Over the past 15 years, ATM “change events” (ADA compliance, Windows operating system migrations, EMV, ATM manufacturer mandated end-of-life replacements, and continual software security mandates) have compelled many financial institutions to look at more efficient and simple ways to manage their ATM fleets.
One of the strategies for many financial institutions is ATM outsourcing, offered by a growing number of providers around the country. ATM outsourcing allows financial institutions to get out of the day-to-day ATM management business while the outsourcing provider takes over management responsibilities by packaging all the services needed for the care and feeding of an FI’s ATMs.
The provider typically charges a flat monthly fee for each ATM. From my experience selling ATM outsourcing solutions for the past 15 years, I have seen many FI’s practically fall over backwards with sticker shock when they see the monthly fee proposal.
For financial institutions that have been managing their ATMs independently, the “hard” costs of operating ATMs are not easy to understand. These expenses come from several different sources and are typically billed to the FI in different ways and at different frequencies, making it difficult to distill ATM costs to an easy-to-understand monthly expense. As far as the “soft” costs that go along with ATM ownership, many financial institutions either have no idea what it really costs (in terms of staff time) to run their ATMs, or the FI has never conducted a thorough cost analysis to determine how much staff time is devoted to ATM program management.
It helps to take a closer look at the various ATM operating expenses that most financial institutions incur in relation to their ATMs:
- ATM driving and monitoring (charged monthly by the ATM processor) $50 – $200
- ATM telecommunication (billed monthly, usually by the ATM processor) $50 – $250 per ATM
- ATM depreciation (typically 5-7 years)
- Second Line Maintenance ($1,000 – $5,000 per ATM per year)
- First Line Maintenance ($1,000 – $2,000 per ATM per year)
- Cash management – Armored carrier fees for cash replenishment/deposit pickups ($50 – $1,500 per month) or staff time devoted to cash replenishment, balancing, dispute resolution, cash prep, loading, and deposit servicing
- Quarterly Operating System Patching – internal IT or patching services from a third party
- ATM network participation fees – fees billed via the FI’s ATM processor monthly invoice
- ATM software subscription fees ($1,000 – $5,000 per year) from the ATM manufacturer usually billed by the FI’s ATM maintenance provider
- Remote Resolution Services
- Ongoing “Out of Scope” fees from the ATM maintenance provider and/or emergency cash fees from the armored car provider
- ATM program management (staff time devoted to ATM duties such as resolving downtime issues, balancing, meeting with and managing vendors, negotiating contracts, verifying billing accuracy, preparing for upcoming ATM mandates, project management, ATM site visit checks for compliance and fraud, etc.) $150 – $200 per ATM per month
- Security software deployed as part of the software stack on the ATM
- Fraud losses from skimming, jackpotting, and other schemes
- Insurance coverage for vandalism, theft, and other damage to ATMs
- ATM downtime and loss of income, (underscoring the importance of keeping your ATMs available
- ATM location space rental
- ATM supplies (receipt paper, printer ribbons)
- ATM equipment upgrade expenses such as operating system upgrade fees, pin pads, monitors, etc. ($1,000 – $10,000 per occurrence)
- ATM marketing, including the cost of pushing out new marketing screens to ATMs along with signage, wraps, surrounds, and kiosks
- Image deposit processing — $100 – $250 per month per ATM
- Cost of cash – putting too much money in ATMs can be expensive, so it’s important to optimize cash load amounts and frequencies
Ultimately, when all these costs to support an ATM are calculated, it can be rather eye-opening. ATM outsourcing providers can’t always save a financial institution money on their ATMs, but they can consolidate the expense into an easy to understand and consistent monthly operating expense that simplifies the budgeting process. In addition, outsourcing can get your organization in a position where your employees can focus on duties that drive new revenue and provide additional client servicing rather than supporting an asset that costs your organization money.
If you are curious about your organization’s Total Cost of Ownership for your ATMs and ITMs, Dolphin would be happy to conduct a cost analysis and tailor a customized outsourced solution that will make life easier for you and your staff and perhaps reduce costs as well.