European Commission Environmental Policies

Further to the last report which confirmed that the European Commission had completed an environmental study relating to the impact of “cash”.

Recent meetings have been held with the European Commission and the prime purpose of the meeting was to appraise ATMIA of the findings, which were confirmed as being for reference purposes and not for regulatory purposes.

Summary of the meeting:

1. The note production phase represents less than 15% of the environmental “points” for the complete life cycle. The ATM and the CIT distribution are roughly equal at just over 40% of the environmental “points”
2. Environmental “points” are defined, not just by power usage, but production of raw materials, manufacture, waste production, gas emissions etc – so a complex formula.
3. The total environmental effect is similar to every household in the EU having 3 x 60 watt light bulbs on permanently!
4. ATMIA together with our members should internally promote two things which could have a major impact in reducing the environmental profile

• Local recycling using both automated deposit ATM’s and cash recycling ATM’s
• Investigate introducing a “deep sleep” mode for ATM’s during silent hours or when retail stores are closed (similar to a PC which automatically goes to a power saving mode when not in use. This could be a big “green” sales pitch, and would save a significant amount of power. However the potential impact on service needs to be assessed, as “power down” situations have shown a trend for increased service calls.

Much more detail was provided to confirm the depth of the EC analysis, including note paper, ink, silver foil, toxicity tests etc.

Any member comments or observations would be appreciated.    

European Commission Statement

1. Checking Counterfeit Notes

The Euro- Check Web Site is a web-based application, with the main functions of:

• enabling financial institutions and cash-handling professionals (e.g. Cash-in-Transit companies or bureaux de change) to check the authenticity of euro banknotes;
• providing information about the circulation of counterfeits to law enforcement bodies (e.g. police agencies, customs offices, etc.).

Applications for access can be made online, to https://ecws.ecb.int/. The approval of the requests takes a few days.

2. Cost of Cash

At a recent meeting of the European Cash User group, the ECB pointed out that in Europe the cost efficiency of cash, in particular in comparison to other means of payment, has been questioned and discussed. These discussions may have contributed to a somewhat distorted perception of the merits of cash. The Eurosystem recently undertook an evaluation of existing studies on the cost of cash. One of the most important findings is that only moderate potential savings can be achieved from a substitution of 20-25% of cash by electronic means of payments. Most probably, much greater cost savings could result from optimising the cash handling process, in particular the lodgement processes (ATMIA NOTE – another case for automated cash deposit & recycling). The ECB underlined its commitment to contributing to this goal together with all relevant stakeholders in the cash cycle.

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ATMIA ATMs 2007

This year’s European conference, which was jointly organised by Retail Banking Research (RBR) and ATMIA was held in London on the 29th and 30th March.  The event was attended by over 200 delegates from 36 countries and ATMIA and RBR are delighted with the feedback they have received and are looking forward to starting work on next year’s conference.

The morning of day one was based around bank and independent ATM deployer case studies with speakers sharing experiences of self-service deployment.  The afternoon concentrated on outsourcing, from individual aspects of ATM operations to 100% outsourcing.  The focus of day two shifted to ATM functionality with particular attention on automated deposit and recycling, as well as software opportunities including multivendor solutions, ATM monitoring and cash management.

GarantiBank is Turkey’s third largest commercial bank, and one of the country’s most innovative when it comes to self service.  Barbaros Uygun, Alternative Delivery Channels Director, gave an entertaining presentation explaining his bank’s ambitious and successful growth strategy.  A key element has been the renewal and expansion of its ‘Garanti – Paramatik’ ATM network.  GarantiBank deployed 1,015 mostly dispensing ATMs at end-2004, a figure that is expected to reach 1,900 by end-2007.  The majority of these not only except automated deposits, but also dispense coins.

Wendy Luczywo, Head of ATM Business Unit at Alliance and Leicester in the UK provided insights into how financial institutions with smaller branch networks can compete through development of off-site ATMs, mainly in branches and post offices.  A lack of suitable locations and low customer loyalty resulted in a negative interchange position of £500,000 per month. A&L decided to pursue a strategy of installing both free and surcharging ATMs into retail locations.  Between 1999 and 2003 the A&L off-site ATM exploded, while the branch ATM network actually fell slightly.  A&L successfully reversed its negative interchange position.  Since 2003, the portfolio has stabilised as the number of suitable new sites has fallen, average transaction volumes have decreased and pressure against surcharging has mounted.

Andrew Martin is CEO of Cardpoint Europe, based in Germany.  Cardpoint is one of Europe’s largest IADs, with 5,500 ATMs in the UK and 1,000 elsewhere.   Andrew highlighted the challenge of European IAD expansion and emphasised the need to treat each country differently and build an appropriately tailored business model for each country.  He explained how Cardpoint has segmented European markets into three categories: mature / saturated, greenfield (large untapped potential) and brownfield (developed requiring a new proposition).

Ron Delnevo, Managing Director of UK IAD Bank Machine (recently acquired by Cardtronics of the USA) and Tony Horne, EVP International Business Development for Cardtronics, provided contrasting presentations.  Ron gave a passionate perspective on why he believes there is still plenty of potential for IADs in the UK, and also defended the use of surcharging in the interests of customer choice.  Tony Horne from Cardtronics spoke on the need to diversify operations in light of an increasingly mature US market and falling transaction volumes.  He described three innovative programmes that Cardtronics is promoting: bank branded independent deployment, surcharge-free networks and managed services.

One of the most eagerly anticipated presentations was ‘100% outsourcing’ from Bryan Pisciotta, VP Automated Channels for Citibank in the USA.  Citibank in the USA deploys 2,935 traditional full-service ATMs, but the focus of Bryan’s presentation was the 485 additional ATMs it deploys through a number of 100% outsourcing agreements. Bryan was keen to emphasise that Citibank really means complete outsourcing for these units, to ensure single accountability with its outsourcing managers.  This allows cost-effective deployment, hassle-free installation, high service levels and fast time to market.  Overall, Citibank is delighted with how its outsourcing programme has developed – its only word of caution relates to the difficulty of finding suitable 100% turnkey providers, particularly because Citibank does not wish to be tied to just one provider.

Eddy de Raat, Project Manager ATMs for ABN AMRO in the Nederlands spoke about the business case for recycling ATMs in 2000, and by 2006 had rolled out nearly 400 units.  This increase has been driven by a desire to increase transaction speeds, reduce cash handling and cash replenishment costs and increase security.  Eddy provided statistics showing a decrease in transaction time for 100 seconds for a deposit transaction at a teller to 40 seconds for a self-service deposit, significant but not quite as great a decrease for cash withdrawals.

Another bank pioneering use of automated deposit and recycling is Erste Bank.  Peter Michael Seitz, Manager of Branches and Self-Service for the bank provided an analytical evaluation of the potential for this technology.  Erste Bank considers branches with more than 26,000 teller cash deposits as suitable for deposit automation – 80% of deposits need to be migrated to self-service in 3-4 years to justify the necessary investment.  For coin deposit, branches spending more than 120 hours per year are considered suitable for coin deposit.  Erste Bank believes the business case for coin deposit is event stronger than for note deposit.

One of the less glamorous and surprisingly often neglected issues for retail banks is cash management.  Jim Molloy, Head of Payments Business Projects at Bank of Ireland gave an insightful presentation of the scale of this issue, and how cash management information systems (MIS) can reduce the cost of handling and holding cash.  Prior to introducing a MIS system, BOI was struggling to monitor its cash stock levels and felt that its cash funding costs were too high.  Regular over-ordering at ATMs was leading to significant rework (up to 35% of cash was being returned to cash centres).  Upon the introduction of a MIS system, branch management received accurate stock figures and recommendations for cash orders.  Although it took time for branch managers to trust the recommendations, BOI has noticed significant improvements.  Rework has reduced by 80% and cash in transit and funding costs have been substantially reduced.

If you missed this event and would like to order a CD containing all the speaker presentations, please contact amanda@atmiaconferences.com.

ATMIA and RBR have confirmed that they will be collaborating again next year to jointly produce ‘European ATMs 2008’.  The exact date of the conference is still to be confirmed, but it is likely to be late April 2008.