Study finds charging no ATM fees makes better business
Released: October 17, 2005
The hypothesis was straightforward. Does the ATM network offered by the Community Bankers of Wisconsin result in higher or lower profits to its participants? The straightforward answer is yes. Further, do small banks that belong to a consortium, such as the Community Bankers of Wisconsin, make more money by charging fees for ATM transactions, or do they make more by not charging fees? The answer, again, is yes - they make more money by not charging fees.
These were the surprising answers found in a recent study conducted by University of Wisconsin-Whitewater’s Fiscal and Economic Research Center (FERC), “The Effect of ATM Networks on Community Banks.”
According to UW-Whitewater Assistant Economics Professor Russ Kashian, “It is more profitable for small town banks to belong to an ATM network rather than standing alone. We found while they may lose ATM fees, they will more than make up for it in increased deposits.”
FERC’s research, which was based on financial data obtained through various FDIC databases and included 121 depository institutions, utilized quarterly call reports from March 1998 to March 2005.
For information regarding the study, contact Kashian at (262) 472-5584, (414) 588-1260 or kashianr@uww.edu.- Barbro McGinn,mcginnb@uww.edu
