Instead of becoming obsolete, they’re evolving to do way more than dispense cash
The first ATMs came out in the 1960s, and by the ’80s they were ubiquitous. At the time, they were a technological marvel. You could get cash or deposit checks without having to go in the bank and wait in line for a free teller. To modern sensibilities, though, the notion of an ATM seems antiquated. More than 40% of Americans rarely make purchases with cash or have it on hand. The figures for those ages 18-49 and with household incomes over $100,000 are over 50%. We have direct deposit set up for paychecks, and when we do receive physical checks, we can deposit them remotely using our smartphones. That might lead you to think ATMs are becoming obsolete, at least in developed countries. But you’d be wrong. True to their roots as cutting-edge technologies, ATMs are evolving to meet the needs of today’s financial institutions and their customers.
Especially given the increased competition from fintechs, banks are very interested in customer retention. To do so, they’re trying to offer more personalization. At ATMs this includes quick cash options based on customers’ withdrawal habits, or offers based on the machine’s location relative to businesses they frequent. If you’re using your debit card at the nearby grocery store a lot, your bank will know your shopping habits and make suggestions or offer coupons. Aside from legacy ATMs, banks are exploring smart lockers that can be used for easy document and safe deposit transfers.
True to their acronyms as automated tellers, the machines will be able to perform more of the functions a human teller provides and offer more self-service 24/7. “It’s often a better experience,” Simon Powley, head of banking advisory services at Diebold Nixdorf, told The Financial Brand, “and the same goes for the digitalization of banking. People want the ability to personalize their experience, to be in control of it, to efficiently do what they want from all hours and locations.”
Even before COVID-19, banks were closing branches. The pandemic sped that process up, and in its place brought remote banking options in the form of video teller machines (VTMs) or interactive teller machines (ITMs). These have all the features of a regular ATM, but they provide a video link to a human teller who can walk the user through any complex transactions. These machines can be anywhere, inside or outside an existing branch or at a retail/grocery store.
VTMs can be costly upfront, which is why large banks and credit unions are the ones implementing them now while smaller institutions double down on older ATMs that don’t require regular software upgrades. Globally, ATM manufacturing is experiencing 5% CAGR.
Other tech is fast making its way to ATMs, including security features such as facial recognition and other biometrics that reduce fraud. Spain’s CaixaBank started with facial recognition on 20 ATMs in 2019, and the trend has grown since. Another security measure is card slots that vibrate to disrupt skimming attempts.
Big players such as Chase, Bank of America, and Capital One are offering cardless technology, with QR codes or text codes enabling mobile wallets to take the place of physical cards for verification purposes. Other institutions, such as SAFE Credit Union, are using near-field communication cards to replace physical credit and debit cards. “We spent a lot of time analyzing, upgrading, and tuning our existing ATM fleet to provide a faster transaction,” SAFE chief information officer Mike McCarthy told BOSS.
In place of the bulky machines we normally think of, some banks are installing tablet-style ATMs in branch lobbies that can perform quick functions such as check deposits and cash withdrawal. A pet project of ATM industry association ATMIA, the Next Gen ATMs movement involves more than 400 companies in more than 50 countries, with KLEAR Technologies of Las Vegas debuting the first in 2021.
The project is a “reinvention of the ATM to integrate ATMs into the mobile-digital world and to set up a new wave of innovation and investment in our industry through this dynamic ecosystem,” ATMIA CEO Mike Lee told The Financial Brand.
If they’re not dispensing cash anymore, legacy ATMs can be repurposed for new uses or be replaced by machines that dispense gold coins and bars. PMX Gold has introduced multiple “Gold to Go” machines in Boca Raton, Fla., that check the price of gold every 90 seconds and adjust exchange rates. A simple software upgrade can transform a legacy ATM into a lottery ticket dispenser that can go in gas stations and convenience stores, freeing up time for clerks. For a decidedly 21st century use, ATMs can convert to digital tokens and dispense cryptocurrencies. There are already about 40,000 Bitcoin ATMs across the world. Indeed, rather than going the way of the dodo, ATMs are being reinvented to play an even bigger role in the future of banking.