The veteran field sales people working at IADs rightfully assume that they know the best locations for ATM deployments in their respective regions. After all, it is their home game, and knowing how much cash each ATM will need next Monday is a piece of cake. Is it a 200 TRX location or a 500 one? What would be the typical ROI in that specific location?
However, a different game unfolds in the ATM space. Here is the big picture:
- The Utilitarian Approach: Generate more transactions per ATM
For an IAD, transactions are everything. It is how an IAD generates revenue providing cash availability and earning a service charge in return.
But with the current state of Artificial Intelligence (AI) in our daily lives, we even use it to indicate the best available route to pick up our kids from schools. Then, why not use it in such a mission for critical decisions? Location intelligence software based on AI may help the IADs to locate and deploy existing and emerging top locations and find out hidden gems before the competition.
If you think in such a fast paced world, you have found all the best locations and they never evolve. Think again!
- The Missionary Approach: Serve the Under-Served
It is no secret that the Banks lately are more prone to close down their branches and rescale their ATM networks. As the focus on mobile and web channels escalates, Banks move away from rural areas to more urban and fewer locations targeting special demographics in order to maximize ROI.
IADs have an important role in this context. Even though mobile and web are more profitable channels for financial institutions, the need for cash is not declining, if not increasing. Therefore; in order to make cash available ubiquitously nation-wide, IADs will be taking on a new role: coverage gap minimization.
- The Tactician Approach: Banks Outsourcing
As the mobile and internet banking penetration increase, the ATM channel is starting to lose its significance for the banks -- managing ATMs not being treated as core part of their businesses. However, there is still a demand in ATM service from bank customers. Therefore, a trend of outsourcing ATM operations in the world to 3rd parties in order to provide such services is emerging.
In order to position themselves in this new wave, IADs should move out of their comfort zones and traditional IAD friendly locations. They should start thinking about what sort of network they should retain to become a prime partner candidate for Financial Institutions. These locations will have much more diverse characteristics that cannot be found with the rule of thumb learned by years of optimizing traditional IAD locations.
- The Futurist Approach: The Fintech Partner
Most of the Fintech is all about Financial Institutions without banks. But any form of large scale Fintech that is out there to replace majority of bank services, needs a physical presence of some sort. Cash is still king and a financial service with zero cash is still futuristic.
Consider even only online banking business of the case of ING-Diba in Germany and “enpara.com” from Finansbank, Turkey. While the former is pre-dominantly an ATM only bank, the latter does allow the customers to utilize the ATMs of Finansbank but not the branches.
Hence, both online banks and Fintechs will be looking for partners with appropriate coverage for alliances for making their services complete and convenient for their customers.
As a result, ironically with AI, the oldest alternative distributive channel for banks, ATM, could be the first one to utilize AI in order optimize its geographical coverage for ever changing targets.
For more information contact:
Dr. Tolga KURT