The ATM from one era to another

Since the introduction of the first cash dispenser machine by Barclays Bank in 1967, ATMs have become the most utilised customer touch point in retail banking. New customer channels, the internet and mobile phones may have considerably broadened the scope and reduced the costs of customer interaction for banks, but due to the evolution of the ATM it remains a dominant point of contact moving from being a cash dispensing machine to a wide service provider.

The last ten years have seen a number of changes to the ATM channel including a new operating system and the introduction of EMV smart cards. Both of which have had a significant impact on the ATM environment.

The migration to Windows meant a move from a proprietary to an open standards environment. This gave banks greater flexibility and the benefit of a more competitive suppliers market. Enhanced functionality like Intelligent Deposit, cash recycling, more advanced application software supporting sophisticated graphics, imagery and sound have made the ATM experience a far richer one for the customer. However this has increased the risk of ATMs to fail and requires the banks to consistently maintain and test the ATMs to ensure maximum uptime.

EMV adoption has also had a major impact on ATMs. Since the standard’s introduction in the UK in 2004, EMV caused card fraud to decline by 25% within the first two years. However, this benefit has come at a cost as EMV Chip and PIN cards are complex. As a result, ATMs have had to evolve significantly to account for this new technology while like the migration to Windows, the banks have had to prevent against the heightened risk of failure of the ATMs and must test them regularly.

Highly public ATM crashes can negatively impact brand reputation and customer loyalty, consequently ensuring ATM uptime has become a key focus for banks. Manual testing for EMV-based transactions is now untenable as it would be far too time consuming, therefore banks are increasingly migrating toward automated testing which is a lot more time and cost efficient.

The last decade has been full of interesting and challenging changes for the ATM channel. To fully take advantage of the ATM channel, banks must put in place measures to automate the ongoing testing and monitoring of their networks. This will enable banks to benefit from a tangible return of investment, as automated procedures are more time and cost-effective than a manual approach
The ATM has come a long way in the last 40 years and the self-service channel is increasingly critical for banks looking to reduce costs and drive customer service.

The most forward thinking banks appreciate that to fully exploit the potential of their ATM networks they need to take a lifecycle approach to functional development, testing and deployment to serve their customers and future proof the technology to stay ahead of the competition. In order to do this, they must ensure that they have the expertise, resources and technology at their fingertips. With solid processes in place, banks will be in the best position to fully realise the potential of the ATM channel.

Debit card spend on the rise but cash is still king

This week Visa suggested that debit card spending will overtake cash as a method of payment this year as a result of trends such as the increase in internet shopping. However, as Andrew Bailey of the Bank of England suggested, cash is far from 'dead' and is used for 60% of transactions. Clearly, cash is still one of the most trusted forms of payment.

While debit card transactions may be rising, cash is not going away. Both the ATM and debit cards are valid parts of the banks payment systems strategy, having their own unique advantages for the customer. Debit cards are necessary for new payment needs such as online shopping, however investment in the ATM channel continues to be essential given that ATM withdrawals account for around 70% of cash acquisitions compared with 25% in the 1990s. ATM numbers are now around 2 million worldwide and predicted to grow to 2.5 million by the end of 2013.

In addition, while innovation of payments is often seen to be taking centre stage with the arrival of new products such as contactless, banks should also consider implementing innovative new functionality at the ATM to make the most of the terminals’ usability. For example, mobile phone top-up and deposit processing are just two of the options which banks are rolling out at present. Customers are increasingly more demanding and it is crucial that banks respond by ensuring that they are provided with high levels of convenience across all payment channels.

Ian Kerr

Bank of England highlights the importance of ATMs

A recent speech by Andrew Bailey of the BoE touched on some interesting points. Cash is far from 'dead' as there are still some £45bn in notes in circulation and this number is rising despite the fact that cash is used for 60% of transactions compared to over 80% in the 1980s. This 'paradox' as Mr Bailey describes it is explained by the fact that the public still trusts cash and, given the low interest rates and current economy, see cash as a way to store value. This echoes some research we commissioned last Christmas when we surveyed consumers attitudes to spending. We found that consumers felt most comfortable making Christmas purchases with cash to control their spending, rather than using cards, at a time when budgeting is highly important.

Mr Bailey then went on to talk about the need to get more £5 notes in circulation as there is a high public demand for these.

The speech has some implications for the UK's ATM deployers. ATM withdrawals account for around 70% of cash acquisitions compared with 25% in the 1990s and, as a result, it is now more important than ever to keep this cash dispensing network available. This requires banks to implement extensive testing and monitoring for their ATM networks. Moreover, banks and IADs need to keep a close watch on bill mix combinations, and test these thoroughly, to ensure that demand for £5 notes is satisfied. Mr Bailey’s speech has clearly highlighted the strategic importance of the ATM channel and the visibility that any downtime will attract.

Ian Kerr

The ATM is critical at Christmas

The other day Visa predicted that the busiest time for high street shopping will be December 23 - the final weekday before Christmas Eve. The company expects to process over 17 million transactions in the UK worth over £860 million on this day alone.

As consumers hit the high street, the ATM will be a vital service for many shoppers. In fact, last year Level Four’s research found that shoppers favour cash over credit cards to manage their budgets at Christmas. Even though ‘green shoots’ are appearing it is highly likely that the same feelings will apply this year as well. As banks look to increase consumer trust and loyalty, it is essential that ATMs are up and running to ensure that they adequately meet consumer needs.

In order to ensure banks cope with this spike in withdrawal volumes they will to not only increase the levels of cash stored in the ATM or alternatively provide for more frequent cash replenishment, they will also need to look at preventing ATM downtime. Providing the best possible service is essential to maintaining brand reputation, especially at Christmas when the volumes of consumers are larger, and stress levels are typically higher. To provide this service, banks should be prioritising comprehensive ATM testing and monitoring strategies at this time as part of their ongoing campaigns to maximise the potential of their ATM networks. Whilst providing excellent service at the ATM is important at all times, it is clearly essential in the run up to Christmas

Ian Kerr

Cash for free

Link Consumer Committee recently published its annual report on the UK’s cash machine network and how it works best for cardholders.

The report focused on the growth of free to use ATM’s in the UK’s most deprived areas. This has been steadily increasing and is set to expand across a range of communities.

ATMs continue to be the most frequent touch point for banking customers, and the free to use ATMs will be a positive service within poorer areas of the country.

This new provision allows customers more affordable access to cash while also allowing for increased numbers to use self-service banking. Banks recognise the importance of answering their customers’ needs now more than ever, and this action demonstrates the lengths they are prepared to go in terms of customer service.

ATMs having a bubble - Cash machines go cockney

Bank Machine, the supplier of ATMs, has introduced a Cockney rhyming slang option on five of their East London ATM machines http://www.telegraph.co.uk/news/newstopics/howaboutthat/6077110/Cockney-rhyming-slang-introduced-in-bank-machines.html]. This is part of a three month campaign intended to be an amusing way of recognising the cockney dialect traditionally spoken in East London. If successful, it’s thought that Bank Machine may expand the campaign further to include Geordie, Scouse, Brummie and Scots dialects.

The campaign has had a positive response with many locals and tourist going to “have a butchers” (look) at the unique ATMs. Unlike most of Bank Machines’ other ATMs, the five cockney slang ones are currently free of charges. While this is a light hearted way of recognising the cockney dialect, it highlights how financial institutions recognise the importance of interacting with their customers and the lengths they are willing to go to retain their loyalty. In a time when banks face the challenges of retaining customer trust and facing aggressive competition, it is vital they remain innovative across all channels especially the ATMs, the most frequent touch point for banking customers.