Andy McDonald, vice president of Merchant Payments at ACI Worldwide, who has more than 20 years’ experience in the payments industry, provides insight into whether ATMs have a well-earned retirement awaiting, or if we’ll still be using them in 50 years’ time.
The ATM is about to turn 50, and your professional background means that you’ve witnessed a lot of change directly – what’s the single biggest change that you’ve seen in your time in the industry?
Andy McDonald: When I started out in the industry as a vendor for ATMs, they were universally referred to as a ‘cash point’ or just the ‘hole in the wall.’ Their function? Dispensing money, primarily during the times when banks were trying to encourage tellers to turn into sellers by migrating transactions from the counter to a cash machine. For me, the biggest change is that ATMs have moved from being a peripheral or accessory to core banking services, to being completely central. ATMs haven’t changed that much, but offer a much wider range of services than they once did. As a result, for many people in the UK, a trip to the physical branch does not necessarily mean speaking with anyone directly – as ATMs have become more sophisticated self-service kiosks. The general public is also increasingly comfortable with accessing services in this way.
Though, is it fair to say that dispensing cash still remains the raison d’être for ATMs, especially those in an off-premise environment? How is the shift away from cash, toward digital payments going to impact the ATM?
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AM: Despite the widespread projections of a ‘cashless society,’ I don’t see the ATM heading for retirement any time soon – and I’m not just saying that because ACI powers some of the largest ATM estates in the world. In fact, I believe that the trend toward banks closing regional branches will put a greater emphasis on role and functions of the ATM, and they really will become a “bank in a box.” As a result, financial institutions must continue to invest in ATM technology, even if cash usage declines. At the global level, ATM deployment continues to rise, as emerging economies roll out estates to service their customer bases.
So there will be competition between banks as to which can provide the best, and most comprehensive “bank in a box” – are there other ways in which the role of ATMs will change?
AM: The increasingly competitive environment will mean that the ATM becomes a core customer touchpoint; part of banks’ efforts to provide an omni-channel service approach as part of their customer experience. Banks see that the ATM can be used to communicate with their own customers and those of other banks during the transaction process, with targeted messaging and loyalty benefits. In the UK at least, banks are increasingly offering their customers benefits and promotions in partnership with selected merchants.
How can this approach potentially increase ‘stickiness’ – and are there any specific examples that you’ve seen work well?
AM: Well, for example, Barclays and Nationwide Building Society offering football fans access to tickets, whilst promoting their own services. This creates habitual usage of a machine for customers, and increases loyalty to that bank from the customer. There is so much scope these days to personalise the experience to each customer and these promotional schemes benefits can be customized and tailored. Related, the ATM screen becomes more important than ever before, as it increasingly replaces the human teller; the screen becomes a focal point for brand recognition.
What are your thoughts on fees for ATM usage – given the changing role of ATMs, as you’ve discussed. Will different models emerge?
AM: The attitude toward paying for services varies across the globe, but in UK there has been debate about this ever since independent ATM deployers started installing machines in convenience locations such as corner shops, nightclubs, petrol stations and bankless branch locations. It all depends on the value of the service to the customer and how they perceive the inconvenience of travelling further to receive ‘free to use’ services. Nothing has fundamentally changed here, but by adding more value to the transaction and experience, the customer is more likely to continue to use that service and be happy to do so.
Overall, the picture that you’re painting suggests evolution – rather than extinction – of the ATM. What do you see then as the main barriers to truly shifting to a cashless society, which would seem to be a prerequisite for the demise of the ATM?
AM: The ATMs located all over the globe are an asset to everyone associated with them; whether they are dispensing cash, bitcoin or any other new payment service that develops over time. Customer demand for speed and convenience is the reason the ATM was introduced in the first place; it remains the main benefit today and will be in the future. The global nature of usage, accessible anytime and in real-time, enables deployers to think about what services are applicable through the ATM screen. That said, the days of looking at the message “please wait while your cash is being counted” are truly behind us.