During the past five years, the best-laid credit union business continuity plans have been put to the test. In the case of ATM planning, many have been found lacking. Hurricanes Rita and Katrina provided an important wake-up call to remind credit unions that ATMs are behind the majority of member cash transactions.

Will your ATMs be online or offline in hard times? To answer this question, let's look at what was learned from the most recent catastrophes and consider the ATM continuity options available today.

In the summer of 2005, as Hurricanes Katrina and Rita struck the Gulf Coast, credit unions in the storms' paths were forced to execute their continuity plans and to move their operations to offsite facilities. In some instances, worst-case scenarios became reality and several credit unions saw their main facilities destroyed by high winds, floodwaters and tornados.

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

What have savvy credit unions done since last summer to revise plans for continuity of ATM services? How are leading institutions managing their risk for overdrawn accounts when it takes weeks rather than days to resume normal operations? What new steps are key vendors and partners now taking to address the needs of credit unions and their members? Traditional continuity plans have focused on branch services and back office processing. Less attention has been given to ATMs and other electronic delivery channels. In the area of ATM continuity, savvy credit unions are adopting one of three approaches. 1. Go Offline. The most basic plan is to process ATM and debit transactions in an offline mode until normal operations can be restored.

In this model, the switch or network approves transactions based upon stand-in limits and parameters. This approach requires the least in terms of up front investment and planning, but has some limitations as well as the greatest fraud risk from overdrawn accounts.

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

2. Get redundant. A second approach is to put in place and test redundant systems. In this model, the credit union duplicates their ATM production environment in an offsite facility. This approach involves a larger up front investment and ongoing testing, but gives the advantages of an online environment.

For those credit unions that consider the ATM channel to be as critical as a physical branch, a redundant network infrastructure supports the goal of getting ATMs back in service within the same 24-hour timeframe as branch operations. This kind of “warm” or near time recovery plan must ensure that other operational aspects such as cash delivery are synchronized with Information Technology efforts.

Because redundant infrastructure can be a costly proposition, sites may wish to consider a “co-location” approach using shared facilities several hundred miles from the main data center. The alternate facility houses redundant equipment and communication lines including the credit union's circuit to their primary ATM network. Credit unions that adopt this approach typically perform an annual “failover” test to demonstrate that their critical ATM application can successfully cut over to the alternate server. 3. Get Outside Help. For credit unions that wish to maintain an online environment without the costs and complexity of creating their own redundant environment, partnering with key vendors who offer a subscription based disaster recovery service (DRS) is a viable option. Traditional core system providers have been slow to incorporate the ATM channel in their DRS offerings, due to the connectivity challenges and specialized communications required for ATM processing. As ATMs migrate towards standard IP communication protocols (including wireless support), the barriers to core providers have been reduced, and many vendors have new options in the works.

Today, with new options in connectivity and greater awareness of the risks and importance of the ATM channel, all credit unions should be reviewing their existing business continuity plans. Perhaps a credit union will tailor its plan to focus on a few strategic ATM locations, or focus on the shared branch network to provide members cash in an emergency. In either scenario, advance planning and access to offsite shared branch connectivity is crucial.

Each credit union must weigh the benefits of deploying redundant systems and infrastructure, either through an internal initiative or in partnership with other credit unions and vendors. Of the methods above suggested for ATM continuity, the only wrong approach is making no plan at all.

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