Bendigo and Suncorp get the nod for an ATM network alliance

BENDIGO BANK and Suncorp Metway have stuck a deal that will give customers access to each other's ATMs free of charge. It will give them a combined network that rivals the big banks.

By InvestSMART · 12 Jul 2010

By InvestSMART ·
12 Jul 2010

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BENDIGO BANK and Suncorp Metway have stuck a deal that will give customers access to each other's ATMs free of charge. It will give them a combined network that rivals the big banks.

The Australian Competition and Consumer Commission has given its interim approval to the alliance.

The deal comes after the Reserve Bank steered through reforms allowing customers to be charged directly by ATM operators for withdrawals.

But many saw these reforms as giving the upper hand to the bigger banks because they would be able to spread the cost of operating their network across a bigger asset base.

Bendigo and Suncorp will have a combined network of nearly 1500, making it the fifth biggest network. However, this is still less than half the size of the market leader, Commonwealth Bank, which has more than 3350 machines.

National Australia Bank has pushed ahead with its own alliance with the credit union group Cuscal. This has created a network of 3100 cash machines where NAB's customers and members of 50 credit unions can use the machines without charge.

HSBC has struck a deal with Westpac allowing its customers to use its ATM network. A recent spate of bank mergers has also bolstered the networks of Westpac and Commonwealth Bank.

"Under the reforms there is the potential for larger financial institutions to develop arrangements to gain a competitive advantage over smaller financial institutions by virtue of their larger network of ATMs, at which they can continue to offer their cardholders direct fee-free transactions," the competition commission said in its decision to grant interim approval to the Bendigo and Suncorp deal.

In their application both Bendigo and Suncorp argued the introduction of direct charging had given an advantage to the owners of large networks because this allowed customers of those banks to avoid charges in many locations.

By contrast customers of regional banks were likely to pay fees for a higher proportion of their transactions because of the regionals' smaller ATM networks and larger concentration in the regions.

Both Bendigo and Suncorp said the alliance would not slow their plans to expand their respective ATM networks.

NUMBER OF DIRECT-OWNED ATMs

CBA 3356

ANZ 2558

Westpac 1779

NAB 1670

Bendigo 792

Suncorp 678

Source: APRA

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Frequently Asked Questions about this Article…

What is the Bendigo and Suncorp ATM alliance and what does it mean for customers?

Bendigo Bank and Suncorp Metway have agreed to an ATM alliance that lets each bank's customers use the other's ATMs free of charge. In practice this creates a larger combined cash network customers can access without direct ATM withdrawal fees.

Has the Bendigo–Suncorp ATM alliance been approved by regulators?

Yes — the Australian Competition and Consumer Commission (ACCC) has given interim approval to the Bendigo and Suncorp ATM alliance, allowing the banks to proceed with the arrangement while the regulator continues its assessment.

How big is the combined Bendigo and Suncorp ATM network and how does it rank against big banks?

The alliance creates a combined network of nearly 1,500 ATMs, making it the fifth-largest network. That is still less than half the size of the market leader, Commonwealth Bank, which has more than 3,350 machines.

Why are Australian banks forming ATM alliances after the Reserve Bank reforms?

After Reserve Bank reforms allowed ATM operators to charge customers directly, larger banks gained an advantage because they can spread operating costs across bigger networks. Regional banks like Bendigo and Suncorp are forming alliances to increase scale and offer fee-free access to more locations for their customers.

How will the Bendigo–Suncorp alliance affect ATM fees for everyday customers?

Under the alliance, customers of Bendigo and Suncorp can use each other’s ATMs without paying direct withdrawal fees at those machines. The deal reduces the likelihood of paying ATM charges when using machines inside the combined network.

What does the article say about regional bank customers and ATM charges?

The article notes that customers of regional banks were more likely to pay ATM fees because regionals typically have smaller ATM networks and a higher concentration in regional areas. Bendigo and Suncorp argued the introduction of direct charging had disadvantaged smaller-network owners.

How do other banks’ ATM arrangements compare to the Bendigo–Suncorp alliance?

National Australia Bank has an alliance with credit unions via Cuscal that created a network of about 3,100 cash machines where NAB customers and members of 50 credit unions can withdraw without charge. HSBC has a deal with Westpac allowing its customers to use Westpac’s ATM network, and recent bank mergers have also increased the scale of Westpac’s and Commonwealth Bank’s networks.

Will the ATM alliance stop Bendigo or Suncorp from expanding their own ATM networks?

No. Both Bendigo and Suncorp stated the alliance would not slow their plans to expand their respective ATM networks, so they intend to continue growing their direct-owned ATM footprints alongside the partnership.