“Nobody would dare say they see interchange going away…what matters is ensuring there is an equitable exchange between issuer and acquirer…” – Bryan Bauer, Kahuna ATM Solutions

In a recent webinar, The Future of Interchange, Bryan Bauer of Kahuna ATM Solutions and David Tente of ATMIA delivered a compelling presentation on interchange’s history, evolution and current condition.  It was refreshing to learn that ATMIA, NAC and many Registered ISOs are in this together to find common ground.  United…we have a voice.  Separately… we’re too small to make an effective impact.  It is vital that we begin seeking alternatives to diminishing revenue streams for independent deployers of ATMs.

It’s easy enough to identify the problem and find support amongst our peers.  What’s difficult is identifying ways we can offset these losses.  What I found most important in the webinar were the 7 steps that independent deployers can take to increase revenue and control more of their destiny.

1.  Update Pricing Strategies:  Evaluate all of your service fees. Adjust pricing for field service and tech support, for example.
2. Increase the Surcharge:  Pass more expense on to the cardholder.
3. Increase Transaction Volume:  Utilize more robust signage and/or join a Surcharge-Free Network.  This can dramatically increase the usage of your ATM.
4. Upselling:  Use Branding/Advertisement on ATMs as a means of revenue.  Banks, Credit Unions and Retail Brands all see ATMs as viable impression points.
5. Outsourcing and Additional Service:  Utilize your expertise in managing ATM programs for financial institutions.  You have a much more efficient and cost-effect business model.
6. Offset Interchange Losses:  Negotiate with those that benefit from interchange and seek ways to balance out the fees absorbed by the deployer.
7. Agreements:  Make sure your agreements are up-to-date and still in line with your costs of operations.  You have to allow room to adjust for any unexpected increases in service costs.

When the landscape shifts, we need to build new foundations for our business models.  ATMs and the use of cash are still thriving in our global market.  It will require flexibility, good planning and execution to offset the loss of revenue from interchange.

Are virtual tellers in demand?  Yes, and rapidly increasing.

 Why?  The cost of bank branching is under scrutiny and many locations are closing their doors.

When you put together the cost of real estate, human resources and the sheer expense of managing a branch, the price may far exceed any justification to keep a location open.  Today’s consumers have migrated to on-line banking, mobile banking or non-bank programs that allow them to manage their money in a virtual manner.  It is likely that tomorrow’s banking customer will never step foot in a bank location to get an account established and managed.  This demographic of new banking customers will enjoy access to their bank programs in ways our parents couldn’t imagine.  With the exception of getting cash from an ATM, every service is now capable of being acquired via the Internet.

The concept of virtual tellers has been around for quite some time.  In varying degrees, it has evolved to be a common method of reaching consumers on a global level.  Whether you are speaking to an actual person or viewing pre-recorded content triggered by the questions asked, the purpose of these virtual assistants is to keep the transaction moving forward.   Should the consumer get confused and need help, this service will keep them from walking away.  This personal interaction puts the customer at ease and they remain confident in their bank.  They still need to know the bank cares about the quality of service the consumer receives.  Personal touch still matters…but now that touch is virtual.

The clear value to the bank is that their customers will have reliable access to bank programs and will have a direct experience in the event they need help.  If a bank has closed a branch location, it’s likely they’ve left behind a full-function ATM so their customers are still served in that community.  Customers understand the changing times and know that they’ll have fewer branches to conduct their banking business.  As long as they have an access point in the same area the branch was located, they don’t feel abandoned by their trusted institution.  Having access to a virtual teller at this location will help guarantee that a stellar customer experience is always available.

Banking programs are rapidly changing and much more is being offered at an ATM.  Many consumers will intuitively know how to use deposit automation/check imaging or pay a bill at the ATM.  However, there will always be first-time users of these services that get confused and are then stuck in the transaction.  This is where the value of the virtual teller comes in quickly…it is a means to educate the customer of the technology and how simple it is to use.  Once they’ve successfully completed a new type of transaction, they will likely repeat the process time and again…without the need of teller assistance.

Banks are also counting on demands from the new consumer demographic to validate these decisions.  Since the pattern is showing that on-line and mobile banking are rapidly on the incline, banks are counting on this tech-savvy generation to embrace virtual access and assistance.  Tomorrow’s customer won’t expect the hand-holding experience like when we signed up for our first ATM card.  None of the newest technology will alienate them…they are surrounded by it today and are very comfortable in a virtual environment for business matters.  It would be shocking if a new customer seeking a bank relationship didn’t base it partly on the ability to use a Smartphone to image and deposit checks, for example.  While virtual tellers are just becoming available, there will soon come a time when this is the norm, not the exception.