Would an ATM machine on CMC’s campus be profitable?

Joseph Chang Maryan Samson Andrew Yeh

The case against an ATM machine on CMC:

-ATM machines at Pomona and Huntley Bookstore do NOT have high volume of activity

-Banks speculate that an ATM machine on CMC would be not generate more activity than Pomona or Huntley have thus far

-Fundamental part of any deal would necessitate CMC advertising on behalf of Bank’s ATM on-campus to all incoming Freshman classes

The case for an ATM machine on CMC:

-Pomona has one

-Northern part of CMC is a central point of the rest of the Consortium

-Major implication: in addition to CMC students that would use an ATM machine on CMC’s campus—students across Pitzer, Scripps, Harvey Mudd would change their preference to an ATM machine on CMC

-Planned growth for Pitzer and CMC campus actually imply higher future potential customers

Data Collection

Sample Size: 202 Students (124 Non-CMC, 88 CMC)

Online SurveyHand Surveys

The Empirical CaseAssertion: CMC’s ATM machine would not generate $50,000 of monthly activity

Data as of May 4, 2009:

-Claremont McKenna student body: 1,211 students x (On-campus housing rate): 97%- (CMC student abroad average): 73 students

-CMC active student body: 1,102 students

-Pitzer student body: 950 students x (On-campus housing rate): 94%- (Pitzer student abroad average): 75 students

- active student body : 818 students

-Scripps student body: 962 students x (On-campus housing rate): 96%- (Scripps student abroad average): 65 students

-Scripps active student body : 859 students

The Empirical Case cont.

Summary of Findings:Of the 89 CMC students polled, 83 students said they would use an ATM machine on CMC’s campus

-Average Gross Transactions: 93.92771-Average Monthly Frequency: 2.792683-Average Monthly Gross Transactions: $262.92 -Variance of Gross Transactions: 7084.995-Standard Deviation of Gross Transactions: 84.17241-Variance of Monthly Frequency: 3.252785-Standard Deviation of Monthly Frequency: 1.803548

-Based on Sample size of 83/89 = 93% of CMC students would use an ATM machine on CMC’s campus

The Empirical Case cont.

Summary of Findings:Of the 63 Pitzer students polled, 53 students said they would use an ATM machine on CMC’s campus

-Average Gross Transactions: 54.1504-Average Monthly Frequency: 2.653846-Average Monthly Gross Transactions: $143.72-Variance of Gross Transactions: 2463.208-Standard Deviation of Gross Transactions: 49.63081-Variance of Monthly Frequency: 2.653846-Standard Deviation of Monthly Frequency: 1.956259

-Based on Sample size of 53/63 = 84% of Pitzer students would use an ATM machine on CMC’s campus

The Empirical Case cont.

Summary of Findings:Of the 49 Scripps students polled, 36 students said they would use an ATM machine on CMC’s campus

-Average Gross Transactions: 61.80556-Average Monthly Frequency: 2.882353-Average Monthly Gross Transactions: $177.98-Variance of Gross Transactions: 1974.504-Standard Deviation of Gross Transactions: 44.43539-Variance of Monthly Frequency: 12.71301-Standard Deviation of Monthly Frequency: 3.565531

-Based on Sample size of 36/49 = 73% of Scripps students would use an ATM machine on CMC’s campus

The Empirical Case conclusion.

Based on our sample sizes,

CMC would have 93% of their active study body using the ATM Machine. 93% of 1,102 would yield 1025 students with an average monthly transaction of $262.92. Net activity: $269,493.00

Pitzer would have 84% of their active study body using the ATM Machine. 84% of 818 would yield 687 students with an average monthly transaction of $177.98 Net activity: $122,272.26

Scripps would have 73% of their active study body using the ATM Machine. 73% of 859 would yield 627 students with an average monthly transaction of 117.98. Net activity: $111.595.97

The sum clearly exceeds the $50,000 target by Wells Fargo.

Limitations of research:

-Activity during summer breaks and winter breaks significantly lower-Cannot calculate costs of advertising plan-Surveys approximate transactions—possible inflation-Does not take into account actual logistics of a proposed ATM machine i.e. location, hours, bank, etc.-Does not fully address the behavior—just the numerical data

Research: To identify what factors affect the students of CMC, Pitzer, and Scripps when choosing an ATM machine

Hypotheses:- DISTANCE (+)- SCHOOL (+)- GROSS TRANSACTION (+)- FREQUENCY (+)- EMPLOYED (+)- LOCATION (+)

Regression StatisticsMultiple R 0.385849R Square 0.14888

Adjusted R Square 0.122691

Standard Error 0.333908Observations 202

ANOVA

  df SS MS FSignificanc

e F

Regression 6 3.803062 0.633844 5.68496 1.82E-05Residual 195 21.74149 0.111495Total 201 25.54455      

  CoefficientsStandard

Error t Stat P-value Lower 95% Upper 95%Lower 95.0%

Upper 95.0%

Intercept 0.656571 0.094744 6.929917 5.99E-11 0.469716 0.843427 0.469716 0.843427

GROSS TRANSACT. -0.00083 0.000308 -2.67999 0.007992 -0.00143 -0.00022 -0.00143 -0.00022

DISTANCE 0.053368 0.019189 2.781125 0.005949 0.015523 0.091213 0.015523 0.091213MONTH 0.020453 0.014871 1.375381 0.170591 -0.00888 0.049782 -0.00888 0.049782EMPLOYED -0.06095 0.050194 -1.21425 0.226119 -0.15994 0.038045 -0.15994 0.038045NON-CMC 0.161133 0.048405 3.328861 0.001043 0.065669 0.256597 0.065669 0.256597

LOCATION -0.024 0.055675 -0.43109 0.666879 -0.1338 0.085802 -0.1338 0.085802

Application of Findings-Addresses Bank’s Volume Concern-Placement of an ATM on CMC is projected to be more profitable given the factors shown by the regression-Does not Address the problem of School being out for Summer and Winter Break

Questions?