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Branches provide a relatively expensive delivery channel. The cost of a simple transaction, such as depositing a check or making a cash withdrawal, in a branch is many times higher than if the transaction was carried out through an ATM.
In the early days of the introduction of ATMs many US banks made the mistake of tr ying to use ATM networks as a way to generate revenues and to differentiate their service. In many cases they actually discouraged usage by charging fees for transactions carried out using ATMs. This is understandable. The initial investments were high and banks sought to recoup their costs but this policy was also shortsighted and misguided. The initial competitive advantage from being able to offer a differentiated ser vice was soon lost once other banks introduced their own ATMs.
Over time banks have realized that the key benefit of ATMs lies in cutting, or at least containing, costs. Now, many banks provide an incentive to customers to use ATMs by not charging for ATM transactions but imposing a charge for transactions done in a branch. Some banks have gone as far as to actually pay their customers for carrying out cer tain transactions made through ATMs!