Consumers’ shifting cash use has banks second-guessing the effectiveness of the strategies they use to support their ATM networks. In this month’s Digital-First Banking Tracker, PYMNTS spoke with Santander Bank’s Tamara Zaichkowsky on how turning to a cloud-based ATM-as-a-service model is helping the bank tap efficient ATM management capabilities without sacrificing its customer satisfaction standards.
ATMs are an integral part of most financial institutions’ (FIs’) service portfolios, sparing customers from visiting bank branches for key services like cash withdrawals, checking account balances and a host of other services. Online and mobile banking have been growing steadily more popular for years, but digital channels cannot handle all tasks involving cash, thus securing ATMs’ place in customers’ financial lives. Studies show that the average ATM is used approximately 300 times each month, with some in 24-hour convenience stores experiencing up to 3,000 transactions in that same length of time.
The pandemic is prompting uncertainty in the space, however, as cash use has plummeted and customers’ utilization of ATMs to make withdrawals has fluctuated dramatically over the past year. This shift has left FIs looking for new ways to innovate when it comes to ATMs, including Boston-based Santander Bank, N.A., which operates more than 2,000 ATMs.
“We saw a decline in ATM transactions in the March and April time frame that coincided with the lockdowns that were being put in place in New England and New York,” said Tamara Zaichkowsky, head of Santander’s consumer and business banking restructuring office. “Then we saw a rebound in June when people were out and about more, but customers’ routines have changed. They weren’t going to the specific ATM they saw near their workplace; they were going to different ATMs, and not at the same frequency.”
This evolving field has left many FIs looking for new ways to make the most out of their ATMs. Some, including Santander, have embraced cloud-based ATM solutions to meet challenges both old and new.
Challenges In ATM Operations
Santander and other banks face myriad perennial obstacles when managing day-to-day ATM services, the first of which is where to place machines. Customers may not use ATMs set in inopportune locations, while those set in heavily-trafficked areas might see so many users that cash management trams cannot keep up with replenishing their stores. Each ATM can be expensive to manufacture, purchase and maintain, making proper placement a necessity.
“A lot of it has to do with our existing footprint in terms of our branches and our infrastructure, and how that overlays with volume of needs and overall areas of opportunity we’re trying to identify and businesses we need to support,” Zaichkowsky said. “It also comes down to the availability of space. There’s a very complex model related to identifying all [of these factors], but at the core of it, it is very focused on ensuring that we are being thoughtful around our customers, their needs and making sure that it’s convenient for them.”
Another constant consideration is ATM security — as well as the regulatory and compliance measures this entails. ATM operators must keep their machines and customers safe from wide-ranging fraud tactics, such as card skimming and account takeovers, but they also need to ensure compliance with security regulations in all areas in which they operate.
“It’s a continual dilemma to ensure that you’re very much focused on the regulatory requirements and the reduction of risks while also making it simple and easy to use, which is a hard yin and yang to strike,” Zaichkowsky said. “We have physical security monitoring like cameras as well as a very extensive transaction monitoring system for customer activity — we have to make sure that we are being diligent.”
Large FIs typically have a much easier time performing such duties in-house than their smaller counterparts, but cloud-based ATM solutions are becoming increasingly appealing to banks of all sizes looking to free themselves from these administrative burdens.
How Cloud-Based ATM Solutions Have Changed The Game
Cloud-based ATMs can be especially beneficial for smaller banks, but even large FIs are recognizing their advantages when it comes to ease of use, improved customer experience and the greater institutional knowledge that comes from working with dedicated industry experts.
“It will really allow us to improve our customer experience and workflows and really increase our ability from an ease-of-use [perspective] as well as upgrades and general system management,” Zaichkowsky said. “You’re ultimately leveraging a much larger knowledge base, which allows for greater growth when it comes to software enhancements and speed to market.”
Cloud-based solutions also allow banks to focus more on large-scale digital transformation initiatives. Outsourcing ATM management enables in-house staff to devote their full energy to banking apps, online services and other programs. Care must be taken to ensure that ATM providers’ partnerships with banks line up with FIs’ digital-first goals to offer seamless experiences, however.
“Our focus is really on digital transformation,” Zaichkowsky explained. “We need to make sure we’re not only digitally capable, but also focused on [customer-facing] applications so that all channels have a similar consistency and customers have the ability to go in between their phones and ATMs and have consistent experiences.”
Cloud-based solutions could go a long way toward advancing banks’ digital-first initiatives, but they must complement other services to work as one part of a cohesive whole. FIs that effectively implement such services stand to ease customer frustrations and foster loyalty while pursuing future innovation strategies.