There’s no lack of good ideas when it comes to self-service banking. As Steve Bigwood, director of software and professional services at Cennox, told PYMNTS in a recent conversation, a brief look at the global space turns up a host of interesting capacities for ATMs. In Spain, he noted by way of example, one can perform 50 different types of transactions at a self-service machine – buying tickets, paying bills and more.
“There’s a lot more to it than the cash and dash of previous days,” he said.
Bigwood was joined by HSBC global self-service architect Anton Godfrey and Jim Tomaney, COO at Renovite, to discuss the state of self-service banking at ATMs, and how (or if) the market is likely to evolve.
Today, Godfrey admitted, ATMs can be vehicles for innovation — but only in a few places. Some ATMs in Turkey, he said, nearly doubled Spain’s number of self-service capabilities; they now include options like buying and selling stock.
That’s the good news: The capacity for innovation is there.
The bad news, all three agreed, is that capacity for innovation is underexploited in much of the world, particularly in developed markets like the U.K.
Future capacity aside, promoting ATMs as the self-service banking hubs of the future doesn’t inspire tremendous enthusiasm at big banks.
“In the U.K., most of what I see are ATMs as a channel that is used as a means of keeping customers away from the branch counter, and little else,” HSBC’s Godfrey said, noting that other than a handful of added-on features, like the ability to use an ATM to donate to a charity, the U.K. self-service model is mostly still about “cash and dash.”
Which isn’t to say ATMs aren’t contributors, Godfrey emphasized. Consumers like ATMS for their specific purposes, and they save banks from having to stash a lot of money.
But all three agreed that ATMs are things banks offer because they have to — because everyone else does —not because they extract much direct value from them. They do, however, rack up a lot of cost.
Compliance Cost Machines
There are many ways the ATMs of old can be upgraded to offer a greater array of self-service banking capabilities, Renovite’s Tomaney said, and a host of slick ways to integrate an ATM with mobile technology to create more streamlined banking experiences for consumers.
But, he said, no matter how “whiz-bang” the technology, if the bank in question doesn’t have the infrastructure or the work processes in place to support it, the capacities won’t go anywhere. To innovate, he noted, banks need ATMs to be something they can innovate on. The investment in making that possible, however, hasn’t been there.
For banking, Cennox’s Bigwood chimed in, innovation just hasn’t been the headline focus when it comes to the care and development of their ATM networks.
“Financial services has been much more worried about being compliant and secure when it comes to ATMs rather than being innovative,” Bigwood noted.
And, HSBC’s Godfrey added, that focus has not exactly been misplaced; compliance and security are both non-negotiable priorities for banks when it comes to their ATMS — and extremely time-consuming and expensive.
HBSC, Godfrey noted, was demoing things like using ATMs for cash recycling and mobile integrations, and there was lots of excitement around doing it. But, ultimately, there was not enough investment in developing it at the bank because they had other, far less sexy stuff keeping them weighted in place.
“All we’ve been doing is updating Windows, expanding encryption and a lot of mundane things that are both very expensive and time-consuming. There is almost no time or funds left to really dig into innovations and [try] things,” Godfrey said.
Moreover, Tomaney noted, the incentive structure hasn’t been there for banks to do that digging. There is incentive to sell improvements like encryption, or perhaps a slight services upgrade like innovation, but that isn’t what’s going on.
“These are really incremental improvements,” Tomaney said. “They aren’t really tapping into what ATMs can become in terms of self-service banking. That is really about realizing a world of transactions for consumers [who] can use the ATM as a touchpoint to reach across channels. With contactless and mobile, we really are on the edge of the next level of innovation.”
Getting Over the Edge
All three men agreed the ATM could be an extremely useful tool to advance and expand the horizons of self-service banking – but for it to live up to its potential, some serious evolution lies ahead.
They did, however, disagree about what that evolution would look like.
HSBC’s Godfrey was the most pessimistic, noting that in his experience, he’d seen very little forward motion thus far; as of yet, he believes there’s not enough momentum to sustain any kind of ATM innovation. For him, the brightest future lies in simplifying the machines, moving away from the idea of layering additional customer-facing services directly into them.
“I’d like to see less of the services living on these machines and more of this migrating to the cloud,” Godfrey said, before noting that he meant a private and secure cloud — not something public-facing. “That could really cut back a lot of the time spent securing the hardware.”
Cennox’s Bigwood had a bigger idea in mind, saying that beyond moving where services live, banks need an entirely “new approach” to how they think about and leverage ATMs as tools.
“Because there really isn’t a reason to commit to innovating in what is essentially a branded cash-dispensing network that doesn’t generate any revenue,” he said.
However, there is reason to create a sticky, useful platform with which consumers can easily interact at will in a lot of convenient locations, particularly if those uses can be synced with other self-service activities they are already doing through their mobile banking applications.
Tomaney had the most expansive view. He believes ATMs need to migrate away from their roots as a branded network and become something much more like generic utilities that consumers use at will when they encounter them, not necessarily as part of their relationship with a specific provider.
“For this to really evolve, this almost has to be generic for customers. No one cares whose electricity they are using, or what Wi-Fi network they are on. And that is how we need to start viewing ATMs — as the utility that the actual services sit on top of — and then make that utility open to everyone,” he said.
It would be a big change — perhaps too extraordinary to consider.
But, Tomaney noted, a big change is what is needed, given how sluggish the progress in the market has been thus far.
“The extraordinary of the 20th century is now the ordinary of the 21st. And I think the extraordinary evolution of ATMs that could just become an ordinary part of our lives — the transformation we are still waiting to see — is one where they become a hubspot in the internet of self-service. And that is what I think the segment really needs,” he said.
But is it what the segment will get?
It seems unlikely that banks — however they feel about the expense of their ATM networks — will be ready to dispense with them entirely in favor of making them an open utility. Banking would have to think differently to leverage ATMs to their full self-service potential.
But in a world where everything is getting more automated, it does seem likely that the humble ATM could stand to become more versatile — and useful — than being the starring player in a standard cash and dash.