ATM Growth Slowing

S peer & Associates, Inc., an e-financial services consulting firm, recently completed its Fifteenth Proprietary EFT Annual Survey for the calendar year 1999. The information was compiled from a questionnaire directed to senior EFT executives of the top 250 ATM owners in the U.S. and Canada and expanded to the top 200 ATM owners in Latin America.

Chairman George L. Albright said, “This year it is evident that the driving challenge for ATM owners will be the ability to manage profitability in light of declining usage rates, upgrade ATM functionality, assess the feasibility of connectivity to Internet sites, and serve as a key component of integrated delivery system strategies.”

Albright explains, “ATM growth rates are slowing, particularly in the U.S., as sites have been covered, and saturation has occurred in most markets. After growing at a 25 to 30% clip for the past decade, terminal deployment has slowed, and we expect the rate will continue to drop with ATMs in North America increasing from about 230,000 terminals at year-end 1999 to approximately 300,000 by 2002. Most of the expected growth is attributed to continued off-premise deployment.”

In the area of POS direct debit terminals, the survey found that tier 1 institutions are again this year planning the largest increase among the respondent group for POS direct debit terminals at 20%. The overall respondent base predicts only a 2% increase. The survey also found that because of the low projections on ATM deployment, overall volumes are expected to increase 7% in 2000.

When asked to predict trends, respondents predict a 7% increase in transaction accounts (compared to a forecast of 10% last year) and a 14% increase in total number of network debit cards. Additionally, survey participants plan to increase off-premise ATM base a modest 3.3%. Respondents also focused on IT matters as their most challenging strategic issue in 2000. “Specifically, 47% of the respondents cited hardware and software upgrades and system enhancements to meet the expectations of the ever growing sophisticated consumer as their number one concern,” said Albright.

“We continue to notice few companies cite marketing practices as a top priority for the year,” Albright continued. “We expect the ATM industry to take note of the explosion of interactive marketing techniques exhibited by leading Internet marketers. To remain competitive, marketing issues and the need for one-to-one marketing capabilities will become a top issue for the industry in the near future.”

Key findings of the survey include:

• Both proprietary and check cards experienced slower, yet still health, growth (33%) among the 1999 respondent base.

• On-premise ATMs comprised 40% of all ATMs in 1999. (This is down from 48% in 1998 and 58% in 1997.) However, those 40% of ATMs constitute 70 to 80% of all ATM transaction volume. Furthermore, on-premise ATMs facilitate 5,811 transactions monthly, off-premise ATMs handle just 1,828 transactions per month.

• The average number of ATMs per institution increased 63% in 1999 compared to a 24% increase in 1998. What this means is that when banks consolidate, they increase their number of ATMs.

• Foreign transaction fees are now widely established. All institutions surveyed, both U.S. and Canadian, charged for withdrawals. In 1999, 96% of the respondents were charged for withdrawals. Average cash withdrawal fees were up 9% to $1.27.

In 1997, 56% of the survey respondents surcharged compared to 66% in 1998 and 95% in 1999. However, Albright stated, “All the respondents that did not surcharge at the ATM in 1999 plan to continue a no-surcharge policy. Overwhelmingly, these are Canadian institutions, suggesting that ATM surcharging is far from gaining the kind of acceptance that it has in the U.S.”

Speer & Associates, Inc. is headquartered in Atlanta, Georgia. For more call (770) 396-2528 or visit them on the Web at  www.speerandassociates.com.

Back | Next

© Copyright 1995-2000 
The Green Sheet, Inc.