Community banks form surcharge-free ATM alliance

Source: Customer Services Inc

A dozen community banks, all customers of Computer Services, Inc. (CSI) (OTC Pink Sheets: CSVI), have formed an alliance that provides their customers with access to surcharge-free Automatic Teller Machines (ATMs), with a goal of connecting hundreds or even thousands of ATMs throughout the nation. Banks do not have to be customers of CSI to join.

Although BankRate.com reports an average surcharge of $1.32, alliance members view surcharge-free ATMs as a way to attract new customers and provide better customer service to existing ones. Consumers with accounts at these banks will pay no surcharges when using ATMs owned by any of the other banks in the alliance.

This group of community banks is using the alliance as a "strength in numbers" approach to their big bank competitors. Although some CSI customers own dozens of ATMs, the average across the CSI customer base is significantly less than the thousands of ATM locations offered by the big banks.

And on another front, big banks that process ATM transactions and issue debit cards for smaller banks have begun to offer the smaller banks' customers free access to their ATMs. Combining the ATMs of all the alliance member banks will allow these banks to compete more effectively for customers' loyalty.

Debbie Williams, SVP, FirstService Bank, Crestwood, MO, first floated the idea of the ATM alliance at CSI's St. Louis User Group meeting in February 2004. "When new customers sign up for many of our services," Williams says, "they often tell us point blank that they plan to keep their checking accounts at one of the nation's big banks because 'they have ATMs everywhere.'"

Randy Bono, VP at Premier Bank, Jefferson City, MO, faces the same situation. He considers the alliance a remarkable competitive tool. "One of the first questions our new customers ask is 'Where are your ATMs?'" Bono explains. "ATMs are an expensive service a bank has to offer to be competitive. This alliance will help all CSI customer banks leverage the cost of multiple ATMs and allow us to compete with the large banks."

Banks become members of the alliance by paying a one-time fee of $300 per bank, regardless of the number of Bank Identification Numbers (BINs) or bank ATMs. Any BINs added in the future will be assessed a one-time fee of $100. Currently 12 banks are sharing 68 ATMs but as more banks join, participating banks' customers will gain surcharge-free access to more and more ATMs.

When all is said and done, the alliance's strength will be in its numbers. Williams said she would like to see all CSI customers band together and expand the alliance from border to border at CSI. "Community banks are recognized for providing good customer service," she said. "With this alliance, we can join together to do it."

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