A couple of weeks ago Nationwide Building Society in the UK announced that it would prohibit cash withdrawals of less than £100 in the teller queue at the branch.  This ban affected only holders of accounts that included an ATM or debit card, point being that these are customers that could just as easily get their cash from the ATM as in the branch.  Nationwide also pointed out that 1/3 of teller transactions were carried out by only 8% of the customer base.

Aside from the public perception, it would make life easier on the currency management front.  ATMs are simply much easier to forecast.  Unless it’s a recycler (of which there are precious few), forecasting only includes withdrawals and ATMs get no input on whether or not a currency order should be changed.

To make this new rule work, Nationwide had to review the volume of < £100 withdrawals in the branch so that they could change both their branch and ATM replenishment strategies.  They also had to consider the additional wear and tear at the ATM and increased maintenance requirements.  Another consideration – what happens if the onsite ATMs are down?  Are customers then allowed to withdraw at the branch?  How fast is the response time SLA for those ATMs that go down?  Has it been accelerated?  And will the branch have the necessary reserves to cover transactions until the ATM(s) is back up?

I’m sure that Nationwide did a fairly thorough analysis of their teller transactions before making this decision (or at least I really, really hope they did).  But no matter which way you slice and dice it, it comes back to appearances.  The website thisismoney.co.uk conducted a poll with the question “Is Nationwide right to stop certain customers from making withdrawals less than £100 over the counter in a bid to cut branch queues?”  Of 591 votes, 31% said yes and 69% said no.  Comments to the post on an FT.com blog were all negative, a couple noting that the queues wouldn’t be so long if more than one counter position were open.  Nationwide did get public support from one guardian.co.uk author, but not from the author’s 84-year-old father, who while Internet-savvy still doesn’t like ATMs.

When it comes down to it, the numbers might stack up and the business case may make perfect sense, but it just looks bad.  It looks like 8% of the customer base is a bit of a nuisance.  But will those customers leave?  Maybe some will, most will probably not.  And perhaps that was accounted for in the business case, as well.