Mark Aldred, Banking Specialist, Auriga
A year ago, the ATM celebrated its 50th birthday. But, less than 12 months later and it seems signs of a bright future are dimming.
High operational costs threaten the mass removal of unprofitable ATMs in major markets like the UK. Already there are so-called ATM deserts in some parts of the UK where an ATM is a rare sight.
There’s also the rise of contactless digital payments that seems to be pushing the use of cash close to extinction. Indeed, in some countries like Sweden, where cash makes up only 2 percent of transactions by value today, the use of cash could end by 2021. So, what’s the need for an ATM?
Well, to paraphrase Mark Twain, the death of the ATM is much exaggerated. Some people may think what is the original example of disruptive FinTech has lost its edge, but they’re wrong.
Banks who invest into their ATMs can tap into huge benefits, while those who don’t risk missing out on improved customer relationships and improved opportunities at a time when they must be fighting to retain customers.
We need to recognise the strong attachment customers have with using ATMs to manage their financial affairs. This is partly because cash usage isn’t declining across the board. For example, 75 percent of point of sale transactions in Western and Eastern Europe are cash-based (Source: Pymts Global Cash Index). Research Auirga sponsored also revealed that nearly one in two Britons visit a cashpoint weekly. Cash is losing its pre-eminence, but it is going to continue to be part of a wider mix of payment methods.
So, in this new world of payments, ATMs need to redefine themselves from a position of strength in terms of consumer trust. ATMs can have the functionality to do more than deliver a mono-service of churning out bank notes. There is demand from consumers for ATMs to do more. For example, when we researched the types of service that UK consumers would like to see, they responded that bill payments (34%), currency exchange (22%), loan applications (5%) and even ticket sales would be welcomed at cash points.
This demand to be able to do more on one device is nothing new. Mobile phones used to just be a tool for making phone calls, but now they’re used for everything from live video streams to making payments. ATMs are in a strong position to adapt – vendor-independent software empowered by the ultimate Web technologies on board means that even the oldest of ATMs can be given a new, revitalised role, but banks need to change their way of thinking.
The ability to cross sell other bank or third-party services and products could provide revenues that could secure the future of previously unprofitable ATMs. High operational costs for running networks of ATMs could also be tackled by new generations of ATM management software that is multi-vendor and can use better data analytics to deliver improved cost efficiencies. By better data collection and correlation, banks can automate how they determine the most efficient cash delivery and collection schedule and processes, enabling a drastic reduction in operational costs as well as out-of-service time for cashpoints and the impact of this on customers and the bank’s reputation for quality of service.
As they passed the 50-year milestone, many ATMs have ended up as isolated parts of many banks customer relationship management systems. How ATMs are now being seamlessly integrated into other customer engagement channels is very much the future of the ATM within a new generation of bank branches.
For many consumers, the ATM is one of the main ways they interact with their bank – which means banks need to make as good an impression as possible. Personalisation can take your customer’s experience to a new level. Smart ATMs could pre-empt what a customer wants to do at the machine – for example pre-set fast withdrawal for the customer who always takes out a set amount of cash for weekend expenses, or allowing customers to set up their dashboard to meet accessibility needs. With the large sums of money that banks invest into their marketing activities and into their digital transformation they need to make sure this is replicated across all channels or they will start to lose out in the future. Digital is strongly reshaping customer experience: implementing digital transformation in banking is synonymous with implementing a true omnichannel banking strategy/architecture with the ATM channel fully integrated with the other banking touch points.
The future of the bank branch
Banks are having to take hard decisions about their branch networks, but the bank branch is by no means dead.Banks are reinventing their branches with a focus on a smaller hybrid branch of self-service machines and staff. The success of this lies in how well staff can be more than highly qualified receptionists and can access in-branch systems to fully engage with branch visitors. A lot of this intelligence comes from how the branch can optimise its use of cloud-based software to deliver advanced, personalised services in-branch through ATMs.
Self-service machines, like ATMs, will allow banks to run branches that give customers the best service possible, freeing up staff to focus on delivering exceptional service and advice. Cloud technology allows information to be shared over devices in-branch – for example staff could use a tablet to check the status of machines and when a customer accesses a device receive an update about the assistance they might need.
How ATMs and other self-service machines with richer, more flexible functionality and features are at the heart of major banks’ future strategies is illustrated by many banks globally. For example, Portugal’s Millennium BCP banking group is creating a new kind of customer-centric branch for the future. Each of its new branches are radically remodelled to have a core of self service and assisted service machines that can serve all its customers’ needs at all times. This includes a video-conference feature that enables face to face services after the branch has closed for the day
Don’t let your tech hold you back
ATMs provide huge opportunities for banks to increase revenue and improve service. However, only banks which have the right technology in place will be able to seize these opportunities. The challenge for banks is to achieve these steps despite the constraints of sometimes outmoded legacy technologies. The right software can rejuvenate existing ATMs and the future is cloud based in how it reduces the total cost of ownership, improves time to market and eases the development of new services.
A mind-set change is needed. The ATM is on the brink of some very exciting developments – with technology like artificial intelligence, data analytics and chatbots poised to bring an even better experience to the ATM – but without the right infrastructure in place banks could risk missing out on some great opportunities.