THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, February 16, 1995 TAG: 9502160319
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Long : 101 lines
In a drive to extend its service beyond bank branches, Virginia Beach Federal Savings Bank is installing automated teller machines at 15 Wal-Mart and Sam's Club stores in Hampton Roads and Richmond.
The availability of these machines will provide Virginia Beach Federal with greater access to its customers, said John Chattleton, the thrift's executive vice president for retail banking and lending.
Virginia Beach Federal figured that its ATMs could have a significant impact if some were installed in Wal-Mart and Sam's Club stores. There are five Wal-Marts and one Sam's Club in South Hampton Roads.
``Our view is that an awful lot of folks visit Wal-Marts,'' Chattleton said. ``Their floor traffic is dramatic.''
The ATMs, bearing Virginia Beach Federal's name and the slogan ``Cash in a Flash,'' are scheduled to begin operating in early March. They will be located inside the main entrances of the stores.
Virginia Beach Federal, which had no ATMs of its own three years ago, has six today and expects to have 24 by year's end, Chattleton said.
``We believe that alternative delivery systems - ATMs, telephone banking and the use of personal computers in the home - are important to the future of banking,'' he said.
Nationwide, the number of ATMs has swelled by more than a third since 1990, to 109,000 in 1994.
About 80 percent of these cash-dispensing machines are on bank premises. However, more and more of the ATMs installed in recent years have gone into shopping malls and other sites away from banks, said Kere Lewis, executive vice president of Speer & Associates, a financial-services consulting firm in Atlanta.
``The locations in shopping centers and airports have already been staked out, so the growth area has become retailing institutions,'' Lewis said.
Banks and thrifts like Beach Federal have turned to nonbranch alternatives partly because they are less costly to operate than conventional bank branches. ``You can do an electronic transaction for one-quarter to one-third the cost of a paper transaction,'' Lewis said.
To attract customers, financial institutions have been expanding the menu of services and products available from their ATMs. These range from postage stamps to theater tickets and investments in mutual funds.
However, installation of the machines is not cheap. Neither is maintenance. In fact, some banks have removed ATMs from supermarkets where the level of activity failed to justify the cost of maintaining the machines, Lewis said.
Chattleton acknowledged that ATMs in some stores have failed to generate the activity that the machines' owners expected. But the problem, he said, may have been bad marketing, rather than the ATMs' locations.
They don't intend to make that mistake with Wal-Mart.
``We spent a lot of time studying the floor traffic, the positioning of the machines and the signage,'' he said.
The process began nine months ago when Virginia Beach Federal approached the managers of local Wal-Marts about having ATMs in their stores. The managers referred the thrift to the retail chain's headquarters in Bentonville, Ark.
``We talked to two people there and had a deal pretty quickly,'' Chattleton recalled.
The arrangement with Wal-Mart calls for Virginia Beach Federal to pay monthly rent for the space that its ATMs occupy.
``If the machines become phenomenally successful, we will share some of the income'' with Wal-Mart, Chattleton said.
The ATMs going into local Wal-Marts and Sam's Clubs will be hooked to several networks that connect banks, thrifts and credit unions around the country. These include MOST, which links many institutions in mid-Atlantic and southeastern states, and the Armed Forces Financial Network, which ties together many banks and credit unions serving military personnel.
Use of all 15 machines in the Hampton Roads and Richmond Wal-Marts and Sam's Clubs will be free to Virginia Beach Federal customers. For others, the thrift will charge the user's financial institution 50 cents per transaction. Most banks and thrifts in the region pass on those charges to their customers.
The thrift's contract with retailing giant Wal-Mart comes on the heels of an aggressive installation program at 7-Eleven stores in Virginia.
Southland Corp., the Dallas-based parent of the 7-Eleven chain, contracted two years ago with EDS to install ATMs in as many as 6,000 7-Eleven stores around the country. To date, 2,700 machines have been installed in Southland's convenience stores.
During the first half of 1994, 400 of those went into 7-Eleven stores in the Northern Virginia and Richmond areas. And earlier this month, EDS began installing its ATMs in another 230 7-Eleven stores in Hampton Roads, Petersburg, Emporia and Roanoke, said Steve Keane, a Southland merchandiser at the company's divisional office in Alexandria.
Southland decided to have ATMs put into its stores because their availability boosted sales, Kean said.
The machines, which are located inside the 7-Elevens, are tied into several ATM networks, including the MOST network. ILLUSTRATION: Color photo by D. Kevin Elliott, Staff
John Chattleton of Virginia Beach Federal Savings...
Color graphic by Robert D. Voros, Staff
The growth of ATMs in America
KEYWORDS: AUTOMATIC TELLER MACHINE by CNB