The rise of the retail network
The need for physical banking touchpoints and advancing branch strategies is fueling the evolution of retail payment networks. This symbiotic partnership with retailers provides FI customers with secure and convenient access to cash and banking services through ATMs placed in stores while driving increased foot traffic to retailers increasingly competing with online brands.
High and variable costs—caused by regulatory changes, network improvements, software upgrades, security concerns and other factors—make an internally-managed ATM network an increasingly unappealing proposition for a financial institution. Indeed, many are already turning to ATM as a Service models to outsource the complex, costly and time-consuming job of running their ATM network, shedding their physical assets in favor of partnering with providers like NCR to operate their network and enable them to expand their reach through a retail network presence.
Strategies across the globe are shifting as FIs look for new ways to deliver services to their customers and reduce the reliance on extensive, costly branch and ATM infrastructures. In New Zealand for example, FIs are implementing a utility solution that will see some of the remote bank ATMs being brought together into a collective, owned and operated by a third party, providing surcharge-free access to cash for participating FIs’ customers.
Meanwhile, in the UK, FIs are participating in the Access to Cash initiative, which will identify, develop and deploy alternative ways for consumers to access basic banking services. This strategic imperative is beginning to deliver a new look to the UK banking ecosystem which, over time, will see new shared Bank Hubs and the Post Office taking the place of the traditional branch. But these two options are insufficient to manage the demand for basic banking services in many areas, and so work is underway across the industry to find new routes to market that can protect access to cash for all.
As consumers are increasingly undertaking their banking remotely, the requirement to move away from a high-cost branch infrastructure is becoming commonplace in markets across the globe. The partnerships needed to support this are being executed through a plethora of commercial models from traditional outsourcing to ATM as a Service and utility models. But these models are all underpinned by the need to deliver a lower-cost approach to consumer banking that supports the FIs as they migrate their customers away from in-person towards digital-first banking.
Expand through retail networks
Another important attraction to retail payment networks is extending brand reach and consumer access. There are thousands of regional FIs that have a small number of branches and ATMs. Additionally, the success of neo-banks like Chime and Revolut has resulted in large cardholder bases that have no branch infrastructure whatsoever.
In these scenarios, customers often need physical access to banking services while they are traveling or live in markets without a local branch. By joining a retail network, FIs can provide their customers with wider access regardless of where they happen to be located. NCR’s Allpoint Network—with 55,000 ATMs across the US, Mexico, Canada, UK and Australia allows member FIs to offer surcharge-free access to cash to customers. According to Mercator, 58% of people actively seek out ATMs that are within a surcharge-free network, so this is a highly-attractive proposition and enables customers to bank with confidence.
What’s more, to grow in current or new markets, or defend against new challengers, FIs can also brand these off-site ATMs without the need to own or operate them. This boosts brand awareness and provides the opportunity to attract new customers when they may be thinking specifically about their banking relationship while at the ATM— and who are looking for a local presence.
While many retail network ATMs focus on dispensing cash and more basic transactions such as balance checking and perhaps bill payments, with the right partner these machines can be multi-function devices—a mini branch concept that offers customers the capabilities to do a broad range of traditional branch transactions at the ATM in their local grocery store.
From depositing cash to balance transfers, cross-border payments, bill payments— and even opening new accounts, there’s the potential to provide customers with a real alternative to a branch. What’s more, Interactive Teller Machines (ITMs) are becoming more popular to provide a remote face-to-face connection with a bank to give assistance and enable more complex transactions that require verification, ID checks or overrides to be completed.
With a retail network partnership, FIs have an alternative to the high costs— financial and otherwise—of building and maintaining branches or deploying an in-house ATM network and enable the FI to focus their time and resources on developing future-forward digital solutions to meet the desire for on-demand banking.
By working with trusted partners, FIs have the opportunity to reduce the capital investment needed to maintain an ATM estate, also allowing them to expand their brand presence and service footprint. This consultative approach to outsourcing critical infrastructure while partnering to resolve and improve retail distribution challenges, positions financial institutions to grow more efficiently, while continuing to offer physical access to the services customers value highly.