Mandatory ATM Network Upgrades; Credit Unions Need to Be Aware – and Beware

Why Credit Unions today are spending millions upgrading their ATM networks – and how understanding your options can make a BIG difference…

Credit Unions today continue to make significant investments in the ATM channel – and under difficult circumstances. The challenge; limited resources make it virtually impossible to keep abreast of what is currently happening, what’s on the immediate horizon and to identify and evaluate available upgrade options. It seems like every time one upgrade is done, another, new and previously unknown upgrade mandate arises. The bottom line for today’s ATM network managers:

• The only constant is continued change
• Change (by nature) tends to be complex/confusing
• Confusion can be very expensive

Understanding what is driving these changes, and the options to address them can be the difference between a well-executed upgrade program and heartache.

Imminent Forces

The primary forces currently driving Credit Union ATM network upgrades include:

• Member/Consumer Demand and Competition
• Compliance/Regulatory Mandates
• Cost Control and ROI

Member/ Consumer Demand
Cash is not going away.  Despite the debit card and other payment options 24 x 7 access to cash through the ATM is considered a fundamental service that customers demand. Half of all Americans age 25-49 use ATMs on average of 8 times per month.  Advanced functionality now allows check deposit, personalized transactions and a wide variety of other services to be provided by the ATM. Forcing your customers repeatedly to a competitors ATM exposes them to increasingly sophisticated attempts to entice them to become their customers. Major Banks are spending millions on ATM network upgrades as part of an integrated marketing package to attract new customers and expand wallet share of existing customers. And for good reason; it works.

Compliance/Regulatory Mandates
Increasing fraud and security concerns continue to drive mandatory network upgrades. Industry publications are full of headlines about the latest data security breaches – and ATM networks are no exception. On the horizon: increasing scrutiny and mandatory verification of compliance. Processors will require Credit Unions to verify that ATM hardware (primarily pin pads and card readers) meet updated security standards and that a program for ongoing network firewall, anti-virus and system operating software patching (at the ATM) is in place. Credit Unions that do not meet these requirements face the potential for fines, liability for losses as a result of non-compliance and/or having transaction processing being terminated.

Cost Control and ROI
Networks today are being set up and managed via a centralized communication network – both as a cost reduction move and as a way to more effectively manage the network.  The ability to remotely monitor and diagnose equipment, performance and/or repair needs allows a significant reduction is service/maintenance costs and improves uptime and member access.

Delivery of key member services, security/compliance and cost control all have long term implications that impact virtually every functional group within the Credit Union organization – and as a result are vital considerations for any successful upgrade project.

Identifying Internal Needs
Operations, Card Services, IT, Marketing, Facilities, Audit and Finance are just a few of the departments that need to be involved in a successful ATM upgrade project. Each has a unique set of responsibilities, wants, needs and expectations of today’s advanced ATM network.  The key to highly successful programs is in understanding and evaluating available options – and developing a balanced plan that best meets short and long term requirements for all departments.

Buyer Beware
As suppliers attempt to develop network upgrade solutions in response to changing network requirements – it becomes incumbent on the part of the Credit Union to exercise due diligence.  As available options expand, so does relative risk. Due diligence includes:

• Understanding the implications of hardware upgrades versus replacement; knowing when upgrading older legacy systems may be simply throwing good money after bad.
• An evaluation of required versus optional hardware, software and project support elements; why they are necessary, and what should the Credit Union expect to benefit from the investment
• Identifying short term versus long term/ongoing costs; understanding total project costs to allow the delivery of required services and performance.
• Potential vendor evaluation; including relative experience, resources and responsiveness/delivery

The Challenge
For many Credit Unions one of their largest obstacles in their upgrade project will be in distinguishing between what is available, practical and cost effective.  For others, this project is seen as an opportunity to proceed strategically and deliberately; taking into account the institution’s current condition, strategic direction and how this important delivery channel may be leveraged to best support their member service delivery needs.

The challenge for each is to develop and execute a plan that delivers a focused, integrated customer experience at a cost that represents the best value to the Credit Union. By understanding their available options Credit Unions will be able to maximize investment return, achieve mandated compliance and deliver member value as required to meet and exceed their strategic goals.

Tim Bergman is founder and principle at The Bergman Group, a consulting firm specializing in helping Credit Unions with new facility design optimization, delivery systems development and branch equipment specification, purchase and service/maintenance contract support.  Tim has provided innovative and trusted expertise to the Credit Union community for over 20 years and currently provides services that help clients manage costs, reduce waste and to efficiently deliver focused, value added member services. www.thebergmangroupinc.com