There is significant evidence that ATM usage is on the decline in North America and Europe (not, notably in China, Africa and the Middle East, where ATM usage is exploding – banking research firm RBR’s 2013 report indicates that China alone issued a million new ATM cards every single day). Rabobank, a Dutch multinational banking cooperative which maintains the largest number of ATMs in the Netherlands, is expecting a 30 to 40 percent decrease in the number of ATM interactions – that’s a decline of around 60 million customer visits – by next year. Accordingly, the bank is now taking steps to close a number of their ATMs. Banks in America are also seeing people visiting ATMs less – according to figures from the American Banking Association, only 11 percent of banking customers use ATMs to manage their accounts, down from 17 percent in 2009. Industry experts also note that people are visiting ATMs less than they used to: Where someone may have gone once or twice a week, they now go once every two weeks. Meanwhile, independent ATM operators are reporting a decline in revenue over the last 10 years, although part of that has to do with moribund interchange rates, the fee that financial institutions pay them.
ATMs provide services that are increasingly available from other and often times more convenient sources, from cash back at CVS to depositing checks using your phone’s camera. “For the ATM to survive and be interesting, there would have to be reason for it exist and that would be that it’s got something in its belly that is highly valuable that you want to get closer to consumers… or it’s got some more kind of advanced capability that would cause the banks to more comfortable with you using it in more advanced ways, such as closing an account or opening an account,” saysStearns. Right now, ATMs aren’t entirely succeeding.
“Physical touch with your bank is on the decline across all portals,” says Nancy Bush, banking industry analyst. At the same time, she says, banks are, as always, looking to cut costs while increasing their revenues. The answer, as some banks see it, is to reduce their branch footprint while at the same time equipping their ATMs with more powers – because despite how they’ve stagnated, ATMs actually offer a lot of opportunity.
“We think of it today mainly as a cash dispenser,” says Stearns. “But an ATM is terminal… It’s a device that sits on the edge of the network and becomes the device by which the consumer interacts with the network… That device could be used to do anything on the financial network and it could be used to redeem or purchase any kind of physical objects.” In other words, it could really do just about anything.
Ohio-based Diebold is one of the world’s biggest manufacturers of ATMs, making more than half the ATMs in America, and as such, must be an industry leader in innovation. In 2013, the company unveiled their “millennial” tablet ATM at the Consumer Electronic Show in Las Vegas; the small, snazzy device with touch-screen style interface relies on cloud processing to allow customers to use their smartphones to access their cash at ATMs – no card involved at all. What’s significant about this, says Frank Natoli, Diebold’s chief innovation officer, is that it creates a seamless user experience across all avenues of banking, marrying the mobile to the physical, while being safer and using less energy and space; it also, helpfully, taps into the zeitgeist around mobile payments. And it’s incredibly basic: “We asked ourselves, how can we make this as small as simple and distilled down its essence as possible?” he says. “It’s a tablet and it’s a cash automation device and that’s it.”
If stripped down is one kind of innovation, souped up is another. Natoli said that one South American country – he declined to say which one – Diebold is working with wants to allow customers to use their ATMs to link to other systems outside just the bank, for example, to access their government payment accounts, do peer-to-peer payments, reload prepaid cards, things like that. The idea that the device could provide more than just money services is by no means a new one – in the U.S., ATMs sell stamps, and in the U.K., “cash points” have long been able to top up pre-paid mobile phone minutes – but the expansion into other networks is a significant step.
Those are the kinds of changes being made to the physical device – but Natoli says that the latest big thing in ATM is people: Counter-intuitively, banks are starting to replace the automated “a” in ATM with an actual human. Some Bank of America ATMs, for example, now offer “teller assist”, which connects customers to a real teller sitting in a call centre via a two-way video enabled interface, should they want to (the service, however, operates on limited hours.) Diebold’s biggest competitor, NCR, rolled out 350 of its “interactive teller” machines in 2013.
It’s a version of the “help button”, which would connect a user to a real human, and that Natoli envisions more ATMs coming equipped with in the future: “Consumers, when they know what they’re doing, prefer to serve themselves and do it,” he said. “But when they need help, they want it to be accurate and efficient.”
Another way, however, that ATM innovation is re-introducing humans has less to do with what the ATM can do and more to do with what it frees the human up to do. “If you think about your normal interaction with a teller, most of the interaction is just some pleasantries, but a good percentage of the time, the teller has their head down… the amount of actual eye contact and conversation is low,” Natoli said. The newer wave of ATMs is really about refiguring of the traditional branch, for example, Chase Bank’s Grand Central Station branch which has ATMs on hand to do a wide variety of activities that tellers used to do, such as distribute $1 and $5 bills for exact change withdrawals. In the center of the space is a concierge desk, allowing customers who need more personalized service to get it. “So you start to repurpose what the employees in the branch do, they become aides, advisors, guides,” said Natoli. It goes without saying, too, that freeing tellers from having to do basic transactions also means that they work harder to sell the bank’s other products.
But the biggest question, the question that dogged ATM use from the very beginning, is whether or not customers will use it. “Americans are stubborn, stubbornly resistant to change when it comes to banking and one of the problems right now is that we are still in the middle and sort of tail end of a massive demographic change in this country,” says analyst Bush, noting that comfort and trust are two extremely important factors in money handling. “My mother banks entirely different than I bank, I bank entirely different from the kids of my friends, who never want to go into a bank… The banks have a tough job right now, which is to satisfy a number of constituencies, all of which have varying degrees of technological expertise.”
Customers appear to be approaching the new ATMs with as much gusto and trepidation as they did in 1977, when talking to The New York Times. But ATM makers and banks remain confident, just as they were in the 1970s, that people will come around: “You could say that we’ve experienced the death of the cassette, the death of the CD, but by God, everybody has personal devices to listen to music,” says Natoli. “All we’re going to see is the ATM evolve to serve the customer how they need to be served.”