In the first 50 years since it was introduced in 1967, the ATM didn't change much, offering the same basic functions like withdraw cash, deposit funds and check account balance.
ATMs are finally beginning to play a different role, however, thanks to a movement known as bank transformation. As banks redefine themselves to meet the demands of a digital age, ATMs are becoming physical touch points, keeping banks connected to their customers in a way that mobile apps cannot.
Some experts think that this latest evolution of ATMs is just beginning — that ATMs will continue to play an even more important role in providing a channel that banks can leverage to help differentiate their customer experiences.
Bank transformation is a phrase that gets kicked around a lot, but in general, it points to banks moving their services from a physical realm to a digital realm. While e-commerce, ride-hailing firms and others have been quick to get on the digital bandwagon, banks have been slow to change.
"Banks have operated in a non-digital manner for decades and really haven't taken advantage of a lot of the technology that's come along to push their operations forward," William Budde, VP of product marketing at ATM manufacturer Hyosung, said in an interview ATM Marketplace.
Of course, now that the pressures is on, all of that is changing.
According to Donna Embry, SVP of global payments strategy at Evolve Bank & Trust, the three main drivers of bank transformation are cost, technological evolution and changing consumer behavior — in that order.
Indeed, as falling interest rates bite into profits, banks have been under the gun to make deep cost cuts and drive earnings growth. Some are reducing headcount, while others are shutting branches, particularly in areas that tend not to be as profitable.
It's not only the need to cut costs driving change. Competitive pressures on traditional banks coming from fast-growing European neobanks, such as Revolut, Monzo and N26, are accelerating a shift toward digital banking as bank customers conduct more of their daily banking business online.
As all this is happening, one of the big challenges for banks now is how to continue offering customers the experience they want, when they want it, and the fact is, not everyone wants to do their banking online.
As physical touchpoints, ATMs play a "huge role" in bank transformation, Mike Lee, CEO of the ATM Industry Association, told ATM Marketplace in a recent interview. Interactive ATMs with new functions, such as live chat with tellers, are bringing new meaning to 24/7 bank access, he said.
Lee is part of a movement shaping the next-generation of cash machines. In an earlier interview with ATM Marketplace, he described future ATMs as app-based machines that consumers could access from their mobile phones. "The next-gen ATM will be more flexible. It will allow different configurations, so retailers will be able to get involved as well," he said.
Budde agrees. "ATMs provide a bridge between the physical and the digital world and the bank's customers," he said. While banks are able to provide a plethora of digital and self-service capabilities via mobile apps that sit directly in the customers' hands, ATMs compliment those with a physical self-service experience, especially important when consumers want to do more than simply deposit or withdraw funds.
"That physical presence offers customers a human-centric experience when they have complex questions about products and investments," he said.
As banks transform themselves, one question looms: What will the bank of tomorrow look like?
Evolve's Embry believes future banks will become "phygital," a merger of the physical and the digital worlds, where branch software technology provides a unique interactive experience for the user. She sees branches morphing into high-tech lounges, complete with free coffee and plants, for pleasant customer interactions.
ATMs will play a part in all this, she said, but they will offer more personalized and flexible customer experiences through their apps, with an extended range of transactions from cash in/cash out to payments, bookings, charity donations and more. These services will give banks new opportunities to differentiate themselves.
Along those lines, Lee envisions the branch becoming more like a "financial service station," especially in areas of high consumer traffic, with the ATM offering a host of new features.
"I see the expansion into full interactive machines linking consumers to other areas of the bank, primarily lending. I see real-time payroll redemption for gig economy workers and real-time loan initiation for large purchases combined with a retailer for full service. The possibilities are endless," he said.
Budde believes the future that Embry and Lee describe is a lot closer than most people realize. The true bank of tomorrow will meet customer needs via the customer's chosen interaction points and locations, and the ATM will be there with a host of new offerings. "The only limits are our imagination," he said.
Article provided by ATM Marketplace.com