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What to consider when outsourcing ATMs

Outsourcing ATMs is not a bad idea.

ATMs are a focal point in the operations of many financial institutions. They represent an opportunity for giving customers the services they need, including deposits and bill payments. However, maintaining them can be a laborious process for banks and credit unions. It can also be expensive. The question of whether to keep ATM operations in-house can be an important one, especially when control and the bottom line are at stake. One option for dealing with this issue is outsourcing fleet management to a third party. Before taking such a drastic action, it's important to consider several different factors so that it happens with clarity and foresight.

When it's a good idea to outsource ATMs

There are various situations where holding on to ATM fleet management in-house is not necessarily in the best interest of the financial institution. ATM Marketplace offers a few examples for banks and credit unions to consider:

  1. ATMs lack key self-service functions: Customers of all stripes are demanding more from ATMs. If it's not bill payment, it's check deposit. If it's not cardless transactions, it's mobile integration. In essence, these factors are what make certain banks competitive with one another. However, it's not always possible to make critical updates in time, which may cause certain consumers to take their business elsewhere. To maintain retention, it's sometimes ideal to have a third party add new features to ATMs that benefit users, ensuring a continued relationship with them over the long term.
  2. Expansion becomes increasingly cumbersome: Every bank knows that expansion is often in their best interest to increase profits. However, much like an army conquering territory, that can only happen if the logistics of doing so is sound. If not, financial institutions risk spreading their resources too thin at too great a cost. By using an outsourced fleet management service, there is less money spent on maintaining assets, which a bank can then divert to strategic matters.
  3. It's too expensive to hire dedicated employees: Skilled workers that load cash into and repair ATMs are not exactly affordable to retain. They usually demand a salary and benefits that banks may give to tellers and representatives as well as management. That costs a lot of money. It may be wiser to contract to a third party that performs these tasks for less than when done in house.

Other areas where third-party ATM managers come in handy

There are other things to consider when outsourcing ATMs is on the table. One is minimizing the storage of vault cash, according to a white paper by ATM Marketplace. Money is expensive to oversee, so third parties using their own vault cash as collateral can help keep costs low. Risk management is also an important factor, since cash handling involves paying insurance and considering exposure to theft. Due to their expertise and scaled-up operations, outsourced fleet managers pay less in insurance, which helps bring down overall expenses per load. With these benefits in play, outsourcing ATM fleet management may be a wise decision in the long term.

January 28, 2016