The automated teller machine (ATM) debuted 51 years ago in the U.S., dispensing small preset amounts of cash … and that’s about it. They quickly faded into the décor of banks and street corners, becoming a prosaic feature of everyday life. And while some imagined there’d be banks on Mars by 2020, few guessed that dull ATMs would one day reinvent retail banking.
ATMs have come full circle — starting life as the best tech innovation the public had ever seen (from banks), then becoming utterly routine, and to the present day — when ATMs are suddenly sexy again. A convergence of factors is at the root of the ATM makeover now underway. They include the increasing obsolescence of physical bank branches, the mass adoption of mobile banking, and self-serve kiosk trends, among others. Ironically, the ATM comeback also involves adding more convenient, accessible human contact back into the branch experience.
For legacy financial institutions (FIs) that hold leases on brick-and-mortar locations, supercharged ATMs solve some problems, namely, how to retain customers and stay relevant. The latest PYMNTS Digital-First Banking Tracker, a collaboration with NCR Corporation, unclouds a blurry picture where 70 percent of consumers in a recent survey reported visiting a bank branch in the past month, and yet foot traffic keeps dropping as digital banking climbs.
Solving the Branch Conundrum
Traditional FIs are embracing a digital-first posture while simultaneously facing a real estate conundrum: what to do with dozens, even hundreds of bank branches that fewer people are utilizing? It’s akin to what malls are going through. Like malls, physical banks are putting creative energy (and significant dollars) into spiffing up their digital furniture, the ATM.
It helps explain why the value of the ATM market was $18.44 billion at the end of 2018 and is forecast to see a compound annual growth rate (CAGR) of nearly 11 percent through 2027, when the sector is expected to have doubled in size to approximately $44 billion in spend.
That action is the result of ITMs, or interactive teller machines, that first began appearing about five years ago in isolated field tests and are being rolled out widely now. These new financial appliances do very cool things like use real-time video to connect tellers to ITM customers who wish to speak with a human during their transaction. Manufacturers have replaced paper with digital deposit slips that can clear within hours instead of days. Innovations like easy PIN authentication turn a debit card into a valid ID when using the ITM. Some ITMs can even order movie tickets, handle fiat currency transactions, read wearables … the list goes on.
Awesome too are features like automated account opening and instant-issue debit cards at the ITM. Banks that have installed ITMs are reporting positive feedback from customers, a reduction in error-prone manual tasks, and a more engaged customer than they’ve seen at the branch in years. ITMs also saves time for human tellers, freeing them up to market to walk-ins.
Interactive Teller Machines March On
We’ve taken it for granted for decades, but the boring old ATM appears to be the key to a retail banking future that was getting harder and harder to visualize. It’s not totally out of the blue, as the trusty ATM was the first widely available “digital banking experience” and weirdly, people trust them to a surprising extent. The ATM’s sheer familiarity is one of its greatest advantages.
Biometrics and cardless transactions, cash recycling and other thoroughly digital features are being brought to bear on new ITM experiences, which are about security and customer experience (CX). In the “what does this do for civilization” department, ITMs are seen as a way to provide digital-first banking services to underbanked areas.