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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
TJ
August 31, 2012 at 9:53 am

I always carry some cash. It's ridiculous how so many people today act stupid in situations where you have to tip a valet for parking your car or in other situations and you have no cash on you. It's immature. Cash is still king.

DJKA
August 31, 2012 at 8:47 am

FWIW, I haven't had an ATM card in years. My bank eventually just stopped sending them to me because I never used them.

There are times when it would be convenient to get some cash, but I do 99% of my financial transactions online and/ or via credit card.

DJKA
August 31, 2012 at 8:46 am

"According to the BLS, in 2011 the median wage for a teller was about $12/hr, or $1920 per month."

If the teller's wages are $1920 per month, then it's probably costing the bank at least $5000 per month to employ her. Payroll taxes, benefits, facilities, etc. also cost money.

Arlo J. Thudpucker
August 30, 2012 at 10:02 pm

I doubt ATMs cost anywhere near either $1100 or $1700 per month. I'd bet there were some creative accounting at play here in oder to bogus up these numbers.

According to the BLS, in 2011 the median wage for a teller was about $12/hr, or $1920 per month.

Only an idiot would lose the flexibility of a human for that kind of difference.

Ken
August 30, 2012 at 9:09 pm

"Customers want to be able to deposit checks at an ATM, she said."

Really? As fewer people are using checks and those that do are increasingly using them only to pay bills where is the increased demand for personal deposits of checks?

Bofa needs to cut some corners but wants to make it look like a shrewd move.

Let BofA fall where it may... I left them years ago for multiple reasons and will gladly stick to USAA. Not only is my interest-bearing (no minimum) checking account free but ATM fees are refunded and in the off chance I get a check (thanks grandma) I can deposit it from a smartphone, computer with a scanner or, incredibly, at a local UPS store!

James G
August 30, 2012 at 1:07 am

@Tedie Wells Why would "Osama Obama" be racist? What, precisely, does race have to do with it? You may find the comment offensive, but this "racist" stuff is really getting tiresome.

I wonder if you would have found it "racist" if it was "Osama Bush"... I think I already know that answer.

Get lost with that racist idiocy. Nothing racist about "Osama Obama." It is an insult, for sure. Not racist.

Tedie Wells
August 29, 2012 at 9:08 pm

@Wendy, the Jewess, your comments referring to the President of the US, as Osama Obama, is very disrespectful and could be considered racist on many levels. This article refers to the closing of ATM's and you have chosen to bring up politics. Please READ the article NEXT time before making non-related, ignorant comments.

Wendy Weinbaum
August 29, 2012 at 3:44 pm

As a Jewess in the US, I say: If more of the middle class think Osama Obama will help them, than think Mitt Romney would, then they DESERVE their fates! And as always, remember that all REAL Americans put their 2nd Amendment FIRST!! America wasn't won with a registered gun.

DJ
August 28, 2012 at 10:13 pm

I just go through the drive-thru to get my cash; that way, I don't have to take time to figure out my checkbook to see how much I have left that I can spend. I know, paycheck to paycheck.

Dave
August 28, 2012 at 9:21 pm

Who cares if they pull atm's from the mall? Drive by the bank. They're not getting rid of atm's. Most stores take debit cards anyway. Why get cash? You're still having to use an electronic card t get it.