Commerce Bank upgrades its ATM fleet

Commerce has upgraded its entire fleet of 402 ATMs in a five-state region. At the bank’s 335 full-service ATMs, however, customers can now deposit cash and checks without envelopes or deposit slips. The ATMs will scan the deposits, total the cash and checks, provide images of deposited checks on the receipts – and credit customers’ accounts almost instantly.

John Cox, retail administration manager for Commerce’s Springfield region, said a full-service Opteva ATM with deposit imaging runs more than $100,000.

The new machines, which also offer enhanced accessibility for the visually impaired and can handle transactions in English or Spanish, are one way that Commerce is responding to a paradigm shift under way in retail banking. At a time when ATM usage is declining, investing in new technology might seem counterintuitive, Cox said, noting that the key issue isn’t ATM traffic, but customer demand for multiple banking options.

Card-carrying customers

The emerging trend in retail banking is self-service banking, driven by the proliferation of online payment, debit cards and credit cards. While electronic banking is reducing demand for checks and cash, the demand is still there.

“The statement that ‘checks will die’ has been overstated for years, but checks are definitely on the decline, and the need for cash is on the decline,” Cox said.

Credit and debit cards surpassed cash and checks as the preferred method of in-store payment in 2003, according to the American Bankers Association, and in recent years, credit card use has slowly begun to decline in favor of debit cards.

ABA research shows that credit cards accounted for 19 percent of in-store payments in 2006, down from 22 percent in 1999.

But don’t look for online banking, plastic and ATMs to replace branch locations.

“As far as a community bank goes, there’s still a substantial desire for brick and mortar and to walk in and see your banker face-to-face,” said Doug Marrs, vice president of operations for Great Southern Bank, which has 175 ATMs in southern Missouri.

The ATM’s role

Commerce views its ATM network as “a value-added service for our customer base,” Cox said.

“Our customers still utilize ATMs because they’re a seven-day-a-week, 24-hour-a-day banking opportunity,” Cox added.

While converting its fleet of ATMs to imaging technology is a significant cost – at least $33.5 million, though exact figures were not disclosed – the conversion will reduce some of Commerce’s traditional ATM expenses.

The bank eliminates the cost of supplies – envelopes and deposit slips – but more importantly, because deposits are scanned and electronically transmitted, Commerce will no longer need armored cars to pick up ATM deposits on a daily basis, eliminating courier costs and the cost of shipping checks cross country.

Marrs said Great Southern values ATM network as a customer convenience, but where Commerce is investing in ATM deposit technology, Great Southern is moving away from ATM deposits altogether.

“The number of transactions at any given ATM, as far as deposits go, historically has been small,” Marrs said, “So, that additional investment of capital into that kind of technology, we haven’t elected to go there yet.”

Great Southern has experimented with providing additional services through its ATMs – manufacturers in recent years have paired ATM functions with services such as coupon and postage stamp dispensing – but “we haven’t found the demand to be there,” Marrs said.

Yet customer demand for convenience means ATMs won’t be going away any time soon, and Marrs said Great Southern will continue to gradually expand its network.

Customer preferences

While the bank branch is the preferred place to conduct business for a third of ABA survey respondents in July 2006, online banking and ATM usage, at 26 percent each, are preferred by more than half of bank customers.

Not surprisingly, preferences break along age lines. Almost 47 percent of bank customers older than 55 prefer local branches, compared to 25 percent of customers younger than 34, according to the July 2007 edition of an annual ABA survey that gauges preferred banking methods.

While 30 percent of younger customers preferred to do their banking online, that figure dropped to 13 percent among customers 55 and older.

Online banking, as well as debit cards, is reducing demand for cash, which affects ATMs.

According to the ABA, 2006 marked the first year since 1996 that the number of ATMs in the United States shrank – from 396,000 to 395,000. The number of transactions per ATM shrank by almost 1 billion in a two-year period, from 11.03 billion transactions in 2004 to 10.1 billion in 2006.

But while bankers report ATM traffic is stable or declining, studies show ATM availability remains an important factor to customers choosing a financial institution.

“Now (consumers) can choose to write a check, they can choose to go to an ATM, they can choose online banking, they can choose the debit or credit card,” Cox said. “They have multiple channels that they can use to conduct their banking business.”

ATM Trends

Total number of ATMs in the United States

2006 – 395,000

1996 – 139,134

Total U.S. ATM Transactions

2006 – 10.1 billion

2001 – 13.6 billion (peak)

1996 – 10.7 billion (access fees for ATMs introduced this year)

Historically Speaking

• The first U.S. ATM was a cash dispenser introduced in 1969 at Chemical Bank in Long Island, N.Y.

• The first multifunction ATM was launched in 1971 by Citizens & Southern National Bank in Atlanta 

Source: American Bankers Association ATM Fact Sheet[[In-content Ad]]