[Editor’s Note: Brian Bailey, Cardtronics’ Managing Director for Global Financial Services, and Tim Halford, Managing Director for Cardtronics UK and Ireland, were interviewed in June by Global Banking & Finance Review. Below
is a reprint of the June
20, 2017 article that resulted from that interview.]
In your opinion, what is the future of outsourcing going to look like in the financial sector globally?
Brian Bailey: Since the financial crisis, financial institutions have been going through a phase of deep transformation. They have to rethink their channel and infrastructure strategies because of different factors such as changing customer demand and cost reductions. As banks focus on developing their digital channels, they will increasingly depend on specialist partners for their non-core offering.
At Cardtronics, we work with hundreds of financial institutions around the world, and we have seen first-hand that the trend is gaining momentum. I am convinced that these types of arrangements will become even more popular and common as banks are going to continue to develop their physical channels with a clear focus on automation and self-service solutions. Outsourcing to external specialists will therefore remain central to the infrastructure strategies of financial institutions.
How can independent ATM operators help financial institutions transform their business models?
Brian Bailey: Financial institutions are focusing on driving efficiencies and reducing costs, while improving the customer experience. Many banks have developed digital channels while consolidating and reimagining their branch networks as it is simply economically impossible to retain a full-service branch in certain locations. However, financial institutions also need to maintain a strong physical presence to compete for customers and provide the cash they demand.
A good example of this is Scotiabank in Canada. in addition to advancing the digital experience for its customers, Scotiabank is executing a vision that will transform its approach to distribution and re-shape its physical presence. While full-service branch offices have historically been the uniform foundation of Scotiabank's physical presence, the bank is currently moving towards a multi-format approach to brick-and-mortar distribution.
As Scotiabank adopts more of a digital-first mind-set, it is tailoring its physical form and function to specific markets or segments, and ATMs are essential to meeting customer needs for cash access and other self-service activities as part of a more variable physical location experience strategy.
It's about having the right physical presence in the right place to meet customer needs. When executed properly, this approach delivers the benefit of radically simplifying a bank's operations. To that end, Scotiabank works with Cardtronics to augment its digital platforms and bank branches through physical points of presence in the form of more than 500 Scotiabank-branded ATMs in 7-Eleven Canada stores. Through this partnership, the Scotiabank brand experience is delivered by our ATMs in a convenient retail environment, with the bank's account holders benefiting from expanded surcharge-free cash access.
Based on our experience in partnering with banks such as Scotiabank across the world, we have developed OnATM - a suite of secure, on-demand, bank-grade ATM services for financial institutions that want to improve cash and self-service access while reducing costs and refocusing resources on core business initiatives.
The OnATM suite includes:
- Allpoint - a network of 55,000 surcharge-free ATMs placed in retail locations across the U.S. and around the globe.
- OnPoint - as in the previously discussed Scotiabank-7-Eleven example, through OnPoint banks can leverage Cardtronics' ATMs to extend their points of presence, increase cardholder convenience, and do both without owning the capital outlay.
- OnBranch - high quality, cost-effective management of bank-owned ATMs through our staff, on- and off-premise, wherever they may be.
- OnHub - a shared network of banking centres which are designed to serve personal and business account holders with self-service banking solutions. Branded Bankzone, these self-service transaction hubs reduce costs by automating transactional banking tasks like deposits and withdrawals - and removing the burden of these tasks from bank branch counters.
What is the situation for the UK financial sector? What are the main challenges faced by banks in the country?
Tim Halford: In the UK, we have found that bank branch closures have been particularly prevalent. It is true that most customers have embraced online banking to a certain extent. However, many local communities and businesses still require the provision of basic financial services on the ground.
Indeed, a recent study by Saga conducted among over 50-year-olds in the UK revealed that over one third of the 10,000 respondents would be unable to carry out many financial transactions if there was no branch left in their communities, and another third said they would be prepared to switch banks because of this.
Moreover, it will remain crucial for banks to provide cash access in local UK communities. According to Payments UK's latest report, cash was the most frequently used payment method in 2016, used for 15.4 billion payments, 3.8 billion more occasions than debit cards. At the same time, the Global Cash Index by PYMNTS.com predicts that, overall, UK cash use is set to grow by 3.9% between 2015 and 2020.
How can independent ATM operators support financial institutions in the UK?
Tim Halford: We've developed the OnHub product to offer a solution for local communities and small businesses where the "last bank in town" had to leave.
In a nutshell, banks can subscribe to this service to give their customers the benefits of a physical presence when the local branch has to close down. This solution consists of machine-based transaction hubs for consumers to withdraw or deposit cash, while businesses can make deposits utilising business bag drops as well as stock up on change. This partnership can help banks in the UK to meet the needs of their customers for basic banking services at a low cost.
As Brian mentioned, we've also developed the OnBranch solutions to support financial institutions in running and maintaining ATMs and other hardware in both their branches and any offsite locations - definitely an attractice offering also for banks in the UK as well.
Are Fintech "start-ups" and other so called disruptors likely competitors to what independent ATM operators offer to FIs?
Brian Bailey: The fintech boom has shown us that customer-centricity must be at the heart of every strategic conversation in the financial services sector. I think the future will show us that partnerships between banks, independent ATM operators and younger fintech businesses are the way forward.