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Recent news reports about banks increasing their ATM fees created quite a media stir and thousands of online comments responding to the stories.
One commenter on NPR Online (Sept. 29, 2014) stated, “My credit union offers two overdraft protections per year – if you make that mistake once in awhile, you’re not charged. Oh, and no fees (from the CU) to use other ATMs. And my checking account accrues interest. Why are you still letting banks get rich off your money while charging you for it?” Another noted, “If your credit union is a member of the CO-OP network, no fees at any CO-OP ATM. Sweet deal folks.”
ATMs a Continuing Force
If nothing else, the uproar over fees underscores the continuing demand by consumers for ATM usage.
Hard data provides further evidence, according to a study commissioned by the Federal Reserve Bank of San Francisco, “Diary of Consumer Payment Choice.”
“The notion among certain groups that ATMs are obsolete has been pervasive for many years,” the report says. “However, data suggests that the ATM and its industry are far from reaching their demise.”
The study finds that ATMs continue to be a force in the financial services marketplace, perhaps because paying with cash is still king for many. Contrary to popular perception, 40 percent of 18- to 24-year-olds prefer cash to other payment methods. In addition, a study by CreditCards.com found that two in three U.S. credit cardholders say they typically use cash for purchases of less than $5.
Some other data points are illuminating:
- Preference for the ATM channel has increased from 11 percent to 14 percent in the past year. A recent American Bankers Association study found that the use of desktop banking since 2013 has dropped, while the use of branch, ATM and mobile banking channels has risen.
- 17 percent of all checking account shoppers indicate that a free ATM is a “must have,” according to findabetterbank.com.
- 41 percent of users reported locating an in-network ATM via their mobile device, according to the Federal Reserve Board’s study, “Consumers and Mobile Financial Services 2014.”
- The average value of ATM cash withdrawals has risen, according to an ATM Marketplace http://www.atmmarketplace.com story appearing on Sept. 29, 2014. Consumers made 100,000 fewer ATM withdrawals in 2012 than they did in 2003, but the average dollar amount climbed from $85 to $116.
- The cash payment share by volume in 2012 was higher than for debit and credit combined, according to a study performed by the Federal Reserve Bank of Boston. Excluding recurring payments, such as utilities, payment shares in the U.S. were 46 percent cash, compared to 26 percent debit and 19 percent credit.
Attractive to Millennials
CO-OP Financial Services, operator of the 30,000-locations-strong CO-OP ATM network, commissioned a study by Raddon Financial Group that found a direct connection between use of ATMs and credit union members’ financial activity. And, the report has good ATM news for the industry’s effort to attract Millennial-aged consumers—via the no-surcharge benefit to members of participating credit unions.
The report points out that 20 percent of study respondents were Gen Yers and 26 percent of those younger members use ATMs up to three times per month – considered frequent use. A key to ATM popularity with young people is the fact that networks such CO-OP ATM are fee-free.
The convenience, familiarity and reliability of ATMs also play a key role in establishing the trust and engagement needed to establish long-term member relationships.
“Engagement represents the degree of emotional connection that individuals have with your institution,” the report states. “Higher levels of engagement, or emotional bonds, correlate with higher loyalty, share of wallet and financial performance. Establishing these emotional bonds with your (member) base is critical to maintaining retention and service quality levels.”
Self-Service Engagement
With the surging advancements that self-service systems are making in today’s financial industry, the role of the ATM is becoming even more important as technology progresses.
Consumer attitudes about self-service are changing rapidly. What once felt like less service, now feels more like empowerment. Consumers are not only willing to take charge of their financial activities, in many cases they would much rather do it themselves.
With an array of advanced payment and account access technologies – including at the ATM – credit unions can meet the self-service demands required of them.
Terry Pierce is senior product manager for CUES Supplier member CO-OP Financial Services, a financial technology provider to credit unions based in Rancho Cucamonga, Calif. Pierce can be reached at terry.pierce@co-opfs.org or 800.782.9042, ext. 6178.
