Top 10 factors influencing ATM strategy decisions today
Decision makers at financial institutions (FIs) agree that leveraging the ATM channel is helping them deliver enhanced customer experiences while improving their operational efficiencies. But when it comes to ATM operations, they’re at different points on an incremental journey, or continuum, toward achieving the benefits they seek.
So what are the leading factors driving FIs’ ATM operations strategy decisions today? And how effective are the options they’re choosing in delivering on those values?
A recent Datos Insights/NCR Atleos white paper explores this question. In Q1 2025, it analyzed the different ways FIs are optimizing their ATM operations through various management models, with a particular focus on ATM as a Service (ATMaaS). Findings were drawn from interviews and briefings with executives at global retail FIs with various ATM estate sizes, including those greater than 1,500 ATMs.
The authors observe that in the search for the sweet spot between functionality and cost optimization, each FI is guided by its own unique set of challenges, pain points, concerns and goals—often in the context of its background and orientation. The process of updating technology and modernizing operations is anything but one-size-fits-all. FIs are at different stages in the branch transformation process, have taken different steps to arrive where they are now and have different priorities and challenges. As a result, the value that most drives the ATM strategy decision for one financial institution tends to be very different than that of another. It depends on where they stand, where they want to go and how they intend to get there.
Shared challenges, differing priorities
In the midst of these highly variable priorities and values, several themes emerged from the study authors’ discussions with FI leaders. These included:
1. Limiting capital investments
If an FI has recently made significant capital investments in infrastructure, they tend to place primary value on a solution that does not require new capital investment. They’re likely to choose to supplement existing technology with vendor services to extend the lifespan of that technology.
This option works best with a vertically integrated partner that has the resources to take full responsibility for hardware, software development, state-of-the-industry services, evolving security challenges and data analysis. Using multiple vendors or service aggregators might initially seem less expensive, but this route can have hidden costs, from internal management to margin stacking (because of course, a profit must be made by each party every time a dollar turns).
2. Maximizing availability
ATM availability looks different to management than it does to customers. For customers, it’s about convenience—being able to count on that ATM being ready to use. For FIs, it’s about a strategic approach to maintenance, downtime and fleet management.
ATMs that aren’t monitored and maintained correctly are more vulnerable to security and compliance challenges, which can cause more ATM downtime. The time and materials it takes to upgrade and fix ATMs can be a huge cost for FIs. While FIs may be charged for the time and material costs under maintenance-only agreements, this is typically covered under ATMaaS contracts.
Shifting the model to one in which an outside ATM partner takes on the responsibility for maximizing ATM availability frees the FI from the overhead of managing the ATM estate. When a customer moves to the NCR Atleos ATMaaS model, they gain the many benefits of using a single vendor that will commit to a specified outcome. NCR Atleos can make this commitment because it uses leading-edge tools to make sure the right technician arrives quickly with the right part already in hand and the skills and support to do what needs to be done.
3. The burden of increasing complexity
Keeping up with the growing complexity of government compliance mandates, vendor management, resource optimization, network optimization and cost management can hamper FIs’ efforts to focus on their core business—and many are keenly aware of this. Execs for whom these factors loom large may choose large-scale services solutions such as managed services or a full ATMaaS approach to take the day-to-day management of these issues off their plates, so they can focus on their core business. The benefits to the FI increase as they move to a complete outsourced solution.
4. Boots on the ground for quality assurance
Proactive preventative maintenance can take fleet management out of break/fix mode and put it in the driver’s seat. Under an ATMaaS agreement, shifting to an outcome-based model tasks your service partner with delivering against your contractual agreement. This means every service touchpoint with your fleet can be leveraged to ensure optimal levels of performance and availability.
When a field service rep arrives to service an ATM under an ATMaaS model, they typically also check for and mitigate any other issues while they’re there—for instance, making sure all the screens are correct and the physical decals, such as ADA compliance postings, are in place and intact. Under other agreements, they might raise a work order for a repair. This is important from both a compliance perspective and from a branding perspective, because a torn sticker or a cracked exterior can send the wrong message to customers and prospects.
5. New solutions for the customer experience
Though many FI executives said they know their customers want expanded functionality at the self-service channel, many are concerned that expanding that functionality will strain their operational capabilities and increase the volatility of their hardware and software costs. For these executives, the sigh of relief that comes from the ability to get new features to market fast at predictable costs may be the deciding factor in choosing a level of ATMaaS.
6. Brand differentiation and marketing
While FI executives agree that marketing is important, most acknowledge that their marketing efforts could be more effective. One of the factors that makes ATMaaS an attractive option is the standardized marketing campaigns that can easily be deployed at the ATM, where a captive audience is waiting to hear your message. Recall rates for ads at the ATM tend to fall in the 82% to 84% range—an enviable place to be.
7. The value of data and what can be done with it
With the demand for availability, it’s easy for ATM channel managers to find themselves in reaction mode at the FI level. So analyzing data on cash usage and deposits that could help to optimize the channel sometimes takes a back seat to break/fix priorities. Yet tremendous potential for configuring ATMs to improve customer experience and operational efficiencies can often be mined from detailed ATM data.
With ATMaaS, the FI outsources the day-to-day responsibility for managing the service desk. The ATMaaS partner monitors and manages incidents to drive availability. The FI receives reports and insights into the availability and performance of its fleet that can guide its decisions about its channel to maintain high levels of availability for its customers.
8. Chargebacks and other time-consuming transaction processing tasks
Typically, chargebacks are well under 1% of a FI’s deposits, but they tend to take up more than their share of a FI’s administrative workload. For community banks and small providers, it’s difficult to have more than one or two staffers trained for this highly specialized task—and what about sick leave and vacations? Under an ATMaaS agreement that includes transaction processing and terminal driving service, this challenge becomes the responsibility of the supplier. If a compliance reg comes into place that renders the ATM’s software or hardware out of support or out of compliance and this support is included in the ATMaaS contract, managing it is the ATMaaS supplier’s responsibility.
9. Total cost of ownership (TCO)
Many FI executives are frustrated by the unpredictable costs of managing an ATM program, especially when ongoing investments in hardware, software and services are required. These costs are often difficult to plan for within typical budgeting cycles. For FIs prioritizing long-term value, fully committing to ATMaaS can replace uncertainty with peace of mind, eliminating the need for budget variances. ATMaaS covers all aspects of running the channel, provided by a single partner for a monthly fee, ensuring a contracted business outcome.
The benefits from moving to ATMaaS offer significant TCO improvements. These can include resourcing efficiencies such as labor allocation, restructuring, teams focused on areas of growth, time saved from managing the ATM channel, training the right talent to understand the complexities, even staffing teams to manage the demands of the ATM channel 24/7/365 and providing a help desk facility to support it.
Managing multiple vendor environments means time spent processing invoices and contracts, understanding SLAs, chasing accountable partners for mis-delivery of service, working out the root cause of the issue, understanding compliance regulations, etc. ATM downtime makes customers dissatisfied and places burdens on internal tech support teams and branch staff.
10. Security
Protection against vandalism is a growing concern for many FI leaders. But when an ATMaaS agreement includes logical and physical security, repairing or replacing out-of-service ATMs in the event of a security attack becomes the supplier’s responsibility—not the FI’s.
Conclusions
Leaders at financial institutions agree that competing in today’s banking environment requires a robust ATM strategy. Though they inhabit different points on the ATM operations continuum, all are searching for the right balance between functionality and cost optimization that can delight their customers while optimizing their costs.
Our analysis shows that branches will remain important, but access to most financial services can be delivered with equal quality and greater efficiencies for the FI and with higher levels of convenience for the customers through ATMs and teller-assisted interactive teller machines (ITMs).
Increasingly, we are seeing FIs moving to outsource specialized expertise: capabilities to provide leading edge tech and service, predictability of capital and maintenance spending, compliance/security coverage, etc. Savvy FI leaders understand acutely that an innovative, customer-friendly, feature-rich, secure, compliant ATM strategy is essential to a FI’s success and that it no longer makes sense to build and offer that from scratch.
Based on the results of this study, the authors recommend that FI leadership include a thorough assessment process in its ATM strategy development practice, including identification of pain points, evaluation of potential partners, analysis of total cost of ownership and the development of a transition roadmap.
Learn more
For further insights into ATM channel strategy decisioning and an assessment tool for evaluating your FI’s ATM strategies, download the NCR Atleos/Datos white paper.
