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Banks giving ATMs the ax?

By Claes Bell, CFA · Bankrate.com
Friday, July 27, 2012
Posted: 10 am ET

Used to finding a Bank of America ATM whenever you need one? Don't look now, but that could be changing.

This year, Bank of America has cut a record 1,536 ATMs, or about 9 percent of its total stock, write Hugh Son and Zachary Tracer of Bloomberg:

Bank of America chose to pull most of its ATMs at malls and gas stations in part because those devices only dispensed cash and weren’t available 24 hours a day, (Bank of America spokeswoman Anne) Pace said in an interview. Customers want to be able to deposit checks at an ATM, she said.

"It's about convenience and access, that’s what the customers are looking for," Pace said. "People aren't banking 9 to 5, they are banking when it’s convenient for them."

It costs banks an average of $1,700 per month to run an ATM on someone else's property, compared with $1,100 at a branch, said Tony Hayes, a partner at consulting firm Oliver Wyman in Boston. The difference stems from rental costs and fees for armored couriers to refill machines with cash, he said.

But is BofA's move an isolated event, or a sign that large banks are starting to abandon ATMs? Ann Carns of The New York Times Bucks Blog writes that it's more likely the former:

Other big banks say they have no plans to shrink their networks. JPMorgan Chase, the largest bank by assets, said it planned to expand its system. A Chase spokesman said in an email that the bank had more than 17,500 ATMs, "and that number will grow as we continue to build branches."

Citigroup has 10,428 Citi-branded ATMs, a spokeswoman said, including more than 6,000 machines at 7-Eleven stores, and has no plans to reduce those numbers.

Wells Fargo says it has about 12,000 ATMs since its merger with Wachovia, and has no plans for any changes.

U.S. Bancorp has 5,085 machines and has no plans to pull back on its network, a spokeswoman said.

Like Carns, though, I wonder about the long-term trend. Notwithstanding the old cliché, "cash is king," cash has grown increasingly rare as electronic payment methods like credit and debit become more ubiquitous.

I think as technologies like smartphone-based remote deposit capture and person-to-person payments become easier to use and more widely adopted, there will be fewer and fewer reasons to seek out an ATM, in the same way that the rise of cellphones has killed off the payphone. After all, if you have a device in your pocket that can perform many of the functions of an ATM, why go out of your way?

But in the meantime, having an extensive ATM network customers can use without paying an annoying fee is one of the major ways large banks differentiate themselves from community banks and credit unions, and so they'll continue to invest in them for the time being.

What do you think? Is a big network of ATMs important to you? Are ATMs on their way out, or will people always want easy access to cash?

Follow me on Twitter: @ClaesBell

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175 Comments
wiseone
September 19, 2012 at 8:29 am

@ nygrump...I read The Handmaids Tale. Scary.

Traveler
September 18, 2012 at 3:07 pm

I will be retiring soon and traveling the U.S. in an RV. For tax purposes, I will also be attempting to change my state of residence. Thanks to the Patriot Act, I will have to deceive the financial community and break the law to open a bank account.

To establish a new bank account in the new state (required to prove change of state residency), I will have to lie about a permanent address which I will not have living & traveling full-time in an RV. Even once I have an account, the bank agreement requires notification every time I move.

The only other choice is a debit card for Social Security payments and they charge to get your money!

Charles Edwards
September 16, 2012 at 11:00 pm

I worked for an ATM Service a while back for four years. I was armed, wore a bulletproof vest, drove an armored van & I was still highly nervous. Most banks do not think security when they install these & put them in places that I would not walk much less step into to approach an ATM. If I absolutely have no other choice, daylight-bank lobby; after hr-drive-up but only if it is wide open & even then, I have a pistol within reach. I generally us Wal Mart or a large grocer with cash back at the register. There are stores jumping on the fee train though that if you get cash back, there will be a surcharge. Dollar Tree in this area started that trend. As for the comment of them starting to track usage with a possibility seen of taxing it, too late. One of the 'provisions' of Obamacare going into effect in January is a new 'user fee' on financial transactions. Make a deposit-pay a fee. Direct deposit-pay a fee. Write a check-pay a fee. Check clears-pay a fee. Transfer money to another account-pay a fee. Get on the computer to access online banking's bill pay-pay a fee. Any action taken on your account generates a fee payable to the govt. And don't think the banks are going to see this & want a share. They are probably charge a fee for charging a fee. And no, you cannot get out of it by using cash. That's in there too. ANY financial transaction will generate the addition of a fee-cash, check, debit, credit, makes no difference. George Orwell would be delirious looking at this screaming 'I TOLD YOU SO.'

Frish
September 14, 2012 at 1:51 pm

Wrote my MBA Thesis in 1979 about Cash.

ATMs were brand new in the US at the time, and I used a customer survey (6000 respondents) of a now closed S&L for my data.

"Age Group Prediction of Cash Using Behavior" was used by both banks, and ATM manufacturers, to best understand the demographics surrounding ATM usage.

At that time, the most likely target audiences for ATM services were young people and Seniors.

That's because Seniors at that time had grown up in the depression, and therefore didn't trust credit cards.
Youth, having no credit history, needed cash.

The banks saved millions when they installed ATM, since they needed fewer tellers.

Then they made many more millions by charging for transactions on "foreign networks". That really ticked me off...still does!

dmz
September 12, 2012 at 12:30 pm

i hope not. the atm is one of most common machines used today. especially working late hours by the time you get home the banks are closed when you get up in the morning to go to work the banks are closed. everyone also assumes all people have computers, cell phones and make big bucks. that is not the case, there are a lot of people out there barely making it by, and I always see someone using an atm when I am out. they should not become extinct.

pghgrump
September 12, 2012 at 11:55 am

While I do use my debit card quite a bit, I am with nygrump: cash keeps us free. Once everything is electronic, it can be monitored - so, like the PNC commercial, transfering money to your friend for lunch because you didn't have cash is a recorded transaction. It will happen slowly, but eventually the government will get access to all such transactions - probably in the name of "safeguarding our country from terrorists" - and then tax them all. Read Margaret Atwood's "The Handmaid's Tale." Creepy. If they get rid of ATMs, I'll be hoarding cash in a safe.

Tony
September 11, 2012 at 1:57 pm

I agree with BOA for a different reason. Recently I had my AMEX card hacked and saw several billings in excess of $3200.00.
All were from someone who had somehow got my card info. Do not trust GAS stations card readers, or ATMs at places where it looks dubious. Only use your card at the BANK sites. American Express did a great job in catching these charges, and warning me immediately.
AND..do not use a DEBIT card as much as possible.

Deanna
September 10, 2012 at 1:30 am

I'm actually researching this topic for my debate class and am very interested to hear opinions for both sides. So PLEASE let me hear why you want your atms to stay or why they should go! Personally I feel that the need for atms are almost nonexistent. You get cash back at grocery stores without the fees and get up to 60 bucks at most places so why would I go to an atm? Plus there is always a 24hr walmart close by if its too late for grocers to stay open.

econobiker
September 06, 2012 at 10:08 pm

The almost fee free atm scheme is done by going to the grocery store and buying a 35cent pack of gum or 30cent pack of ramen noodle soup and then using your card as a debit card for the sub-50cent transaction and then getting as much cash back as the you need or the store limit is...

50 cents or less sure beats $2.00 to $4.00 each fees from the atm owning bank or company and your own bank if you are out of your bank's network...

nygrump
September 06, 2012 at 2:07 pm

Cash keeps us free. You have to have US Govt approval too open an account now. So if you are on the their gestapo no fly/no buy list, you don't get an account, and you don't get to get any money. How would that work for all you digital fetishists? And that doesn't even touch on the subject of crime. Do you really think the System is setup to ensure the security of your money? The difference now is when you get mugged, they only get what is in your pocket - not they can drain your entire accounts.