Sep 10, 2020

From ISO to FISO, Plotting the ATM Service Provider Changing Landscape

ATMs provide a service for organizations seeking to deliver value to consumers, but that potential varies substantially depending on the functionality and type of ATM being used. In particular, the industry is experiencing a transition in the services being offered by independent service operators (ISOs) with the introduction of an innovative category of independent service operators know as Financial Independent Service Operators (FISOs). ISO’s whom service ATMs found in restaurants, bars, and service stations differ from FISOs whose focus is management of ATM networks specifically for Credit Unions and Community Banks.

The ATM industry at-a-glance

A landmark study from Accenture found that there was considerable growth opportunity in the ATM industry. At the time, banks were investing in ATMs to broaden their service footprint while reducing the size or number of branch locations they needed to manage. The need to find a middle ground was thereby brought forth. The reduced number of branch transactions handled by banks meant that institutions needed fewer branches. However, customers that prefer interacting at branches still want some sort of access to physical locations where they can perform bank transactions. The study found that ATMs were serving as a prime option in this area, and banks were not only deploying more ATMs, but also adding new service offerings at those locations. This allowed the staff at the banks to concentrate on the branches primary purpose which was to obtain new customers.

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According to Accenture, the industry was coming off a move from basic ATMs, which included cash withdrawals, balance checks, printed receipts, and envelope-based limited cash deposits, toward multi-use ATMs. These included ticketing, mobile top-ups, mini-statements, cash recycling, money transfers and similar capabilities. Moving ahead, ATM evolution is moving toward more robust services and capabilities, including targeted marketing, multi-media ATMs, information services and contactless capabilities that improve security.

As organizations - both financial institutions (Fis) and independent operators - embrace more robust ATM solutions, they are creating opportunities to engage customers in new ways and drive value through alternative methods. This evolution is something proving particularly important in today's industry climate, where advanced technical capabilities are expected from ATMs, but demand for physical access to banking resources is shifting.

While the ATM industry must be complimentary with digital banking solutions, there are still ample opportunities for innovation and growth in the sector, but ISOs and FISOs are taking opposite approaches in the opportunity.

The growing opportunity for ISOs

According to RBR London, 53 percent of ATMs in the U.S. are run by independent operators and are typically only cash dispensing machines. As financial institutions explore mobile banking and similar options, the need for traditional ATMs diminishes. At the same time, ISOs can deploy ATMs that provide a wider range of financial services to reach the unbanked or underbanked.

All of this is creating strong opportunities for ISOs in developed markets like the U.S. According to an ATM Marketplace report, a positive legislative environment has combined with shifting industry demands to lead to rising demand for ATM solutions that aren't directly linked to existing financial services providers. Instead, these ATMs are freed to pursue alternative business models and enact strategies that to meet highly specific customer demands to create value. These additional services may include bill pay options, money transfer services, and crypto currency.

FISOs are changing the market

While ISOs have new opportunities, this comes largely as many of them look to become FISOs, changing the way the types of services they offer. As FISOs add new services to their product lines including managing ATM networks for Credit Unions and Community Banks. The FISOs are finding acceptance in the marketplace as these financial institutions typically have fewer IT resources and outsourcing the ATM networks allows their teams to focus on the many changing banking IT infrastructure products such as mobile and other digital banking services. Many FIs are rethinking the role that ATMs play in customer interactions and as they add these new services FISOs are finding that as they move from ISO based services, they must add these new functions to compete. A more sophisticated network solution with multiple endpoints, as well as meeting the customer’s experience expectations that come with a specific FIs image versus a no name cash dispensing ATM.

Taking advantage of potential in the ATM sector

Whether you are functioning in an ISO or FISO environment, one trend remains the same: Demand for robust financial services from ATMs is high. ISOs need to be able to add new services beyond only dispensing cash at ATMs. FISOs need to offer enough value to provide a robust solution for managing the FIs ATM networks across a combination of remote, branch, and ITM formats. Particularly considering the value opportunity for FIs to supplementing banking services or providing banking resources where others are not available. Achieving these goals is highly reliant on data communication to and from ATMs, making robust and secure connectivity critical in the industry.

Ventus Managed Network-as-a-Service (NaaS) for ATMs provides FISO ATM service providers reliable, secure, network designs to meet the specific needs for Fis. Ventus solutions provide enterprise cellular and fixed line connections for remote, branch, and ITM deployments based on specific needs. Network designs include direct internet connections that are needed for the ISO cash dispensing machines, as well as, access to the dual data centers, fully redundant, PCI-compliant Ventus Private Network solutions with multi-point routing handling any combination of connectivity with ATM management, host processors, check imagining, advertising, alarm, and DVR connections for FISOs’ FI customers.

Ventus Global Network Solutions has the experience, equipment, and cutting-edge systems to ensure your ATM network uptime. Ventus handles it all, from building the network, hosting platform solutions, deploying plug-and-play software, and maintaining round the clock, comprehensive network support. Contact us today to learn more.