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Community banks unite with new ATM network

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by Karen E. Culp

SBJ Staff

Banking with a community bank in the area has its privileges.

Many local community banks are participating in the Privileged Status ATM network, a network that links more than 50 community banks' ATMs so that customers can use another bank's ATM without a surcharge or foreign transaction charge, said Shawn Christian, executive vice president of Ozark Bank.

A common concern for community banks was that customers typically had access to, at most, 10 or 20 ATMs, while customers of large, national banks often had access to up to 500 ATMs. Community banks such as Ozark Bank, in Ozark, could not afford many of the cash machines, which cost around $15,000, Christian said.

"We have eight ATMs, and that's a pretty good number for a bank our size. We will probably roll out about six more. The ATMs are very expensive, though, and it has been impossible for community banks to compete with the number of ATMs the larger banks have," Christian said.

The community banks that are taking advantage of the Privileged Status ATM network have between $25 million and $500 million in assets, and also have a much smaller number of ATMs available to customers. Those ATMs are also usually located within a small area, such as just inside Springfield or, in Ozark Bank's case, only in Ozark, Nixa and Rogersville.

One of Springfield's recent start-up banks, Signature Bank, has only one ATM, said assistant vice president Shelly Eib. By participating in the network, Signature and other participating banks have more than 160 ATMs available for their customers to use with no fee, Christian said.

"Since there's no surcharge and most of the participating banks are waiving the foreign transaction charge, when you use one of the ATMs on the network, regardless of whether it's an Ozark Bank ATM and you're a Liberty Bank customer, it's as though you're using a Liberty Bank ATM," Christian said.

A surcharge is applied by the bank that owns the ATM, while a foreign transaction charge is applied by the bank that holds the account. Participants in the network agreed not to apply a surcharge for those customers whose banks are part of the alliance, Christian said.

Liberty Bank, Village Bank, The Bank and Guaranty Federal Bank are four other banks with Springfield locations that are part of the network.

The concept gained popularity quickly, Christian said. It was only in October of 1997 that active solicitation for the network began. The idea came about in 1996 as a collaboration between himself and Carla Green of Guaranty Federal, Christian said. It was the first no-surcharge alliance to be up and running in the country, he said, adding.

Banks participating in the network are located in Missouri, Arkansas, Illinois, Minnesota, Montana and Kansas.

The network came online in the summer of 1997 after a testing phase, Christian said. After regulatory approvals, the system had to be approved by Shazam, the company handling the processing for the Privileged Status ATMs.

"Shazam has been really helpful for us. They've been largely responsible for making the application process so easy. Shazam handles telling the ATM that the bank is now on the network; all the bank has to do is fill out an initial sign-up application," Christian said.

Community banks are finding strength in numbers, Christian said. Alliances such as this one will probably become more common, he added.

"When you look at the reason people bank with a community bank, it's usually because they want that level of customer service. They want the personal attention; they want their banker to know them. But it's very hard for small banks to keep up with technology. This network is an example of several banks coming together to help that situation," Christian said.

Providing the service free of surcharge may be causing some of the banks to lose money, but the benefits outweigh the drawbacks, Christian said.

"You've got to look at who you're benefitting. If you're adding customers because of this, and many banks are, then you've got to look at that," Christian said.

Christian said he expects the network to have between 300 and 400 ATMs online by the end of 1998.

David Kunze, president of Signature Bank, said the benefit of the network for the customers has been tremendous.

"It helps us compete with the larger banks. This is a way our customers can use over 100 ATMs with no fee. Even the big banks can't say that," Kunze said.

"Now that we've got this, there's really nothing the big banks have on us," Eib said.

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