Published November 22, 2021
Business models in banking are evolving. With new ways to procure, manage and outsource emerging, financial institutions are able to find more effective ways to work with external parties. And the benefits of working differently are significant, like reduced costs, improved efficiencies, better use of internal resources, risk-shifting and compliance, to name a few.
When it comes to banking services, one of these new business models is ‘as a service.’ It may feel like a new way of working, with financial institutions paying monthly subscription fees rather than licenses or invoices for smaller pots of services, but it’s actually not.
Nearly all of us buy goods and services on an ‘as a service’ basis. We pay monthly subscription fees for our mobile phones, streaming platforms and more. You can now even purchase a car on an as a service basis—one package that covers the car, servicing, tax, maintenance and potentially even insurance. What’s more, you can stop and start as a service agreements within much smaller timeframes. In some cases you can even return your vehicle after three months, no questions asked.
As a service is a standardized approach—you pay a specific amount to receive contracted business outcomes. While this leaves limited room for customization, it also means the package is always going to be well defined. In many cases, you’ll receive more than you would have chosen, as the vendor is looking to attract as broad an audience as possible. These additional features or services are often there for good reason. For example, while a consumer may not think they want roadside assistance in their Car-as-a Service package initially, they’ll be thankful it was included if they ever encounter a problem on the road. Therefore, it’s important for businesses to put these bundles together in a thoughtful and customer-centric way.
When it comes to financial services, as a service models are already part of how financial institutions (FIs) sell their services to their customers. Take portfolio management of financial investments, for instance. Here, someone else takes responsibility of managing customers’ investments. Their job is to watch the markets and know when’s the best time to shift. All the customer needs to do is entrust their money to the financial institution (FI) and monitor the investment from afar.
This is how running a self-service banking estate works. There are several similar models already in operation. Cash-in-Transit is an early example, with a third-party taking responsibility for cash, replenishments, movement, etc. Many Independent ATM Deployers (IADs) operate a similar model, with the IAD supplying, managing and maintaining the ATM in a nightclub, hotel or hospital, for example.
For FIs, the next step is implementing strategic partners as a service, where one partner takes responsibility of managing an area of business. Increasingly, FIs are looking to outsource their ATM channel as they strive to reduce the strain that management of assets, cash and technology puts on the channel’s internal resources.
ATM as a Service lets FIs outsource the day-to-day running of their entire ATM operation with a single, strategic partner taking over responsibility. This partner owns, runs and manages the entire ATM operation. From simpler elements, such as cleaning, CIT, service desk and performance reporting to more complex responsibilities like compliance, software management, transaction processing, regulatory compliance and even asset ownership. This total outsourcing of everything associated with this function is significantly distinct from merely purchasing an asset through a subscription, and it leads to far greater savings and peace of mind for financial institutions.
This way of working helps FIs shift increasing amounts of CAPEX to OPEX, reducing the complexity of running the ATM channel and delivering greater total cost of ownership with a single point of accountability.
More often than not, this relationship also gives rise to greater consultancy and strategic thinking. This means FIs can benefit from the expertise of their partner to further develop and enhance their ATM channel, taking advantage of the latest innovations and best practices. No longer do financial institutions need to spend large amounts of time, manpower and money to maintain expertise across every facet of every channel or function. Instead, they can focus on delivering fantastic consumer experiences, knowing their strategic partner is delivering industry-leading outcomes.
Whether it’s the latest software to deliver targeted messaging, hardware that incorporates digital innovation or predictive services to ensure maximum availability, outsourcing this channel to experts means financial institutions can place the responsibility in the hands of someone with the experience, resources and network to deliver the availability and experience your customers demand.