while the service provider does the rest: supplying ATM hardware and software, cash management, maintenance, processing and service. Not only does the model free up front-line staff from managing ATM cash loads and daily maintenance, it also allows IT and technical staff to shift focus from maintaining the ATM infrastructure to digital banking or other value-add channels. By its nature, an ATMaaS program results in long-term labor benefits as the service provider takes on management and upkeep for the entirety of the program.

As a special subset of ATMaaS, the interactive teller machine can streamline the teller line even more, reducing the need for in-person tellers. In this model, tellers provide full-service, face-to-face banking through the ITM device, extending transactions to a new set of capabilities for which there is no viable substitute to personal service. The amount of time each teller spends serving clients is maximized by consolidating tellers in a central location from which they can service ITMs across the branch estate, increasing productivity and reducing per-branch labor needs.

While ATMaaS addresses branch needs, access to a third-party ATM network can help financial institutions rethink the size and structure of the branch network entirely. These networks provide access to tens of thousands of ATMs for surcharge-free withdrawals nationwide, along with thousands more deposit-capable ATMs. No longer are certain banking services limited to the branch.

Institutions can offload transaction volume from the branch to the network and shift branch focus to value-added services like wealth management and high-value loans. Meanwhile, the ATM network takes on more of the role of an everyday physical banking channel, with obvious labor benefits to teller lines, ATM management needs and branch staffing.

The labor challenges facing financial services aren’t going away soon. Pivoting to an “as a service” strategy for the ATM/ITM channel, at the branch and beyond, can help alleviate labor concerns today and in the future while expanding service availability and driving improvements in customer satisfaction.

Steve Nogalo is general manager for North America Banking ATM Sales at NCR Banking.

Ideas and insights for banks and credit unions creating the next generation of branch experiences are highlighted in the BAI Executive Report,  “Branches are changing with the times.”