Keeping cash convenient: How geospatial data analytics is helping to better locate ATMs

Where is the optimal place to site an ATM? This was a challenge. We look at why cash is still important but used less as a payment method; the task set, and what was involved, to deliver on a client’s mission to locate its ATMs more intelligently.

Is cash still king?

The question of the importance of cash as a payment method and access to cash is being raised more often:

• Pre-Covid, a 2019 European Central Bank survey found 55% of the respondents stated that “it is important” or “very important” for them to still have the option to pay with cash in the future.
• By 2021, a Global Payments Report declared “cash has fallen to historically low usage around the world, representing only 5.4% of Point Of Sale (POS) transaction volume in Canada, 4.5% in Norway, 11.9% in the U.S. and less than 10% in markets as diverse as Australia, Hong Kong and Sweden”.
• A Mastercard survey early in the pandemic had 79% of respondents worldwide saying they were using contactless payments, citing safety and cleanliness as key drivers.
• However, McKinsey’s survey of US consumers showed that while cash use had massively declined, trust in digital payments had eroded slightly. Also, 38% of over-55 consumers were digital holdouts, “a ratio that has remained stubbornly consistent”, the survey said.
• A Consumer Payments Survey by the Reserve Bank of Australia (pre-Covid) had found these high cash users are more likely to be older, have lower household income, live in regional areas, and/or have limited internet access. In 2019, around one-quarter of consumers said they would face major inconvenience or genuine hardship if they could no longer use cash.

The task: Find efficient and effective spots for ATMs

The client was an Australian provider of a range of financial services often in consortiums with other financial institutions such as credit unions and banks.

Mapcite was selected and an extensive range of data sets was combined with those held by the client and visualised using geospatial software. This helped determine the most efficient and effective deployment and management of ATMs across Australia.

“Efficient and effective” came to include:

• Finding preferred locations for new ATMs
• Retiring redundant or poorly performing ATMs
• Relocating existing ATMs to nearby, better locations

Where people use cash, not just where they find ATMs

ATMs are not inexpensive pieces of equipment in terms of purchase, installation, and servicing, and so poorly-performing ATMs potentially lose tens of thousands of dollars per year.

As ATMs are used primarily to dispense cash, Mapcite and the client knew it was important to first identify the most common uses of cash spend. With this data, both the location of every ATM and the nearby shops and other points of interest relevant to likely cash spend were mapped.

The resulting insights, when viewed as a heatmap, were in themselves quite informative as to where there were concentrations of ATMs both nearby to and distant from likely cash venue concentrations.

The best and worst ATM performers

Location of competing ATMs was also highlighted, the data on which was compared to both high-performing, and poorly performing ATMs.

One of the important aspects of the project was to identify the best and worst performing ATMs across the network, and establish common characteristics which would imply cause and effect for success.

Prevailing conditions such as people movement, shopping points and types, public transport access, security of location, local crime, and local area demographic profiles (eg. elderly, compromised mobility, and socio-economic deprivation) may all impact where, and how often, ATMs could be used.

Common attributes of the best ATMs the key to optimal location

Once all the data was ingested and processed, Mapcite then ran a number of scenarios for common attributes and points of interest within a range of distances (eg. 100m, 250m, 500m, from each high-performing ATM) to uncover any patterns.

Then, after the above steps had been undertaken and analysed, Mapcite could review other geographic locations and boundaries (eg. SA1 blocks where ATM concentrations are low but which contain one or multiple common data attributes with the high-performing ATMs).

Whilst there may be a general perception that banks are removing branches and ATMs across their networks in the light of electronic banking, one of the results of the project showed that there are many areas where ATMs could still be profitably deployed.

Author: Ian Haynes, Associate, Sydney, Payments Consulting Network.

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Mapcite is a member of Payments Consulting Network and our chosen partner for geospatial analysis.

Mapcite has been at the forefront of location intelligence for over 10 years. Its geospatial data analytics software platform has enabled everyday business users to leverage location analytics for richer business insights.

Mapcite’s location intelligence solutions address at the highest level three “key use” case areas (under which almost all specific use cases fall) being:

• Risk management
• Customer engagement
• Resource optimisation

In many cases two or all of these areas are addressed within the same solution, and ATM rationalisation is one such example.

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