The past two years have been a wild ride for the ATM industry. Transactions took a nosedive at the start of the pandemic, especially since the initial belief was that cash was a pandemic disease vector. Financial institutions and the ATM industry spent the early part of 2020 trying to lure customers back to machines with safety measures like installing shields and applying anti-microbial coatings to keypads and screens.
Traffic and acceptance of ATMs and cash quickly rebounded once things started opening up and consumers began receiving stimulus checks, David Tente, Executive Director, USA, Canada, and Americas at the ATM Industry Association, told The Financial Brand. Reflecting this, global ATM manufacturing is now forecast to grow at a compound annual growth rate of almost 5%.
Yet while ATMs have re-established their place in the world, consumers and banks are viewing them in different ways. Changes that would have otherwise taken five years to materialize happened in only a year, says Tente. Forced to use remote banking at the start of the pandemic, consumers are now doing far more digitally and are much more acclimated to their mobile devices.
Meanwhile, banks and credit unions, which were already shuttering branches before the pandemic, are taking the opportunity to deploy more ATMs to infill locations. They are also adding in-lobby machines in branches that remain open, but with sharply reduced transaction volume.
“There’s a continuing trend to push more and more transactions out to self-service,” Tente states. “We think that’s going to continue into 2022 as ATMs get more and more capable.”
Cardless Capabilities and Customization
While new ATM enhancements lack any obvious “wow factors” the changes are significant. Most notable and impactful is the continuous integration of digital and physical capabilities, according to Simon Powley, Head of Banking Advisory Services at Diebold Nixdorf. ATM manufacturers are integrating more functionality for cardless transactions and mobile interaction with the machines.
Cardless ATM use was predicted as the “next big thing” as early as 2018, but it didn’t happen. The pandemic changed the dynamic, however, now that many consumers have adopted mobile payments. Megabanks like Bank of America and Chase already offer a cardless option at some ATMs, but more widespread adoption continues to grow.
What It Means:
ATM personalization can range from customized quick-cash options to targeted offers based on the machine’s location.
Much as they do in their branches and other channels, banks are also seeking to deliver through ATMs the more personalized experience that consumers demand, Powley states. Many are taking a cue from the growing popularity of kiosks in the retail and restaurant sectors. “It’s often a better experience,” the executive states, “and the same goes for the digitalization of banking. People want the ability to personalize their experience, to be in control of it, to efficiently do what they want from all hours and location.”
ATMs personalization can go beyond a personal welcome and include customized quick cash options based on the person’s ATM history. Things like knowing the user’s birthday or having the functionality to help them reset a PIN could help.
In a study with Nielsen, Diebold Nixdorf found consumers now expect banks to leverage their marketplace capabilities to educate them or help anticipate their needs. Some banks and credit unions may also make strategic, targeted offers based on where a machine is located or a consumer’s shopping patterns to anticipate their needs.
Read More: The Future of ATMs in Banking
Low-Cost Expansion and Efficiency
Banks and credit unions are also rethinking how and where they utilize ATMs. Many are now deploying multiple ATMs in the same location to support the growing demand for self-service banking and to provide redundancy in case of an outage. Diebold Nixdorf research found ATM outages were one of the biggest frustrations for consumers.
As banks shutter locations, they’re also looking to some of these machines to handle infill, said Powley. Not only regular ATMs, but some are looking to interactive teller machines (ITMs) as a way to expand their footprint without the costs of a branch. ITMs use two-way video to provide a “bank in a box” concept with real-time access to a human representative. When used with billboards and other promotional steps, strategically placed ITMs can create the perception that a bank or credit union is bigger and everywhere.
“2022 will also be about transaction efficiencies,” says Powley. ATMs and ITMs are a part of that as well as mobile banking.
A Next-Gen ATM for Financial Institutions
The coming year may also be the breakout year for greater integration in the ATM industry. In 2016, ATMIA started the Consortium for Next-Gen ATMs to develop a new API-based architecture for ATMs. At the time, large banks were growing tired of refresh cycles on their machines due to Windows upgrades. It was becoming a costly and burdensome process to send techs out there to maintain it.
Following a multi-year global project involving more than 400 companies and 56 countries, ATMIA came out with its first certified Next-Gen ATM product in May 2021. The first company to attain this Next-Gen ATM certification is KLEAR Technologies, of Las Vegas. It supports secure authentication of financial transactions by validating devices to terminals using a QR code.
It’s an App World:
The goal of a next-generation ATM is to make it “more like a tablet” where the machine owner can add functionality by downloading apps, and consumers can operate it using an app on their phone.
ATM vendors can deploy downloadable software while issuers will have a software development kit (SDK) to add to their mobile app to affect the authentication. Mike Lee, CEO of ATMIA and Chair of the Next-Gen consortium, called it a milestone in the “reinvention of the ATM to integrate ATMs into the mobile-digital world and to set up a new wave of innovation and investment in our industry through this dynamic ecosystem.”
Capabilities like this will enable the ATM industry to add functionality to machines more quickly and at a lower cost, David Tente maintains. “It pushes everything onto the consumer’s mobile device, so they are now interacting with the ATM through their phone, rather than a screen on the machine itself.”
Other New Features In the Works
ATMs are already adding new functionality, such as cryptocurrency transactions. Another new application on the horizon is an emergency cash feature where a consumer can get a cash advance from their credit card company then use a unique code to retrieve it from any ATM. “You’d be able to get cash at any ATM anywhere without a card if you lost it and needed cash,” observes Tente.
The consortium is also working on a concept of “universal cash deposits” which would enable any ATM that can accept cash to take a cash deposit for any bank, anywhere.
Because banks and credit unions can greatly benefit by offloading more transactions to ATMs, there’s also a growing focus on denomination selection. One of the critical issues that keeps people from making deposits and withdrawals at an ATM is simple rules like whether or not the funds are available. If the rules are more stringent at the ATM than at the teller line, the consumer will go with the path of least resistance.
There’s a lot of focus on these business rules because they make the ATM more accessible for funds, Powley observes, but also because denomination selection continues to be at the top of what consumers expect.