The published view of RBR of London is that the number of operational ATMs will exceed 4 million machines by 2020. There is ample evidence to support this, with developments in China and India making a strong contribution. These are also markets where the number of branches is still growing. In addition, a strong demand for new ATMs often better enables the introduction of valuable next generation functionality. Turning to branches, RBR research shows that global growth over the last ten years has increased the number in operation to around 1.1 million. However, this upward trend has now levelled off. Industry consolidation in many markets, together with the early effects of digital banking, is the cause of an increasing number of branch closures. The historically over-branched markets of Germany and Spain have seen significant reductions, and the same will become apparent in Italy and elsewhere. In the USA, FDIC figures showed that the number of branches peaked at 99,550 in 2009, since which time they have been in a steady decline.

The expression that for every action there is an equal and opposite reaction is as relevant in banking channel strategy as elsewhere. For example, online banking enables customers to manage their accounts by direct access to the bank's systems. There is no longer a need for them to go through the intermediary of a call centre, and the number of agents is falling as a consequence. In a similar manner, and despite the continued growth of the global ATM estate, there is a need to look below the headline figures and understand what is taking place in individual markets. In many country networks, a large proportion of the ATMs have been deployed at branches. Spain is just such an example with significant consequences when branch closures also remove the means of hosting ATMs, or perhaps even the need for the machines.

Amongst the largest operators, some of the machines located at closing branches will be retired, but others will be recycled either immediately or after a period in storage. In turn, this could reduce the demand for new ATMs until the supply of recycled machines has been absorbed. The effect of this phenomenon will not just reduce demand but it will also inhibit the deployment of new generation ATMs with their enhanced economics, functionality and performance. There is nothing to support the view that this effect was behind the 8% drop in shipments in 2015. However, if branch closures continue, and certainly if they accelerate, there will be an increasing need to consider whether the trend is having an impact on the demand for new ATMs. The ATM rapidly became the workhorse of the industry after its launch nearly 50 years ago. What's more, despite the major enhancements to its functionality, the simpler and older versions continue to play a key role in the omni-channel strategies of many banks and other institutions. However, the ATM is now an integral component of a channel with a major question mark over its longevity, the branch! Against this background, there will be an increasing need to understand how the fate of bricks-and-mortar banking will impact the growth of ATM estates.

David Cavell advises banks around the World on the development and implementation of profitable omni-channel strategies. He is an approved ATMIA consultant and Honorary ATM Industry Champion.