Cash has been, and continues to be, a critical payment method for consumers across the United States, and indeed across the world. The proliferation of ATMs – more than 400,000 machines are now deployed across the U.S. – has made it easier than ever for consumers to get cash when and where they need it. However, industry trends are changing the calculus of how financial institutions deliver cash access to their cardholders.
Some of these industry trends and their real-world impact on financial institutions’ strategy were explored by Bill Knoll, EVP and Managing Director of Allpoint Network
(a wholly owned subsidiary of Cardtronics), and Joel Swanson, VP Electronic Services at Alaska USA Federal Credit Union
, in a break-out session, “Changing Cash Access Dynamics and Your ATM Strategy” at the 2016 ATM Industry Association
(ATMIA) Annual Convention in New Orleans Feb. 23-25, 2016.
One of the driving factors impacting consumer ATM use, and how financial institutions provide ATM access, has been the continued increase in ATM transaction fees, both the surcharge fee charged by the ATM owner and the foreign fee or disloyalty fee charged by many financial institutions. According to data from Bankrate, the national average combined ATM fee in 2015 reached $4.52.
A further look into the blended ATM fee finds that many of the nation’s largest financial institutions are levying hefty foreign fees on their cardholders, in some cases equaling or exceeding the surcharge. In fact, the top five U.S. retail banks each charge a foreign fee of $2.50 to $3.00 per ATM withdrawal.
With a natural inclination to avoid fees when possible, consumers put a premium on the ability of their financial institution to provide a convenient fee-free way to access their cash. Large financial institutions offer substantial owned and branded ATM networks – PNC now has an ATM fleet of more than 8,600 machines, a 10% year-over-year increase, while Wells Fargo has nearly 13,000 ATMs, an eight-year high.
Smaller financial institutions are combining channels to provide competitive, or even superior, ATM access in their markets. An example is the $6.3 billion Alaska USA Federal Credit Union, which has 73 branches spread primarily across Alaska and Washington State plus a handful of locations in California and Arizona.
The credit union’s fleet consists of 144 of its own machines augmented by 272 ATMs branded with Cardtronics. Alaska USA also participates in the Allpoint Network, providing nationwide surcharge-free access to cardholders. In addition to nationwide access, Allpoint increased Alaska USA’s available network of surcharge-free ATMs in Alaska by 73%. Just as importantly, many of the Allpoint machines serve remote areas of Alaska where it would have been impossible for Alaska USA to place its own ATMs. As an example, 57% of the ATMs in Dutch Harbor, Alaska – home of the Discovery series “Deadliest Catch
” – are Allpoint ATMs. Similarly, two-thirds of the ATMs in Prudhoe Bay participate in Allpoint and about a quarter of the machines in Valdez participate in the network. The breadth of the network allows Alaska USA to serve its members wherever they may be.
Alaska USA says its multi-pronged approach has been a winning strategy for building and maintaining cardholder relationships. By combining an owned ATM network with other access strategies, such as ATM branding and participation in surcharge-free networks, financial institutions can provide the critical cash access consumers’ demand – access that would otherwise be prohibitively costly or time consuming to provide.
Senior Vice President, Marketing
Director, Marketing Strategy