AUTOMATED TELLER MACHINE (ATM) NETWORK EVOLUTION IN AMERICAN RETAIL BANKING: WHAT DRIVES IT?

Abstract

The organization of automated teller machine (ATM) and electronic banking services in the United States has undergone significant structural changes in the past two or three years that raise questions about the long term prospects for the retail banking industry, the nature of network competition, ATM service pricing, and what role ATMs will play in the development of an interstate banking system. In this paper we investigate ways that banks use ATM services and membership in ATM networks as strategic marketing tools. We also examine how the changes in the size, number, and ownership of ATM networks (from banks or groups of banks to independent operators) have impacted the structure of ATM deployment in the retail banking industry. Finally, we consider how movement toward market saturation is changing how the public values electronic banking services, and what this means for bankers.