The Bankwatch

Tracking the consumer evolution of financial services

Archive for the ‘ATM’ Category

Its election time: Service charges under fire in Canada again

 Prompted by the Minority NDP party, the government who are operating under a minority mandate in Canada are getting serious about questioning the Banks and not just their ATM fees. but all fees.

What intrigued me one headline, and this comment in the body.

But most consumer advocates would be delighted if the Commons finance committee succeeds in getting an ATM cost breakdown from the banks.

Source: – Business – Convenience at what cost?

If they saw the costs in running ATM’s, this would hurt not help their argument.  I would speculate that the costs would be in the billions when you aggregate all the Banks’ data.

If they were serious about ATM fees they should include the entire Canadian ATM fleet of 50K machines, not just the 16K Bank machines.  This would make the example more credible.

Some stats on Canadian ATM’s from the article:

ATM use across the country

Canadian banks operated 16,160 ATMs in 2004. That dropped to 15,960 in 2005, but rose to 16,190 last year.

The ATM network in Canada (including non-bank or “white label” machines) has expanded substantially. The total was 51,097 in 2005, up from 42,773 in 2000.

ATM cash withdrawals fell to 691.8 million in 2005 from 875.1 million in 2000, a decline of about 20 per cent.

Fewer ATM withdrawals are partly due to consumers using cash-back features at retail point-of-sale terminals, bankers say. Surveys show 65 per cent of people who used debit cards for purchases have asked for cash back, from 54 per cent in 2000.


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Written by Colin Henderson

March 17, 2007 at 11:11

Posted in ATM

How should Canadian Banks respond to the Government pressure on ATM fees?

 I have had the job of creating the response to this type of criticism.  Its an easy response to make – we own the ATM’s, we can charge other Banks customers, but we don’t charge our own, ATM’s are horribly expensive costing $100’s of millions for a 2 – 3 thousand ATM network.

If the banks gave up, or reduced, ATM fees, maybe implicitly Ottawa is saying, ‘We might look more favourably on you as an industry if you come to us looking for changes in the Bank Act,’ ” he said.

Source: Canadian Banks & Insurance

But all those arguments fall on deaf ears.  Especially in Canada, the weight of opinion will not hear that rationale, and especially not ordinary citizen opinion.

This is the ideal opportunity for a Bank(s) to break away from consolidating their views through the Canadian Bankers Association (CBA) and take a lead position.  Everyone is fighting for market share, and also fighting to retain revenue.  Will market share be improved by taking a common defense?

Question I would ask:  what is the market share benefit of elimination of fees?  This is an interesting business case.


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Written by Colin Henderson

March 1, 2007 at 18:17

Posted in ATM, Profitability

Canadian Banks asked for answer on ATM fees

 I can’t wait to see the response to this.

Jim Flaherty, the Finance Minister, has asked for a “direct” answer from the CEOs of the country’s biggest banks regarding their ATM fee regime. But the best consumers can hope for is that Mr. Flaherty’s pressure will force the banks to roll back fees. That’s because Ottawa does not regulate the day-today pricing of financial services products

Source: Canadian Banks & Insurance

What a great opportunity for differentiation.  In Canada each Bank charges customers of any other Bank a $1.50 fee for using their ATM.  At first this seemed brilliant because the penalty is against the other Banks’ customers.  However as time goes by, the opposite happened as customers interpreted (subliminally) those fees as a sign of Bank oligarchy.


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Written by Colin Henderson

February 20, 2007 at 21:45

Posted in ATM

Bank Systems & Technology| Texting Service Locates ATM’s

 This is a very cool application, and great use of texting/ mobile technology in a useful way.  We need to build this at the Bank!

Need to find an ATM machine? 

A new cell phone service from MasterCard provides cardholders with a mobile, location-based search and directory service so they can request to have the location of the nearest ATM sent to their cellular phone via an SMS text message.  ….

The voice-activated ATM Locator application is provided by Convergys Corporation, which built the application for MasterCard. Hosted on Convergys’ SpeechPort ‘platform, incoming calls are received and processed. …

It then sends the caller’s coordinates to MasterCard, which in turn accesses and provides ATM locations from a central data bank.

Source: Bank Systems & Technology : Need Cash? Texting Service Locates ATMs


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Written by Colin Henderson

October 12, 2006 at 21:28

Posted in ATM, Innovation – CIBC ATM’s back online, but lack central software management

 What caught my attention here is that a few hundred machines were still down at this Bank following correction of the problem.

CIBC officials say that most of the 1,200 cash machines knocked offline yesterday are working again. But a few hundred machines, mostly in eastern Ontario and located in convenience stores are still out of order. The outage occurred during a routine upgrade of a software program, bank spokesperson Rob McLeod said.

Source: – CIBC ATM’s back online

I understand from sources, that the few hundred still down have to be individually visited to have a software change made at each individual location.  This highlights the need to have all machines networked over TCP/IP with central software management, which CIBC doesn’t have for these locations.  That means each ATM must be visited individually to correct their problem, causing costs, and delays.


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Written by Colin Henderson

October 6, 2006 at 20:55

Posted in ATM

NatWest – Mobile Phone Top-up Demonstration at the ATM

Courtesy of Improving new account opening,  this demo of ATM functionality.  Now this is a good use of flash, and the way the demo is done where you actually click the buttons as if you were at the ATM is brilliant.

Link to NatWest – Mobile Phone Top-up Demonstration


Written by Colin Henderson

September 18, 2006 at 08:55

New ATM Study Reveals Evolving Business Model, Diverging Strategies; Analysis of Bank, Credit Union and ISO Deployers Provides the Most Comprehensive Assessment of the State of the U.S. ATM Industry

This conclusion from the Dove Consulting, a division of Hitachi Consulting Dove Consulting, a division of Hitachi Consulting summarises the current state well.

Over the last two years, the search for a new model has prompted many deployers, particularly financial institutions, to re-evaluate the role of the ATM: is the ATM purely a cash dispenser, or is it a strategic customer delivery channel?

Source: New ATM Study Reveals Evolving Business Model, Diverging Strategies; Analysis of Bank, Credit Union and ISO Deployers Provides the Most Comprehensive Assessment of the State of the U.S. ATM Industry

A confluence of factors have driven Banks to re-consider their ATM strategy.

Deployment growth was outpacing transaction growth, resulting in declining per-ATM transaction levels — particularly foreign acquired transactions (i.e., revenue-producing transactions performed by another deployer’s cardholders). Declining revenues, coupled with fixed or increasing costs driven by regulatory requirements (e.g., Triple DES) and increased rent and cost of funds, were putting increasing pressure on ATM deployers’ profitability. As a result, the ATM industry was in search of a new model.

I would add to the list of factors contributing to the change, that of machine obsolescence and the cost of replacement. One network fleet I am familiar with is costing over 100 million dollars, and that network is in the smaller side.

The main factors can be summarised as:

  • machine replacement costs
  • regulatory costs, including triple DES, customer access, and chip card
  • growth of third party ATM fleets (in Canada, third parties are 60% of the overall total of ATM’s
  • software upgrade from Windows on the ATM’s to upgraded software on the switches
  • changing customer behaviours resulting from surcharging

The survey goes on the make some some interesting points in detail.

1. ATM’s and Transaction Volumes

The average number of monthly transactions per ATM, a key industry metric, varies significantly depending on the type of ATM deployer and the location in which an ATM is placed. Financial institutions’ on-premise ATM’s currently average 3,651 transactions per ATM per month, compared to 1,807 for their off-premise ATM’s and 329 for ISO ATM’s.

2. ATM Functionality – Customer Relationship Management (CRM) & Check Imaging

Most of the advanced features currently offered by deployers are banking functions, with shared deposits, domestic account-to-account transfers and mini statements topping the list. Going forward, however, most deployers are focusing on advanced marketing and CRM functionality that will enable them to tailor the user experience to individual cardholders and strengthen their customer relationships and cross-selling capabilities. Deployers’ top three areas of interest for future advanced functionality are targeted marketing campaigns, product offers (e.g., credit card solicitations), and cardholder preferences.

3. Migration to Windows and Advanced Software

Although no longer sold, OS/2 continues to dominate the ATM landscape, with the majority of ATM’s — 58 percent — currently running on OS/2. The pervasiveness of OS/2 will not last much longer, however: 63 percent of ATM’s in the U.S. are projected to be running on Windows by 2008.

4. ATM Surcharge Rates

Deployers continue to increase the surcharge fees they charge to non-customers, currently averaging $1.74 at an on-premise ATM and $1.79 at an off-premise ATM.

5. ATM Economics

Deployers continue to face challenging ATM economics, as measured on a direct basis. Deployers currently earn an average of $1,104 per month at their on-premise ATM’s, and $1,013 at their off-premise ATM’s.

Finally some useful benchmark costs for your business casing.

On the expense side, deployers incur average monthly expenses of $1,444 per on-premise ATM, and $1,450 per off-premise ATM, although there is significant variation between deployer segments.

Monthly Per-ATM Expense by Deployer Segment

On-Premise ATM's          Off-Premise ATM's
--------------- ------------------------ -------------------------
Large Bank              $1,131                    $1,736
Other Bank              $1,313                    $1,256
Large CU                $1,976                    $2,549
Other CU                $1,912                    $2,578
Large ISO                 N/A                       $680
Other ISO                 N/A                       $522
Overall                 $1,444                    $1,450

Relevance to Bankwatch:

These factors shift the costs and the revenues associated with ATM’s. The opportunities exist to consider ATM’s are customer channels, or as sources of income, or both, but the bets are high because of the costs.

Read the rest of this entry »

Written by Colin Henderson

September 12, 2006 at 20:20

Posted in ATM, Banking Strategy

Saudi Arabia ATM transactions break records

Considering the size of Saudi with 17 million population, this is an astounding number of ATM transactions reported at Al  In fact, its so astounding I think there must be an error.

Canada with 32 million population does 1.1 billion ATM transactions annually, just for perspective.  So Saudi is doing 8 times that much, with half the population!

The same report indicates this activity is handled through a mere 5K ATM machines,vs Canada with 50K ATM’s. 

ATM’s are relativley new in Saudi, and cash remains the preferred method of payment.  But the industry is enhancing rapidly, with real time clearing implemented, and cheque truncation expected later this year (2006). middle east news information::Saudi ATM statistics

The Saudi Arabian Monetary Agency (SAMA) announced that Saudis had withdrawn SR 68 billion worth of cash through the available ATM’s networks in the Kingdom through the first half of 2006.

According to Al-Yaum newspaper, citing SAMA report, Saudis had also executed 4,320,474,149 transactions through the available ATM’s networks in the Kingdom through the first half of 2006. The report added that the Saudi banks had issued 359,117,900 ATM cards through the first half of 2006.

The total number of the ATM machines in the Kingdom amounted to 5,377 machines. © 2006 Mean Report (

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Written by Colin Henderson

August 16, 2006 at 16:37

Posted in ATM, Middle East

Why does this customer have to have their deposit held!

This is a great post and Banks would do well to listen to this. Kudo’s to Heather the manager for correcting it right away, but this story should define how a bank can improve. 

The core point here is that the Bank  needs to know each customer real time.  It is no surprise the customer used the the ATM,to make their deposit. 85% of all transactions are handled electronically nowadays.  So the focus of development should not be on the branch anymore;  it needs to be on the place the customer spends their time … the electronic channels.

So its essential that CRM systems can identify which customers like this one, are no risk, and should not have a hold placed.  The system needs to know this when the customer makes the deposit, quietly and unobtrosively behind the scenes. » BMO

Today I deposited a couple of cheques at my bank, Bank of Montreal, using an ATM. Normally, that’s how I use the bank. Before today, I hadn’t spoken to a teller for a few years. After depositing the cheque I decided that I needed to transfer some of the funds from one account to another; the ATM wouldn’t let me, something about a hold. So I went in to see what the problem was. The very nice teller explained that I had a one-day hold on the cheques as they needed to be verified before the hold could be taken off. Of course, I was a little incensed, I have a mortgage with the bank, have never been late with a payment, never bounced a cheque, have a line of credit, been banking with them for 20 years, hell I know the loan officer by name, why do I have a hold?

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Written by Colin Henderson

July 31, 2006 at 21:10

Claims that chip and pin system is flawed, and fallible

The claim here is that certain merchant terminals (not ATM’s as earlier claimed) are not capable of recognising cloned chip cards.

Millions at risk from chip and Pin | This is Money

Security experts say there is a one in five chance that a terminal in a shop or garage will not spot a ‘cloned’ card. It means criminals who copy people’s cards can go on shopping sprees and spend thousands of pounds. The alarming gap in security is being blamed on the issuing banks, for choosing the cheapest version of the new cards. Banks in France and some other countries are already using a more secure system.

The cloning seems ridiculously easy.

Some experts warned soon after the launch of the system in February that criminals could clone the new cards using equipment readily available over the Internet and costing only some £300 or £400.

And the results are horrendous!

Last month the Daily Mail revealed that criminals had stolen more than £1m after using copied cards to withdraw money from cash machines abroad.

This is because repeated transactions at these terminals no longer register with banks’ head offices as a suspicious pattern of withdrawals.

The root cause appears to lie in the choice of technology by certain banks.

Now it emerges that there may be a similar absence of protection on transactions in this country. The reason is that more than 140m credit, debit and charge cards issued in the UK over the last few years use a technology known as SDA, which stands for ‘static data authentication’.

This is the cheapest option that could have been chosen by the big five banks, which made profits of £33bn last year, and other card issuers. Banks abroad, however, prefer the safer option of the DDA system, which stands for ‘dynamic data authentication’.

Relevance to Bankwatch:
Nothing is simple.  The criminals are very capable, and shortcuts in this space will be devastating.

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Written by Colin Henderson

June 7, 2006 at 18:39

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