July 29, 2019
By Jorge Fernandez, Chief Development & Marketing Officer
A decade ago, the U.S. economy suffered the most significant financial crisis since the Great Depression. Intending to strengthen the resiliency of the financial system, Congress ratified the Frank-Dodd Act, which subjects the nation’s largest financial institutions (FIs) to substantially more regulations. Regulations are applied on a one-size-fits-all basis, however, and some regulations pose special challenges to smaller FI like credit unions and community banks, which have the least scale to absorb the cost of compliance.
In addition to increased compliance costs, FIs have more channels they are managing today than a decade ago. Managing a sophisticated website, a mobile banking app, deposit automation via the app and/or through the ATM, person to person payments and other self-service technology are time consuming and expensive
Dispensing cash through the ATM channel used to be a relatively straight forward part of an institution’s operations, but with more delivery channels, additional regulations, increasing security concerns and over 70 percent of account holders expecting some type of self-service option, FIs have seen a dramatic increase in their ATM operation costs. Keeping terminals sufficiently stocked with cash, ensuring firmware and software remain up-to-date, physically servicing components and complying with regulatory requirements has become an ever-increasing challenge.
ATM Outsourcing Can Eliminate Regulatory Burden
FIs have been outsourcing various elements of their ATM operations such as terminal driving, 1st and 2nd line maintenance, and cash loading to managed services companies for years. But piecemealing out various tasks is not cost efficient, is time consuming for bank and credit union staff, and the FI is still responsible for compliance.
There is a better way to manage the ATM channel. An ATM outsource provider, one that specializes in financial institution machines, becomes a bank or credit union’s partner and takes an all-encompassing approach to ATM management ‒ reducing costs, freeing up staff time and reducing or eliminating the regulatory burden.
Banks and credit unions have been outsourcing various elements of their ATM operations for years. But piecemealing out various tasks is not cost efficient and the institution is still responsible for compliance.
There is a better way to manage the ATM channel! An ATM outsource provider, one that specializes in financial institution machines, becomes a bank or credit union’s partner and takes an all-encompassing approach to ATM management ‒ reducing costs, freeing up staff time and most importantly reducing or eliminating the regulatory burden.
A complete ATM outsourcing partner takes on the responsibility of the day-to-day operations of the ATM fleet including compliance. These specialized companies handle all the ATM-specific areas of compliance, such as keeping the ATMs secure with the latest software and firmware, upgrading or replacing equipment to the latest technology, as well as providing all the compliance documents FIs need to furnish regulators. And, in most cases an outsourcing partner will enable the FI to take the cost of the terminals off the books by purchasing the equipment.
In addition to compliance, an outsourcing partner is more cost effective and less time consuming than assigning various duties to service companies. Rather than spending time tracking down the managed service provider responsible for a specific ATM-related task, FI employees make one phone call, send one email or one text message and the outsourcing partner takes care of the issue. This allows a FI to reallocate human resource to more profitable tasks like providing customer service, cross selling products and services, or closing loans.
Banks & Credit Unions Have Options
Although FI trade associations are working with federal agencies to reduce regulations, with increased data breaches and security concerns, which result in more frequent operating system, software and firmware changes, management of the ATM channel has become more complex and much more expensive. And, with over 70 percent of account holders expecting their institution to have ATMs, going without is not an option. But banks and credit unions have options that will reduce their costs, free up resources and eliminate or greatly reduce their regulatory burden.
Jorge Fernandez is the Chief Development & Marketing Officer for Paramount Management Group, a leader in implementing solutions incorporating technology allowing consumers, retailers and financial institutions to interact. Sharenet, a leading provider of ATM outsourcing services for financial institutions throughout the U.S. and Puerto Rico, is a wholly owned division of Paramount. An industry veteran with more than 25 years of experience in the U.S. and international markets, Jorge has extensive experience in market development, M&A, distributor management and marketing. Connect with him via email or on LinkedIn.
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