The impact of utility ATMs on financial access

By Stuart Mackinnon, originally featured on Forbes

On September 2, 1969, America’s first ATM made its debut, revolutionizing access to cash and essential financial services. Far from being relics, ATMs are still evolving to drive financial inclusion and support the resilient infrastructure needed for future banking needs.

Today, ATMs are entering a new era of utility banking. Drawing from my background and experience working in the financial services industry and with ATM technology for the past 20 years, let's take a closer look at this technology and how financial institutions can harness its potential impact.

The importance of cash accessibility

As consumer banking preferences shift, self-service ATMs are becoming increasingly important for financial institutions. Many customers desire flexibility in how and when they bank, including accessing cash. Low- to moderate-income households rely on cash, with about 15% of the U.S. population earning less than $25,000 per household. For the nearly 1.4 billion underbanked people globally, cash is a lifeline.

Legislation is also evolving to ensure cash accessibility. The Payment Choice Act guarantees that U.S. consumers can make purchases using their preferred payment method. The Community Reinvestment Act (CRA), updated in 2023, introduced metrics for evaluating bank performance, adapted to digital banking trends, and focused on expanding access to credit and banking services in low- and moderate-income communities.

Much like cloud computing transformed computing capacity, utility ATM networks allow banks to band together and share ATM devices to reduce costs and meet regulatory requirements. This has led to greater numbers of conveniently located ATMs, increasing consumers' ability to conduct financial transactions. Globally, similar utility ATM network models are emerging; for example, in the U.K., where 1 in 8 bank branches closed in 2023, a public-private partnership is working to provide ATM services in banking hubs and retail locations in rural areas.

Exploring shared vs. independent ATM networks

If you represent a financial institution, you are likely becoming more strategic about providing self-service access to cash in response to these factors. In the U.S., there are two primary types of utility ATM networks. Understanding these types can help you determine which will be the best complement to your existing branches (in the case of traditional financial institutions) or which will work best as your physical presence for cash transactions (in the case of digitally focused neobanks).

Shared networks

Shared networks are owned and operated by member financial institutions. Your customers and your competitors’ customers enjoy surcharge-free access to all the ATMs in the shared network, and the shared network participants contribute the ATMs that make up the network, so you have the advantage of there being no extra operational cost to your bank beyond its existing ATM network devices. This can allow you to offer customers ATM access at a wide variety of bank and credit union branch locations. However, keep in mind that shared ATM networks are located at competing branches, which can lead to customer attrition as they are exposed to competitors’ marketing.

Independent networks

Independent networks, owned by nonbank ATM deployers, also offer consumers surcharge-free access to cash and financial transactions. Independent network ATMs are located at convenient nonbank locations like retail stores; however, some consumers may still prefer using ATM devices at a bank branch. Third-party deployers maintain these ATMs, which relieves banks of operational costs but at the same time makes it critical to select a trusted third-party deployer partner that can deliver the experience your cardholders expect.

In contrast to shared ATM networks, your bank does pay a fee to join the independent network. Neutrality is an advantage of independent ATM networks, as they do not require your cardholders to visit competitors ATMs. Many independent networks have a nationwide footprint, including overseas locations, and can customize the consumer experience to reflect a bank's brand.

In summary, both shared and independent utility ATM networks can offer numerous benefits. Consider how you can position your institution's ATM services and utilize utility networks to best meet the needs of your community and customers as the financial landscape continues to evolve.