Against the backdrop of declining cash usage, banks have to think smart about how they cut and share the costs of their ATM estates
With more and more digital ways to pay, many believe the days of cash are numbered. Yet cash is proving surprisingly resilient; stubborn even. As many as 85 percent of all payments globally are still made in cash.
Cash will continue to play an important, if declining, role in society for the foreseeable future. Yet branch closures, legacy ATM infrastructure and changing market dynamics are putting banks under pressure. They are looking for better, faster and cheaper ways to provide cash access.
Enter the IADs
In addition to the move to digital payments, two other trends are shaping the ATM landscape. Bank-deployed ATMs are declining. At least two machines are removed with each branch closure. So much so there has been a ten percent drop in bank-deployed ATMs in the UK alone over the last four years.
At the same time, the independent ATM deployers (IADs) are expanding their estates. The number of independently deployed ATMs in the UK rose by 2.6 percent in 2016, such that the 39,390 IAD ATMs accounted for 57 percent of the UK total at the end of 2016 (according to Link).
IADs fit, fill and drive ATMs. This involves everything from site selection, installation and maintenance to cash management, processing and security. It’s not difficult to see why the IAD business model appeals for both nascent and mature ATM markets.
Banks must contend with the costs of running their ATM network, while expanding ATM functionality. They must maintain coverage, while complying with a raft of regulatory requirements. And they must handle day-to-day operations, while investing in the future.
For digital-only, challenger or neo banks, this is just not tenable. Even larger banks are small players in a scale network and face headwinds to control costs.
Different flavours of ATM outsourcing
A number of banks have outsourced management of their ATM estates to IADs or are considering doing so. Similarly, a number of markets have ATM sharing or pooling arrangements in place, facilitated by IADs or shared service companies. This includes Austria, Finland, Portugal and Sweden.
How CashFlows can help
CashFlows is a member of all the major international card schemes and offers BIN Sponsorship to IADs and others wanting to access ATM acquiring opportunities. We’ve been an active ATM BIN Sponsor since 2010, so are an experienced and reliable partner.
We currently work with all the largest IADs across Europe and are the principal ATM sponsor for the UK’s leading transaction processor. We’re proud to have settled £2.1 billion from 38,500 ATMs in 2017.
The present challenge to the industry is to explore new business models and to collaborate and partner more widely. To find out more about CashFlows’ ATM BIN Sponsorship, get in touch today.