If you’ve used an ATM lately, you may have noticed that many are very different from what they used to be. Many are more fluid, more interactive and may even allow you to pick the exact bill make up of your withdrawal. For example, if you withdraw $100, you may be able to pick the denominations dispensed, from a single $100 bill to a combination of bills as small as $1 or $5.
In July, I wrote about “The Future of ATMs” and discussed ideas about the new role of the ATM now that all systems were forced to upgrade to the Windows 7 operating system. With great feedback, questions and concerns about ATMs from the post, I’d like to address the myths and misunderstandings of the future of ATMs.
ATMs: Gateway to the Alternatively Banked
There are a lot of financial institutions with plans and strategies around serving the underbanked. In this new age of digital banking, financial institutions would love to use the new ATM technology to help draw in such customers. For instance, underbanked customers may be interested in using an ATM to send money, pay bills or reload a prepaid card.
These new features, however, stand to benefit all customers as they help to create a unique financial services experience without ever forcing a customer to step into a bank. As previously discussed, ATMs are becoming more powerful and diverse, evolving from simple money dispensers into electronic banking kiosks (EBKs), which pair traditional ATM functions with a range of other capabilities. With EBK, customers can conduct virtually all their banking business without ever visiting a branch. This includes check cashing, receiving money in desired denominations and even interacting with tellers via video sessions.
Virtual Tellers are a prime example of how financial institutions are attempting to revolutionize the banking experience at the ATM. You can drive up or walk up to an ATM, hit a button that says “speak with teller” and be connected face-to-face with a teller. This not only can help the financial institution control costs, but also provides the customer with a top-notch experience. All the while, the financial institution can reinforce its brand and expand its base.
Apple Pay & Bitcoins are the future, right?
Many believe ATMs will become obsolete with new payment technologies such as Bitcoin and Apple Pay™. Although digital banking is growing rapidly, these two technologies are still in the infant stages of consumer adoption. Only a small percentage of locations allow you to access Bitcoins, let alone pay with Apple Pay. Furthermore, the sheer number of people who carry cards as a method of payment dwarfs the number of people who own an iPhone and who can pay at a point-of-sale that accepts Apple Pay. In addition, despite the excitement around Apple Pay in the media, more than twice as many smartphone users use Android than use Apple iOS. That is not to say that Bitcoin and Apple Pay are not options for us all to watch, but rather that they are still many years away from reaching broad acceptance. For the next 5-10 years or so, financial institutions will need to continue to service customers with ATMs and evolve with their customers.
Security Above All
Major retailers such as Home Depot, JP Morgan Chase, Target and Apple were compromised in 2014, with hackers stealing personal data from their customers; and experts say the data could be used to defraud customers for years to come. In response, major card issuers and financial institutions have been testing biometric payments. This new form of authentication could use a variety of metrics ranging from finger print scanning, voice recognition, facial recognition or even scanning the pattern of a customer’s veins inside the palm of their hand to verify their identity. During a recent test, MasterCard found a successful verification rate of 98 percent using a combination of voice and facial recognition, and the process took less than 10 seconds.
There are other options we can expect to see before biometrics, however. One option is the Cardless Cash solution from FIS, which eliminates card skimming at the ATM. It works very simply: using an app on a mobile device, a customer preorders a denomination of cash for withdrawal, denotes which account to use and how much they want; upon arrival at the ATM, the customer then selects “Cardless Cash Access,” scans the QR code presented on the screen with their phone and the transaction is completed securely through tokenization in the cloud. Cash is dispensed and a digital receipt is delivered. This is a very convenient and more secure way of conducting an ATM transaction that does not need a card to be inserted.
As discussed at this year’s PayThink Conference, during the “Future of the ATM in the United States” breakout session, ATMs will grow 50% in the next five years with “Brand Transformation” as the key driver pushing new technology into the customer environment. Going forward, ATMs could serve as a financial institution’s attempt to capture new customers while controlling costs.
The rapid growth of digital banking will not slow and it will be exciting to see how the industry innovates.