Credit Union Times: ATM Stress Prompts Outsourcing

When it comes to ATM-related headaches, Tony Black, president of Baylor College of Medicine Federal Credit Union, has experienced a few migraines.

“We were sued once for allegedly not having a [fee disclosure] sticker on an ATM and we also had an ATM stolen out of the lobby of an office building,” Black, president of the $37 million, Houston-based institution, said.

After those harried incidents, BCM eradicated its ATM woes by partnering with a third-party provider.

“With the lawsuit, the stolen machine and increasing pressure to upgrade technology, it was a no-brainer to switch,” Black said. “By leasing machines instead of owning them, our insurance even went down.”

Through outsourcing, BCM cut operating costs, reduced stress on back- and front-office resources, enhanced member service and eased regulatory compliance burdens, he noted.

Small credit unions tend to be heavy users of outsourced ATMs, however, larger cooperatives have flocked to managed services in recent years, some industry experts have noticed.

“It was not that long ago when owning and operating your own ATMs was a smart move, but now, it seems that your ATMs are really owning you,” according to Paul Albright, vice president of sales and marketing for Outsource ATM, the Cypress, Texas-based firm that manages BCM’s machines.

“With declining ATM interchange, required ATM hardware upgrades and increased processing expenses, the financial and regulatory environment has eliminated most, if not all, of the earnings the financial institution may have had in an ATM network,” Albright said.

Some credit unions don’t even realize they can outsource ATMs.

“The ATM delivery channel is one that is no longer part of the credit union’s core competency,” Albright said. “Credit union executives have been so focused on cost containment with their larger annual expenditures that the ATMs have stayed under the expense radar, until 2014’s exposure of the Windows XP sunset and upcoming EMV requirements.”

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Most ATM management companies typically provide an array of services, including transaction processing and reconciliation, maintenance alerts, vault cash forecasting and management, surcharge-free network access and marketing.

By partnering with the Syracuse, N.Y,-based Sharenet, the $358 million Cornerstone Community Federal Credit Union eased concerns about ATM-related compliance issues, Mary Scheib, vice president of operations at the cooperative in Longport, N.Y., said.

Not having to deal with ATM processing, reconciliation, vault cash forecasting, cash replenishment and ATM maintenance has saved Cornerstone a lot of time and money, she added.

“We get the best price on new ATM hardware and software because of Sharenet’s collective buying power, and we no longer carry the burden of having to manage our ATMs on a daily basis,” Scheib said. “On a personal level, the biggest benefit is that I no longer get phone calls on the weekend saying that the ATM is down.”

John Wakefield, president/CEO of the $1.3 billion Empower Federal Credit Union, said switching to Sharenet has relieved a lot of burden and risk for the financial institution, which is also based in Syracuse.

“We no longer stress over the countless regulations like ADA, PCI, Windows migration and the upcoming EMV liability shift,” Wakefield explained.

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Paul Albright
An industry leader in the payments space, Paul Albright is Vice President of Outsource ATM. 
Connect with Paul on LinkedIn or follow him on Twitter

Troy LeBlanc
President of Outsource ATM, Troy LeBlanc has been helping financial institutions address their ATM needs for almost 20 years.
Connect with Troy on LinkedIn.