Bank of America withdraws 9% of ATMs from malls and gas stations to cut costsAudio version
The bank’s total number of ATMs fell by 1,536 in the first half, a record decline, leaving it with 16,220 as of June 30, the Charlotte, North Carolina-based firm said last week. Bank of America didn’t renew deals to place its machines at sites owned by Simon Property Group Inc., the biggest U.S. shopping mall owner, and gas station operator Valero Energy Corp., said Anne Pace, a spokeswoman for the bank.
“When they put an ATM in a mall or gas station, they have to rent that space in the same way that Sunglass Hut has to pay for their space,” said Bart Narter, a senior banking analyst at consulting firm Celent. “They did the math and probably concluded that these guys aren’t profitable.”
Chief Executive Officer Brian T. Moynihan is shrinking the bank’s footprint to focus on his most profitable clients after regulations squeezed fees and he aborted plans to charge debit- card users $5 a month. Moynihan shuttered 108 branches this year and plans at least 30,000 job cuts in a reversal of the expansion led by his predecessor, Kenneth D. Lewis.
“It’s going to be a smaller platform,” Moynihan said in a November conference. “We have 42 million retail customers; many of those don’t contribute or overcome their cost-to-serve.”
Bank of America chose to pull most of its ATMs at malls and gas stations because those devices only dispensed cash and some weren’t available 24 hours a day, 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 added. “People aren’t banking 9 to 5, they are banking when it’s convenient for them.” The move stems from Moynihan’s Project New BAC, an efficiency plan that targets $8 billion in annual expenses by 2015. The number of ATMs shouldn’t change much more, she said.
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. “There are very real expenses to owning and operating ATMs, and since banks don’t charge their own customers to use the machine, the costs are borne entirely by surcharges paid by non-customers,” Hayes said. “In the current environment, banks are unable to support the cost structure they have historically.”