ATMs: changing fundamentals

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: The Indian ATM industry has seen explosive growth in recent times and Banks have committed to substantial capital outlays on ATM deployment, recognizing the significance of the 3 Ms – Maintenance, Monitoring and Management – of the ATMs to make the self service channel a reliable and profitable one.

ATMs represent the single largest investment in the electronic channel services for the banks. Running a large ATM network is a serious business, involving varied disciplines and complexities of hardware, software and processing requirements. Banks are working towards maximizing availability of ATM networks for their customers in this highly competitive environment and are seriously looking at Outsourcing the management of the ATM network to experts as a preferred alternative.

How important is it to have all relevant information readily available when making a decision? Suppose the software program used to help your financial institution determine whether customers should receive approval for a loan malfunctions -- leaving you with access to just 10 percent of their previous financial history.

Would you have full confidence in those loans? This scenario sounds extreme, yet it's not all that far removed from how many financial institutions handle the servicing of the automated teller machine (ATM) channel.

While ATMs have become increasingly sophisticated machines, many financial institutions continue to monitor uptime and service them as they always have, focusing primarily on detecting major hardware outages "after the fact" and dealing with them as quickly as possible. The truth is ATM downtimes can involve hardware, software, network connectivity, outages of cash or supplies, staff shortages or other personnel issues -- and often a combination of two or more of these factors. Such details do make a difference, as any ATM or help desk manager will attest when they have dispatched a technician to resolve an ATM issue.

The Fundamentals

Typically, outsourcing could involve various tasks. The scope depends on a bank’s long term strategic goals. Key tasks involving ATM Management Outsourcing include:

* ATM Monitoring – Involves sophisticated software and tools that enables the ATM Management to monitor the entire ATM network remotely on a 24X7 basis. In addition, the tools facilitate accurate diagnosis of faults and in many instances enable prediction of likely faults. Such diagnostic capabilities help significantly in maximizing ATM availability across a widespread geographical area through faster and accurate response to fix any problem or even pre-empt a possible problem.

* Cash and Consumables Replenishment – This service helps minimize outages and maximize channel availability through improved logistical management of Cash and Consumables Replenishment.

* Currency Management – This is one of the important elements of ATM management as this cutting edge software enables the ATM Management Centre to construct a predictive behaviour pattern of cash usage at each and every ATM and implement a plan to deliver optimal levels of cash to each ATM.

* Network and Systems Management – This includes the monitoring of the entire network connectivity on a 24X7 basis, including the network equipment and servers, the telecom and transmission lines and the software within the ATMs.

* ATM Maintenance – This is typically divided into First Line Management (FLM) and Second Line Management (SLM). FLM refers to managing the paper supplies, currency jams, and cash receipts. SLM includes technical repair of hardware or software as well as upgrades.

* Infrastructure Consulting – An array of services are offered for the design and operation of ATMs within the bank’s IT environment. Deployment and integration services include procurement, staging and installation.

* Facilities Management – Site management, security arrangements are all a part of facilities management. This may also include architectural and engineering services as related to the ATM installation and the other relevant details.

* 24x7 Help Desk – One call may be all that is needed to solve any ATM problem. A telephonic 24X7 customer contact point for any service and technical assistance that banks may need with regard to their ATMs / ATM network.

ATMs are especially popular with a demographic that TowerGroup calls “remote transactors,” consumers who perform at least three-quarters of routine banking transactions via self-service channels.

TowerGroup's research also indicates that the most profitable customers opt to use multiple delivery channels, both self-service and attended. And consumers who utilize multiple channels report higher levels of satisfaction with their financial institutions.

Significant uptime gains

With all of these factors in mind, it's obvious that ATMs play a key part in financial institutions’ relationships with their customers -- relationships that inevitably suffer at least some deterioration if a customer visits an ATM and finds it out of service. While it's difficult to put a price on this loss of customer satisfaction, it is possible to assign a financial impact to downtime and its counterpart – better uptime!

A one point increase in availability can add up to 3.6 days of uptime per ATM per year. That’s significant, especially when multiplied by the total number of ATMs in any one institution’s ATM channel.