Boston, MA
December 2004

Integrating ATMs With bank Revitalization Plans Is Required to Drive Competitive Advantage


Banks that make investments at the branch to increase cross-selling and up-selling oppportunities will find themselves at a competitive disadvantage when ATMs are not integral to the solution.  Banks are investing heavily in branch revitalization efforts intended to help increase the frontline organization’s ability to cross-sell and up-sell to current customers.  Teller automation is one common focus, because it promises to increase the amount of time the customer can be engaged in meaningful dialogue to enable cross-selling and up-selling by the branch staff.  Branch revitalization efforts are an effort to achieve three classic strategic goals:

1.  Retention:  Banks are making adjustments to reduce customer and employee attrition.

2.  Expansion: Banks are making investments that enable cross-selling.  The goal is to increase the average number of each customer’s bank products and services.

3.  New Customer Acquisition:  Banks are also making investments that help drive customer acquisition and increase the banks presence and influence.

These strategic goals are compromised when banks fail to resolve two key issues:

1.  Making the transition to a trusted financial partner requires banks decrease their fee-based revenue in select areas.  Efficiently performing transactions that put a credit card or checking account into default, and then charging a fee, does not engender trust.  Banks that become trusted financial advisors will help predict when shortfalls are likely to occur and then offer the consumer options to avoid the situation.

2.  Banks that fail to incorporate the ATM network into branch revitalization and deposit automation plans will ultimately discover they have built severe inefficiencies into their operations.  By delivering branch revitalization solutions and deposit automation capabilities across the ATM network, the bank consolidates its deposit automation solution into one effort, rather than two, one for teller platform and one for ATMs.  The integrated ATM is then positioned to deploy the new bank brand, personalized sales efforts and new automated capabilities to more remote locations while it reduces costs.

Banks are currently making decisions to replace or upgrade existing ATMs, and the majority have evaluated deployment of ATM units that support deposit automation technologies in preparation for deposit automation solutions.  Banks that don’t rationalize deposit automation in the branch with the solution to be deployed across the ATM network will be forced to establish two efforts, on two different platforms.  This will require significant maintenance effort and compliance oversight.

Tim Sloane, Director of the Debit Service for the Mercator Advisory Group and author of the report comments, “Trust, presence and brand consistency are critical components for banks that plan on becoming trusted advisors to their customer in order to improve cross-selling and up-selling.  Yet, most revitalization plans are being implemented in a fashion that makes cost effective deployment of automation around kiosks and ATMs cost prohibitive.  Branch revitalization efforts that are built primarily on the teller platform are difficult to deploy to remote kiosks and ATMs, and this in turn will reduce the bank’s presence and brand consistency.  To engender trust with customers, banks must find a way to overcome a short term view of fee-based revenue.  Banks have deployed billions of MIPS, yet few calculate a forward looking balance for the customer that takes into account known direct deposits and automatic bill payments to advise the customer when cash will be tight.  Banks that collect a substantial percentage of their revenue from fees levied against their customers will find it difficult to be perceived as good financial advisors.”

The report documents the changes that are occurring in the branch to improve efficiency and drive sales of new financial products and services; and identifies how these changes will impact other bank channels with a particular emphasis on how the new branch environment will force an evolutionary change in the ATM.  As the ATM is integrated into branch operations and design, it becomes a strategicly placed solution that is merged with the furniture rather than a steel cash dispenser that is stuck in the wall.  This report identifies nine likely solutions that will drive the re-configuration of the ATM.

One of Five Exhibits included in this report

The report is 27 pages and contains 5 exhibits.

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