HAVING IT ALL: IMPROVING ATM PROFITABILITY AND CUSTOMER EXPERIENCE

Retail banking is getting harder: low interest rates, more government regulations, and mandates for lower fees. You need to find a way to generate more revenue in a world where customers are willing to jump to competitors faster than ever before. So how do you improve profitability AND your customers’ banking experience?

This challenge has led to a number of financial institutions investing in their ATM line of business to provide customers with more services at reduced operational costs. If you can successfully roll out services that matter to your customers, without driving up costs, your bank could see exponential growth in electronic transaction volumes and revenue. Unfortunately, for many financial institutions (FIs), ATM performance incidents happen. And the majority of these issues (that affect both profitability and the end customer experience) are only discovered when reported by customers.

Forward-thinking FIs recognize this as an opportunity.

These banks and credit unions are coupling their ATM investment with initiatives to better understand what performance looks like from the customer’s perspective. They know that when customer interactions begin failing or slowing down at an ATM—especially one with enhanced service offerings—the clock starts ticking. Fortunately, these leading FIs have also invested in real-time ATM monitoring and transaction analytics software. With this type of software solution, their operations team can be alerted to exactly where and when transaction problems originate so issues can be resolved before wider failures occur, revenue is affected, and customer good will is lost.

For example, financial institutions investing in real-time ATM monitoring and transaction analytics software report reductions of 26% in failed transactions within their first year of product use. Below is a model that demonstrates the potential financial impact of reducing these failed consumer interactions.

Environment
Number of ATMs 2000
Number of transactions per month 6000
Aggregate volume of all ATM’s per month 12,000,000
Current ATM availability 98.50%
Failed consumer interactions per month(12M transactions x 1.5%) 180,000
Financial metrics
Off us surcharge revenue $2.00
On us surcharge credit[1] $0.60
On us failed transactions (80%) 144,000
Off us failed transactions (20%) 36,000
Current revenue lost/at risk(144K x $0.60) + (36K x $2.00) $158,400
Reduction in failed consumer interactions with real-time monitoring and transaction analytics 26%
Results
Recovered consumer interactions(26% of 180K) 46,800
Improved availability((12M – 46.8K) / 12M) 98.89%
Recovered monthly revenue (26% of $158.4K) $41,184
Recovered annual revenue ($41.2K x 12) $494,208

The above model demonstrates that with real-time ATM monitoring and transaction analytics, a financial institution with 2000 ATMS can improve their ATM channel’s availability from 98.5% to 98.9%, and profitability by $494K annually. The increased ATM availability also goes a long way in improving customers’ satisfaction and trust.

How do you build your case to improve customers’ satisfaction and trust?

How do you build your case to improve customers’ satisfaction and trust?

As another example, a large bank found that its ATM profitability reports were becoming increasingly difficult to prepare. Its ATM operations and marketing teams also lacked visibility into customer experience, so when trying to make strategic decisions, had to rely on an incomplete, fragmented view into ATM device, transaction and cash flow performance.

Given these difficulties, the bank built a business case to find a solution that could:

  • Produce customized analytics
  • Isolate ATM service issues
  • Reduce failed customer interactions
  • Improve customer segmentation and manage targeted marketing campaign performance
  • Conduct real-time monitoring of cash levels down to the individual ATM

The bank selected a technology solution from NCR and INETCO that gave them enterprise-wide performance awareness and made actionable transaction data available in real-time. This solution now provides the bank with a complete, one-stop view into ATM device, cash management and transaction network performance that is updated on an hourly basis. Key performance data includes:

  • ATM deposit and withdrawal cash totals, broken down by currency
  • Number of withdrawals by bank customers vs. competitors’ customers,
  • Number of prepaid card reloads, credit card and utility bill payments, broken down by type

The new enterprise-wide performance awareness solution allowed the bank to produce 30+ customized analytics to enhance the profitability of their ATM channel. It also helped them improve customer experience by allowing support teams to isolate ATM service issues 65% faster. This bank now reacts in seconds, rather than hours, to issues that end customers are experiencing.

The role of the ATM is rapidly evolving as financial institutions look to offer more services while reducing operational costs. Without investing in a more robust ATM management strategy the real gains, especially those from improved customer experience and higher electronic transaction volumes, are easily lost. This post introduced a number of different ways to drive a business case for investment in enhanced real-time ATM monitoring and transaction analytics so that your institution can indeed “have it all”. To learn more, I invite you to check out this webinar and complimentary whitepaper: What’s the ROI?.

[1] Many banks measure ATM financial performance for on us transactions by factoring in the cost to execute the transaction at another bank’s ATM.

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