by Andrew Martin, Retail-BCG on ATMmarketplace.com
The ATM has been around since I can remember and before — since 1965 I believe. I recall some early models with a periscope to ensure no one could see your details!
Things have changed since then, fortunately. But in a changing world, we might need to change our perceptions. We might also need a little guidance in navigating a new and potentially tumultuous landscape.
ATMs have grown in functionality, but few financial institutions have fully embraced the technology, so capabilities remain largely at a "cash and dash" level in central Europe.
Why have FIs been so cautious to launch new technology? Is it because consumers are worried about the functionality and how to use it?
I doubt it. We have only to look at how laptops and smartphones have captivated mankind to know that humans are embracing technology at an accelerated rate.
Today, we see AI built into home appliances and "Alexa" becoming the new command center to order carrots, play the radio or turn down the lights.
Most likely, FIs have been slow to embrace new technology because of its domino effect within their IT departments.
IADs have deployed ATMs at an accelerated rate because they are lower-risk acquirers — they provide cash to the public simply as an authorized transaction.
However, FIs operate in a complex environment in which they are both acquirer and card issuer. As a result, their ATMs must be married to the issuing services and fully aligned with core bank systems, licensing requirements and full regulatory approvals.
What would happen if we were to divorce acquiring and issuing (amicably of course) so that we have the acquiring environment operated for the user and the issuing environment operated for the benefit of the user and the bank?
This is all possible today with the advent of API technology — a common interface between systems. API, be it open or closed, will become the norm with banking solutions. The API will integrate, link and marry systems to the benefit of the bank and the user.
We encourage banks to take a new view of their systems. They need not go to the massive expense of purchasing and integrating new technology, though. Instead, they can now build systems like Lego sets. That is to say, that they acquire only the "bricks" they need and that share the same connection types.
Back to the subject of ATMs … Our world is changing at this very moment. Challenger banks are coming to the fore unfettered by the shackles and roadblocks that inhibit the progress of traditional financial institutions.
No doubt, traditional FIs wish to embrace the new ATM technology for several reasons:
- automated bank branch services driving towards an unmanned branch;
- new user functionalities such as tokenization, click-and-collect and others;
- cardless transactions; and
- cash recycling.
And the list could go on and on.
This is now possible as technology allows us to connect the bricks easily.
Numerous organizations are prepared to work with FIs and shoulder some of the risk with the new ventures.
We must face facts that legacy banks are no longer trusted as they once were, and that consumers are willing to take a risk with new challenger banks. If legacy FIs don't change, they will evaporate in an overheated banking environment. They must embrace opportunities, partner with new providers and break the traditional service mold.
If this all sounds risky and counter to traditional thinking, solutions do exist that can provide the new services that users are demanding.
ATMs can offer one of two functions:
- cash and dash, in which we support the basic need for cash; or
- stop and shop, in which traditional bank branch services are automated for user convenience.
With these models, FIs do not need to be the first to market — they simply need to embrace technologies already deployed in certain pockets of the globe — recycling as in Germany, tokenization as in Austria and fully automated branch services as in Azerbaijan.
The point is that the technology is proven. The concepts work. And in this tumultuous landscape, they can add value to the customer journey while benefitting both traditional banks and challenger banks.