Abstract
NEW RESEARCH REPORT BY MERCATOR ADVISORY GROUP
This report evaluates the current ATM environment and the value chain of
participants as it exists today and the future of this ubiquitous self-service
device. As the ATM turns 40 this year, Mercator Advisory Group looks at this
historic event through the eyes of the Financial Institution (FI) and the
Independent Sales Organization (ISO) and the strategic position the ATM holds
within each organization. How each organization defines the role of the ATM
will determine this strategic position.
There is one ATM for every 284 American households. The number of
transactions per ATM is flat with relatively few high volume locations left
unserved in the United States. The ATM manufacturers are looking to new
markets. Financial Institutions continually operate their ATMs at a loss and
are looking for new ways to re-invent and revitalize their current network.
ISO' s are being squeezed by falling profit margins from decreased transaction
volumes coupled with increased costs of rent, servicing contracts, cost of
funds, and are looking for alternatives to generate revenue.
Patty Hayward, Senior Analyst of the Debit Advisory Service for Mercator
Advisory Group and the author of this report indicates that the US ATM market
is stagnant: "As the US market contracts with less ATM' s shipped in 2006
and the number of transactions per ATM falling, the industry must take a look
at what is on the horizon. The market is clearly changing at a rapid pace,
but why are ATM' s not taking on any new roles?"
The ATM channel has many participants which contribute to the overall success
of the industry. But many participants also have created an infrastructure
with challenges that have contributed to the stagnation of the ATM and its
ability to deliver value beyond the basic cash and deposit taking functions.
"ATM channel complexity has resulted in an outdated misaligned
infrastructure that creates barriers between ATM channel participants (ATM
manufacturers, ATM Drivers, and Issuing Processors). The barriers created by
this complexity have prevented the ATM from evolving past the original cash
dispenser value."
ISO' s in a response to the shrinking profit margins in the ATM market; have
been exploring the financial kiosk market trying to generate new opportunities
for revenue growth. It is still a young market but it has potential to
provide financial services to an untapped market - the functionality of the
kiosk just needs to make sense to the merchant deploying it and the end user.
Internationally the ATM market is ripe with many opportunities for ATM
deployment. ATM manufacturers will be looking to these new markets for
growth. Mercator Advisory Group cautions the international market to examine
the current US infrastructure and evaluate whether the solutions offered today
can carry your market into the future without the same challenges.
This report is 32 pages long and contains 14 exhibits, and tables.
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