Two credit-union service organizations have formed an alliance to provide outsourced management services for credit union-owned ATMs.
Co-op Financial Services, operator of the nation's largest surcharge-free ATM network, and CU Anytime LLC, which owns and operates ATMs for credit unions in the Southwest, formed Co-op ATM Services LLC to manage armored couriers, process check images, provide maintenance, and buy and place ATMs, Don Gray, CU Anytime president, tells ATM&Debit News.
Gray also will head the Albuquerque, N.M.-based company, which is scheduled to launch April 1.
Banks and credit unions have discussed outsourcing ATM functions with increased frequency as their ATM-transaction volumes have flattened. As such, the institutions are looking for ways to lower their ATM-related costs.
The Co-op/CU Anytime agreement is unusual, though, because Co-op ATM Services will allow credit unions to hire one vendor to manage all of their ATM operations, says Leon Majors, president of Phoenix ESP Payments Research Group.
"ATM owners always have outsourced some of their ATM business," he says. "But in the last two years, there have been more discussions by credit unions and banks about outsourcing everything connected with their ATM fleet to one vendor."
Phoenix ESP's annual report on ATMs "The Future of ATM: Attitudes, Features and Markets," due for release this spring, found that 30% of the 600 credit unions interviewed for the study are likely to outsource all of their ATM business in the next five years. Some 20% of the 1,400 banks that participated also plan to follow the same strategy.
Credit unions either are thinking about or are planning to outsource management of their ATM fleets because the industry has matured, and their owners are trying to figure out ways to reduce costs, Majors explains. "Banks have a debit card manager and an ATM manager, and if the debit card manager is doing well, it means that the ATM manager isn't." More consumers are opting not to use ATMs because they can shop with their debit cards and secure cash back for free at the point of sale.
"Volume for ATMs is not going up. I don't think it's a major turning point. It's the way the market is going," CU Anytime's Gray says. "If a credit union can find someone else to manage their ATM fleet for the same price or less than they can, then they should do it."
Stan Hollen, CEO of Co-op Financial Services, notes that study data from Dove Consulting suggests credit unions have "relatively high costs of ATM ownership," partly because credit-union ATM fleets tend to be much smaller than banks'.
The largest credit-union ATM network ranks only sixth or seventh among all ATM networks, Majors notes.
Co-op ATM Services will manage some or all of participating credit unions' ATM operations, Gray says. Other companies, including Diebold Inc. and Pendum Inc., which was formed through the 2006 merger of Bantek West and Efmark Premium Armored, also provide outsourced ATM-management services.
But Co-op ATM Services will use its owners' expertise in working with credit unions to appeal to that market. "It knows credit-union speak," Majors says.
Indeed, in forming an alliance with CU Anytime, Co-op Financial tapped a company founded in the late 1990s to own and manage credit-union ATMs. It started out owning 29 machines for seven credit unions in New Mexico. The company, headquartered in Albuquerque, N.M., now owns 168 ATMs for 29 credit unions in New Mexico and El Paso, Texas.
CU Anytime's ATMs have the credit unions' names and CU Anytime's logo on them. The company, however, is so determined to stay in the background, behind its clients' interests, that it does not have a listed telephone number.
Co-op ATM Services will market itself to all credit unions, beginning with Co-op's more than 2,000 members, including CU Anytime, which has been a Co-op member shareholder since 2002.
U.S. credit unions own about 25,000 ATMs, says James Hanisch, Co-op Financial's executive vice president for network operations and corporate development. The market for ATM maintenance is expected to be smaller, he says.
Co-op ATM Services initially plans to process check images from the nearly 2,000 Co-op-branded Vcom ATMs deployed in 7-Eleven stores, Gray says. Co-op ATM Services will process the images from its Albuquerque headquarters.
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