During the past five years, the best-laid credit union businesscontinuity plans have been put to the test. In the case of ATMplanning, many have been found lacking. Hurricanes Rita and Katrinaprovided an important wake-up call to remind credit unions thatATMs are behind the majority of member cash transactions.

Will your ATMs be online or offline in hard times? To answerthis question, let's look at what was learned from the most recentcatastrophes and consider the ATM continuity options availabletoday.

In the summer of 2005, as Hurricanes Katrina and Rita struck theGulf Coast, credit unions in the storms' paths were forced toexecute their continuity plans and to move their operations tooffsite facilities. In some instances, worst-case scenarios becamereality and several credit unions saw their main facilitiesdestroyed by high winds, floodwaters and tornados.

Within 72 hours, the best-prepared sites resumed processing intheir designated Disaster Recovery Service (DRS) facilities.Displaced members used ATMs and debit cards as the primary means toaccess cash for much needed purchases. Even in cases where siteshad several days warning of the potential disaster, bringing theconnection to the ATM network back online was more challenging thananticipated. Where advance arrangements had not been made forconnectivity to the ATM network in an alternate location, some ofthe affected credit unions experienced delays of two to three weeksbefore they could return from stand-in authorizations to onlineprocessing. In terms of overdrawn accounts during this time period,the actual exposure for an affected site with 100,000 or moremembers reached into the tens of thousands of dollars eachweek.

What have savvy credit unions done since last summer to reviseplans for continuity of ATM services? How are leading institutionsmanaging their risk for overdrawn accounts when it takes weeksrather than days to resume normal operations? What new steps arekey vendors and partners now taking to address the needs of creditunions and their members? Traditional continuity plans have focusedon branch services and back office processing. Less attention hasbeen given to ATMs and other electronic delivery channels. In thearea of ATM continuity, savvy credit unions are adopting one ofthree approaches. 1. Go Offline. The most basic plan is to processATM and debit transactions in an offline mode until normaloperations can be restored.

In this model, the switch or network approves transactions basedupon stand-in limits and parameters. This approach requires theleast in terms of up front investment and planning, but has somelimitations as well as the greatest fraud risk from overdrawnaccounts.

As easy as it sounds, the offline approach does not eliminatethe need for up front planning and testing. Considerations includeestablishing offline limits with the network and creation andtesting of balancing and posting files for extended stand-inprocessing. A $200 daily limit can quickly turn into a nearly$1,500 exposure per cardholder during a week of offlineprocessing.

2. Get redundant. A second approach is to put in place and testredundant systems. In this model, the credit union duplicates theirATM production environment in an offsite facility. This approachinvolves a larger up front investment and ongoing testing, butgives the advantages of an online environment.

For those credit unions that consider the ATM channel to be ascritical as a physical branch, a redundant network infrastructuresupports the goal of getting ATMs back in service within the same24-hour timeframe as branch operations. This kind of “warm” or neartime recovery plan must ensure that other operational aspects suchas cash delivery are synchronized with Information Technologyefforts.

Because redundant infrastructure can be a costly proposition,sites may wish to consider a “co-location” approach using sharedfacilities several hundred miles from the main data center. Thealternate facility houses redundant equipment and communicationlines including the credit union's circuit to their primary ATMnetwork. Credit unions that adopt this approach typically performan annual “failover” test to demonstrate that their critical ATMapplication can successfully cut over to the alternate server. 3.Get Outside Help. For credit unions that wish to maintain an onlineenvironment without the costs and complexity of creating their ownredundant environment, partnering with key vendors who offer asubscription based disaster recovery service (DRS) is a viableoption. Traditional core system providers have been slow toincorporate the ATM channel in their DRS offerings, due to theconnectivity challenges and specialized communications required forATM processing. As ATMs migrate towards standard IP communicationprotocols (including wireless support), the barriers to coreproviders have been reduced, and many vendors have new options inthe works.

Today, with new options in connectivity and greater awareness ofthe risks and importance of the ATM channel, all credit unionsshould be reviewing their existing business continuity plans.Perhaps a credit union will tailor its plan to focus on a fewstrategic ATM locations, or focus on the shared branch network toprovide members cash in an emergency. In either scenario, advanceplanning and access to offsite shared branch connectivity iscrucial.

Each credit union must weigh the benefits of deploying redundantsystems and infrastructure, either through an internal initiativeor in partnership with other credit unions and vendors. Of themethods above suggested for ATM continuity, the only wrong approachis making no plan at all.

During normal times, ATMs provide members with convenient accessto their money. In a broad disaster, ATMs and access to thenationwide, shared branch network become a lifeline to ensure thatyour members are online, even in hard times.