Idea Bank Is Driving ATM Innovation — Literally, In A BMW

Cash is one of the more underrated players in the payments and commerce ecosystem. It’s often declared dead, innovators of all stripes are constantly declaring war on it and it is so out of style that even technologies relating to it are considered doomed to the ranks of historical obscurity. NBC celebrated the 50th anniversary of the ATM by declaring it obsolete — and likely to be out of existence by the time today’s preschoolers are starting college.

Same list of things soon to be a memory also included cash.

But for all of the naysayers and those ready to write its obituary — cash remains a surprisingly persistent king in exile; as it remains a favored, trusted and preferred payment method all over the world.

According to PYMNTS Global Cash Index, cash is a majority player in many developing economies — and growing well in developed markets, even as digital payment methods proliferate and continue to gain traction.

Quite simply, as economies grow larger and populations increase, more cash is actually being spent annually (albeit at a slower rate), even as the slice of the pie called digital payments grows. In Western Europe, cash usage is projected to increase at a compound annual growth rate (CAGR) of 0.7 percent and reach €2.2 trillion by 2020. In Eastern Europe, on the other hand, use of cash is projected to increase at a CAGR of 4.2 percent, reaching €1.4 trillion by 2020.

And, in a recent conversation with PYMNTS, Idea Bank board member Dominik Fajbusiewicz gave us some interesting insight into why cash is very much here to stay — and for the long haul.

Said simply, merchants like it.

“Despite the expansion of non-cash turnover in Poland’s economy and public administration, Polish micro-entrepreneurs still prefer to use cash for their transactions rather than electronic payments. Research conducted by Idea Bank has shown that one in three small business owners use only cash, and the remaining two use both cash and different methods of payment.”

In a market where about a third of the market is entirely cash dependent — and the remainder is still heavily using cash as a payment method, he noted — the goal can’t just be to innovate cash out of existence, but instead to innovate to make cash a more efficient product for the merchants that prefer it.

Which, in turn, he said, means bringing better access to it.

The Literally Mobile ATM (Powered By BMW)

Merchants who transact heavily in cash, Fajbusiewicz said, spend a lot of time at the bank. According to Idea Bank’s internal research, 80 percent of merchants make daily trips to their banking branch to handle large deposits — often in the evening hours, which presents additional security concerns.

But, Idea Bank reasoned — what if the customer didn’t have to go to the bank to use an ATM? What if the ATM came to them?

Thus, the mobile app connecting businesses to the Idea Bank Mobile ATM was born.

“With the dedicated mobile app, you can book the Mobile ATM by entering the desired time and location of the service delivery. The whole process looks like ordering a cab. The client is able to observe the car’s current position on a map. Then, when the car reaches the specified location, [the] client makes a money deposit or withdrawal in the same way as they would with the stationary ATM.”

The mobile ATMs offer a more comfortable and easy path for deposits for entrepreneurs, not to mention a more secure one, which means it has seen a fair amount of user enthusiasm, according to Fajbusiewicz. Getting the service up and running has taken some considerable user education and fleet expansion.

“We needed a year to encourage [entrepreneurs] to use mobile ATMs regularly rather than go to the banking branch. Since we launched the solution in April 2015, we have built up the mobile ATM fleet — now consisting of 22 cars, operating in major Polish cities. We plan to introduce additional 16 ‘til the year’s end. Today we can say that it is a fully profitable project.”

The Tech that Makes It Possible

While from a user perspective the service is as easy as calling a cab, the development of the service over time has been a bit more complex, for which Idea Bank has worked to upgrade and improve the user experience.

Their first iteration, housed in a BMW i3, was equipped with a depositing machine with the maximum capacity of 50 notes in a single transaction. That, he said, meant that in the early days doing full transactions — which could involve stacks of notes — could take hours.

“So, developing the project we increased the machines’ capacity to make [it] possible to deposit up to 150 notes in a single transaction. But it still wasn’t enough. Therefore, we decided to set a drop chute in the subsequent cars.”

These days, he noted, using a special envelope and a payment card linked to an account with Idea Bank, users can deposit funds instantly — and see the full operation turned around in the system within four hours maximum.

The changes, he said, are needed because banking these days needs to be able to address a much wider and more diverse set of needs than it ever has before.

“The banking sector is becoming more customer-oriented. It will be a challenge for banks to create instruments and implement projects which will make customers’ lives easier. We have created a lot of interesting solutions in Poland, including Mobile ATM, Idea Hubs — coworking spaces for entrepreneurs (even in a train carriage!) — and Idea Cloud, [an] e-banking system combining [a] banking account with bookkeeping. But there is still a lot to be done in this field.”

What’s Next in Idea Bank’s Innovation Calendar

While mobile ATMs are one prominent area, Idea Bank’s focus is on the wider field, according to Fajbusiewicz, which means they are working across the board on a variety of solutions.

“The most challenging thing we are working on now is our new product — car rental per kilometers.”

The pay-as-you-drive model, explained Fajbusiewicz, is one where renters aren’t charged for how long they have a car — but for how much they used it and how far they drove it via precise information on kilometers covered sent automatically through GPS devices.

“Our new idea is we would like to encourage our customers to change the way they think about their private and corporate economic burden. We want to prove that if you’re using the car in a smart way, you can pay less and be more eco-friendly. I think that GPS and telemetrics are going to change banking services because of the increasing popularity of access economy. The conviction that “we should pay only for what we have used” is gaining momentum and should impact further business areas, including banking.”

He also noted that Idea Bank is working on launching its own social lending platform, which “will bring a totally new perspective to the global social lending idea,” though he didn’t offer specific details — other than its launch is coming soon.