Magazine article American Banker

Automatic Teller Machines Not Meant to Be Money Makers, Bankers Warned

Magazine article American Banker

Automatic Teller Machines Not Meant to Be Money Makers, Bankers Warned

Article excerpt

CHICAGO -- Bankers installing automated teller machines in hopes of making big profits are going to be disappointed. That was the message from a seminar on electronic banking held here recently.

James J. Hubbard, chairman of Hubbard & Associates, the Chicago consulting firm that held the seminar, said ATMs "are a cheaper way of getting services to customers. IPf you're trying to make money on it, your chances are pretty slim."

The issue of how to make ATMs profitable -- and whether customers should bear some of the costs by being charged for their use -- is beginning to come to the forefront.

But experts at the seminar said the emphasis on profitability may be miguided. "I am against the view that ATMs should be a profit center," Mr. Hubbard said. "Where you are really going to get the payback is in the opposite side of opportunity."

The payoff for bankers in an electronic delivery system comes in the freeing of former tellers, who can spend more of their time selling services, and in lowering employee costs, he said.

Christian Loviton, chairman of up Facem, a French consulting firm specializing in electronic delivery systems, told seminar attendees that one major reason ATM networks are so expensive is that no bank has had the "courage" to either move tellers to other positions or get rid of them altogether when ATMs are added. Choice Between People and Machines

"You must not add an ATM network on top of a teller network," he said. "You must choose. There is no profit in keeping an ATM and a teller. …

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