The ATM Edge

Big banks are closing more ATMs and raising fees, giving credit unions yet another opportunity to promote their advantages.


Credit unions may not have the advantage in ATM or branch networks, but the second quarter financial data shows they must have the clear advantage in personal connections, competitive rates and fewer fees.

As second quarter data continues to roll in this week, we’re seeing credit unions’ financial performances improve. They originated $55.7 billion in first mortgages in the first six months of the year, snaring 7.6% of the market share and the highest loan volume on record for the first half of the year. Both business lending and new auto loans increased in the second quarter, as did membership and the average member relationship.

Credit unions are doing all this without the advantages that big banks still have, like convenient ATMs and down-the-street branches. Credit unions must be providing better products with superior service to draw nearly 3 million members, a 3.3% increase, in the past year.

Lately, some bigger financial institutions like Bank Of America have been paring back on their ATM networks. Bank of America, the second-largest bank in the U.S. by assets, has closed 1,536 of its ATMs since January and has shuttered 163 branches in the past year, according to a recent Forbes article. But the bank still has 16,022 ATMs nationwide and it says it will actually add ATMs this year that will replace the closed, cash-only machines with full-service ones.

Of course, ATMs will continue to play a large role in banking in the near future while mobile services gain traction. But think about this: ATMs really only came to the forefront in the 1980s. Then, in the 1990s more consumers started to use debit cards at the point of transaction and ATMs were less important. Now, mobile banking is rapidly on the rise and it’s not hard to envision ATMs going the way of the telephone booth: extinct.

But even right now consumers seem to be saying that convenience alone isn’t good enough. Not only did credit unions usher in millions of new members last year, but according to one Consumer Reports National Research Center study, millions more want to follow suit. That study found that nearly one in five consumers with checking accounts wanted to change financial institutions — 43% of them said they were fed up with fees, 38% said other financial institutions were offering better terms, and 26% said they were getting poor customer service.

And bank fees are still on the rise. In the first half of the year, monthly service service fees averaged $12.08, up from $11.28 at the end of 2011, according to a survey by Average overdraft fees rose to $29.83 from $29.23 and ATM fees increased for both bank customers and non-customers.

Furthermore, the reason many consumers were not changing over was not that they were reluctant to give up an extensive ATM network. Instead, they cited the difficult and time-consuming process of changing financial institutions, including the large fees some banks impose for leaving.


Aug. 16, 2012



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