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E-Trade branching out to ATMs
By Emily Church, CBS MarketWatch
Last Update: 12:16 PM ET Mar 13, 2000 NewsWatch
NEW YORK (CBS.MW) -- E-Trade on Monday moved to expand its online banking franchise by buying privately-held Card Capture Services, one of the largest ATM networks in the U.S.
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03/13/2000 10:01:10 AM ET
E-Trade (EGRP: news, chart) declined to release the terms of its deal to snap up Card Capture's 8,500 automatic teller machines. The deal is mainly based on E-Trade's stock stemming from an issue in June last year, company officials confirmed.
In any case, the acquisition will place the online brokerage in the big leagues among independent ATM operators. American Express (AXP: news, chart) operates some 8,762 "off-premise" ATMs, which are located in places like airports and shopping malls. Its network is second only to Bank of America's (BAC: news, chart).
E-Trade is expecting to expand the ATM network, which now generates some 3.1 million transactions a months to 5 million at the end of this year, said Deborah Newman, vice president for corporate affairs at E-Trade's Telebanc unit.
Financial kiosks
"We're in the process of negotiating with national retailers," she said. "We're looking to move the expansion pretty quickly." Retailers Rite Aid (RAD: news, chart) and Safeway are already linked to the network, she said.
E-Trade's stock edged off 1 1/4 early Monday to 25 1/4, trading down with the entire industry as the Nasdaq sold off. See Market Snapshot.
With an ATM network, E-Trade can now expand e-banking to include withdrawl and deposit services. For now, though, not all of the ATMs on the new network are capable of taking deposits.
Looking ahead, E-Trade is moving toward offering customers the ability to buy and sell stocks and mutual funds from the ATMs, what the brokerage is calling "financial services kiosks."
Targeting small businesses
E-Trade is also expected to use the ATM network to bolster its banking offerings to small businesses, said analyst Scott Appleby at Robertson Stephens.
"One of the clear problems with Internet banking is that there's no physical access point for customers for the opportunity for deposits," said Appleby.
E-Trade's ATM push won't likely be the broker's only move into the 'bricks and mortar' arena. Appleby's expecting E-Trade to start opening between 15 to 50 storefronts in major cities. The company, however, maintains that's not the goal.
Plans to open a storefront on Madison Ave. in New York City are more about brand-building, Newman said. "We're not thinking about" adding storefronts, she added.
The ATM deal is E-Trade's second large foray into electronic banking. The brokerage recently bought Internet bank Telebanc. |
