Armaguard is promising to fill gaps in the national ATM network to ensure bank customers in regional and remote parts of the country do not have to travel more than four kilometres to access cash.
In a presentation to members of the ATM Industry Association on Wednesday, the head of Armaguard’s ATM business, Con Tsiknis, made a pitch for banks and credit unions to subscribe to the group’s new atmx network.
Armaguard and its main rival in the cash logistics market, Prosegur, are competing aggressively to negotiate access deals with ADIs as the major banks rationalise their uneconomic fleets, particularly in rural and remote locations.
The number of ATMs owned by banks and credit unions has plummeted by more than 3000 machines since 2017 when there were 11,250 institution-owned devices.
The issue is a big concern for the Reserve Bank’s payments department, which has been highlighting the industry’s community service obligation to continue to provide ready access to cash in locations outside metropolitan centres.
Tsiknis said he was mindful of the RBA’s 2019 study of “cash withdrawal symptoms” that found most Australians still had adequate access to cash.
The key benchmark for measuring accessibility is whether bank customers have to travel more than four kilometres to a bank branch, an Australia Post outlet or an ATM to source cash.
Tsiknis warned that the contraction of ADI-owned fleets had imperilled the RBA’s assessment.
“As bank-owned networks continue to contract further gaps are emerging that could compromise the RBA’s assessment that cash access is adequate,” Tsiknis told ATMIA members.
“Our goal is to sustain reasonable cash access and monitor for gaps.
“There are still opportunities for expansion in regional locations and our coverage needs to increase to continue to provide essential cash services to Australian communities.”
Tsiknis said Armaguard was monitoring where banks were withdrawing branches because this was a major consideration in decisions to locate new atmx machines.
Armaguard is currently rebranding more than 1200 off-site ANZ ATMs after acquiring them from the bank earlier this year.
ANZ has agreed to enter an access agreement for its customers to use the atmx machines without incurring fees.
While this means ANZ will be required to subsidize customer access by paying fees to Armaguard, the bank is expecting to harvest cost savings compared to operating the non-branch fleet independently.
However, Armaguard is also leveraging the former ANZ machines to lure other banks and credit unions to sign access agreements.
Tsiknis said the company was in discussions with “many” ADIs, but declined to name them.
"We now have the potential to provide financial institutions with access to our network at a fraction of the cost of operating their own networks,” he said.
Armaguard and Prosegur – which launched its new “Precinct” ATM network brand this week – are each hoping to secure universal backing from ADIs so that most Australians get fee-free access their machines.
Prosegur purchased around 750 offsite ATMs from Westpac last year and has an agreement for customers of the Sydney-based bank to use its machines for free.
However, it is not clear which of the service providers CBA and NAB are likely to support. The selections of these banks might hinge on how the geographical configuration of each provider’s network enhances their existing distribution footprints.
Scale is also likely to be a factor.
Armaguard has stolen a march on its market rival by amassing a larger network in the last 18 months, but the head of Prosegur’s Precinct business Matt Sykes told ATMIA members earlier this week that the coverage differential would be negligible by the end of 2021.