The ATM is a familiar part of the business model for most creditunions, but after years of dealing with never-ending compliancehurdles and constantly evolving technology, some credit unions are doingwhat was once considered unthinkable – giving up the titles totheir ATMs.

Instead, they're leasing their ATMs, effectively going fromowners to renters of cash-dispensing terminals across the UnitedStates. And in turn, those credit unions said they're gettingbetter ATMs that still bear their names, but with less headache, lowercost – and less control, too.

The Pride of Disownership

Some, like the Chattanooga, Tenn.-based Blue Cross Blue Shieldof Tennessee Employees Credit Union, which has $10 million inassets and about 2,800 members, simply got tired of managing itsATMs. In January, it announced it had quit the effort altogetherand partnered with an ATM management company instead.

“It was just a good time for us to make a change,” ManagerChannon Hamilton said in a press release about the deal. “We hadbeen having more problems than we expected with our ATMs, and wewere planning to add an ATM across the state in Memphis to servemembers there.”

The credit union said the move added that ATM in Memphis andeliminated staff time spent on ATM maintenance.

For other credit unions, ditching ATM ownership has provided away to overcome the constant capital drain of upgrades for thingslike Americans with Disabilities Act requirements, Windowsissues, EMV implementation, cardless access, biometricsand anti-skimming technology.

“I had been thinking about it off and on, but not seriouslyenough to really take that step until a lot of the new rules andregulations started coming down the pike as it relates to ATMencryption and keypad encryption and all those sort of things,” TomRogers, president/CEO of Memorial Credit Union in Houston,said.

About three years ago, the credit union, which today has about$75 million in assets and 10,200 members, partnered with ATMmanagement company Dolphin Debit and started leasing terminalsinstead.

Naturally, equipment costs are a big driver in the decision. Atthe time, Memorial's 16 ATMs, for example, were at least sevenyears old when it made its switch. Most had to be replaced tobecome compliant with various regulations, Rogers said.

“I just didn't want to spend $150,000 to $200,000 replacing allmy ATMs when I needed that money for other operational items withinthe credit union,” he explained. That six-figure tab excluded allthe staff time spent monitoring the machines on a daily basis,reconciling cash, ordering cash, working with cash deliverycompanies and troubleshooting, he added.

“That really accumulated to about anywhere between one and ahalf and two days a week, literally. I had an accounting specialistwho literally would spend probably up to two days a week justdealing with ATM issues, good or bad,” he said.

Jim Minge, president/CEO at the Arlington, Texas-based TexasTrust Credit Union, which has $1 billion in assets and about 85,000members, also decided to turn over the keys to his credit union'sATMs. The credit union leases them instead.

“ADA was the straw that broke the camel's back for us,” he said.“There were a lot of people getting sued … it turned into a verylong, drawn-out, complicated project for us. And so when we heardof the opportunity to kind of offload some of that, we were prettyexcited about doing so.”

Minge said he was able to save between half and one full-timeequivalent in labor costs at all of his branches.

Upping the Ante

Credit unions may be able to avoid owning ATMs, but they can'tavoid ATMs altogether, Rogers stressed.

“It's kind of like the cost of doing business. You want to havean ATM out there and you want to have them serving your customersor your members, but you don't want it to be time-consuming on yourpart. You want to just put it out there, leave it alone and goabout your business. Then hopefully make a few dollars off thetransaction if you can,” he said. “That's what I would recommend.You have to look at your own internal operation first and see howmuch time running your own ATM network is costing you, and thenkind of go from there.”

ATM outsourcing has been around for a while, but companies likeDolphin Debit, one of several that manage ATMs, said it's gettingmore clients with every new regulation that comes down thepike.

“We have seen an absolute uptick because of EMV specifically,and the cost to upgrade or replace,” Dolphin Debit EVP andCo-Founder Gary Walston said. The company works with about 175financial institutions and added about 30 new ones last year, henoted.

Typically, clients sign five-year leases on their ATMs, and theyoften can swap out ATMs for ones with newer features if they like, Walston said.

Credit unions thinking about outsourcing their ATMs have toprepare to give up some control, however, execs warned.

“Even though that machine is part of your branch and it's outthere, if there is an issue with that machine – say, something'sbroken and you need to have that machine serviced – you turn thatover to a third party. So, you're not as intimately involved withwhen that's going to be repaired and how long it's going to take,”Minge said.

Having a communications plan for members is important, hesaid.

“It's sometimes a little harder for us to explain that, 'Hey,you know, we have a third party that's coming to take care of thisfor us and I can't give you a certain answer of when it's going tobe fixed, but it's in process and it's going to be fixed,'” hesaid. “I think it took us a little while to figure that out. Youknow, because the members, they don't care. It's your machine asfar as they're concerned.”

Nonetheless, having someone else deal with the day-to-day hasbeen a load off – at least for Minge, who said he recently crossedpaths with people from his ATM management company at aconference.

“I shook both their hands and said, 'I'm so glad you guys arethe ones spending the money for all that EMV stuff!'” hechuckled.