As we look around the globe and see growing interest rate challenges and a shifting cost basis, we know it’s due to the new world reality. For financial institutions (FIs), driving growth will become even tougher than it was before. Running a profitable business means striving for peak efficiency—reducing expenses to squeak out every ounce of profit possible and preserving capital by rationalizing every aspect of the business. Setting a new course and pivoting the operating model will be the mandate in the months, if not years, to come.
Maintaining an optimal efficiency ratio in a new reality.
We live and die by how efficiently our businesses are run. An FI’s efficiency ratio is the gold standard in determining its profitability. In this new world of historically low interest rates, CapEx competition and shifting profitability – how is your business’s efficiency ratio looking?
For the time being, it’s going to be tough. Even prior to the current global crisis, the overall management and operations of running an FI were already overwhelming and costly. Loan loss provisions, interest rate spread, portfolio maintenance, fees, audits and compliance, branch rationalization, channel management, the list can go on and on and we haven’t mentioned the self-service/ATM channel yet.
Owning and maintaining the self-service channel requires its own specialized, dedicated resources and management. Regardless of whether you’re able to turn a profit on your ATM business, break even, or see it as a necessary evil, providing consumers with access to cash—and, in some locations, the only link to your physical brand—means the ATM channel is a must-have. As line items go, this one is a biggie. Are you managing it as efficiently as possible?
Is it time to change the channel?
The struggle has been very real over the last decade. FIs have had to manage accessibility (ADA, CSA, etc.) compliance, not just one but two Microsoft Windows operating system updates, several Payment Card Industry (PCI) updates, and numerous other certifications and security fixes for hardware and software. These time- and cost-consuming initiatives often inadvertently take priority over the desire to deliver differentiated consumer experiences—even though consumer behavior is rapidly evolving, and meeting their needs has never been more important.
Moving forward, FIs have the added hurdle (and cost) of keeping branch staff and clients safe. This has risen to the top priority over all others. In the branch and at all consumer touchpoints, making sure all health guidelines are followed has quickly become mission critical.
Keeping up with it all can be overwhelming and you may start to consider whether there’s a payoff. In reality, your business and skill set is focused on providing financial services and not necessarily on ATM/IT expertise. As you look for ways to improve efficiency, consider sticking with what you know best—and the actions that generate the most revenue: taking care of clients’ financial wellbeing with financial services.
It’s a different model—one that might require your self-service fleet strategy to shift. What might it look like? And where should you begin?
The role of the ATM has changed—and those changes are here to stay. I see three specific areas where banks are evolving the channel:
They’re migrating more and more routine transactions to self-service.
They’re redefining branch roles and repurposing talent to focus on higher-value tasks, relying on self-service to accommodate everyday consumer banking.
They’re redesigning the branch, banking access and overall operations to meet the needs of a post-pandemic world.
Self-Service channel operations must naturally evolve, too.
When you look at your efficiency ratio in this new reality, does it still make sense to own, operate and manage your fleet through its entire lifecycle? Or could your organization benefit from having someone else manage it – eliminating worries about the next OS upgrade and latest security hot fix? Perhaps you are looking for ways to compartmentalize it completely, serving your clients with an ATM fleet that isn’t even on your balance sheet. Evaluating what works best for your business (and its efficiency ratio), employees, and end-consumers will ultimately need focused consideration.
With so much happening around us, a new normal is emerging for ATM channel management. Will the next 5-10 years become more complex? Probably so. What’s for certain is that new and more complex pressures will weigh on your efficiency ratio, from increased and ongoing demands for even higher quality service, to channel security, enhanced experiences and compliance.
Now might be the time to rethink what business you are in: is your organization able to single-mindedly focus on your consumer relationships? Now may be the perfect time to get back to the business of providing financial services and financial wellbeing—but with increased efficiency. More and more organizations are looking for ways to offload the operational aspects that add very little incremental value to their core business. Service partner experts do the heavy lifting, making those ancillary activities much less complex, more manageable, improving your bottom line and allowing you to pivot your resources to the ‘new normal’. Diebold Nixdorf is ready and able to help you with this. As your partner, we can help you navigate options and make informed decisions around service-based solutions that can optimize your operation.
Contact your Diebold Nixdorf sales rep to see how our Self-Service Fleet Management Services
can help you today.