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Importance of ATMs increases more necessary as branches close

ATMs play a role in the decline of the physical branch, and that's a good thing.

Banks looking to save money should always consider a strong ATM strategy. It used to be that banks had the advantage if they had multiple branches for customers to visit. However, with branches becoming more expensive to maintain, many financial institutions are looking to close down some of the physical fronts as a cost-cutting measure. Using an ATM is a viable alternative to a teller for most consumer banking needs, including deposits and withdrawals. With this in mind, building up a network of ATMs can save money in the long run, especially if these machines have multiple features.

With banks trimming the fat, ATMs pick up the slack

The banking business is shrinking in terms of physical presence, despite overall growth. Finance blog 24/7 Wall St., citing a recent study by SNL Financial, found that while 1,023 branches opened in the 12-month period starting April 1, 2014, 2,464 closed in the same period. That's not including credit unions. In the first quarter of this year, there was a net closure of 332 branches. Some of the largest names in the American banking industry were performing most of the closures. In terms of the number of states that lost more branches than they opened in the first quarter of 2015, Michigan led with a net closing of 28, followed by California, Washington, Oklahoma and Illinois.

Part of the reason for these closures is an increased desire among many of the large banks to transform banks into something more than just a place to deposit and withdraw cash. The role of the teller has changed significantly over time, in part because people's banking habits are completely different than what they were 20, even 10 years ago. ATMs play a significant role in this by making withdrawals quick and easy to accomplish. As a result, the branch is seen more as a place to perform other financial services, such applying for a loan or mortgage, offering and extending credit to businesses and managing wealth through financial investments.

Another reason for the decline has been the rise of mobile banking, in that many customers can perform teller-related actions on their smartphones and tablets through a series of apps. ATMs are helping in the process by completing certain transactions that aren't possible with a smartphone, such as cash deposits and withdrawals. Bolstering the interaction between these two can also offer a greater degree of customer satisfaction without needing to bring in the teller.

06/24/2015