The Scottish invention that dispenses cash: Honor its history, marvel at its future

By Ron Delnevo for ATMmarketplace.com

We are coming up to the 50th anniversary of the installation of the first ATM: June 27, 2017 is the landmark date.

The first installation in 1967 featured a machine created by a team headed by my fellow Scot, John Shepherd-Barron. Other teams, in Scotland and elsewhere, were working on similar machines but were pipped to the installation post by Shepherd-Barron. No one can take that honor away from him.

Another Scot, James Goodfellow, whose own ATM design was installed later in 1967, also invented the personal identification number.

Multiple Scots, inventing means of dispensing money. Who would have believed it?

Whilst you remain stunned by the thought of Scots loosening their grip on cash, it seems a good opportunity to once again applaud the creativity of my remarkable nation.

Long before that first ATM appeared in a Barclays Bank branch, Scottish inventors helped changed our lives for good and, mostly, for the better.

Read this list and gasp with amazement:

• whisky, John Cor (1494);


• the refrigerator, William Cullen (1748);


• the flush toilet, Alexander Cumming (1775);


• smooth hard-paved roads, John McAdam (1816);


• the first mechanically propelled, two-wheeled bicycle, Kirkpatrick MacMillan (1839);


• the telephone, Alexander Graham Bell (1876);


• the vacuum flask, Sir James Dewar (1892);


• the first electric toaster, Alan MacMasters (1893);


• soccer in Brazil, Thomas Donohoe (1894);


• the television, John Logie Baird (1923); and


• the first true antibiotic — penicillin — Professor Alexander Fleming (1928).

All of this from a country that, even today, has a population of only 5 million, significantly less than one-tenth of 1 percent of the total number of people on our planet.

Scotland certainly punches massively above its weight in terms of the contributions by its natives to improving the quality of life for the whole human race.

The creative Scots do not, of course, rest on their laurels. There is a thirst in Scotland that can't be satisfied by whisky; Scots have an unquenchable desire to invent.

And now, back to soon-to-be marvelous ATMs!

The first machines were intended only to support the cash needs of those who could not get to their local bank branch during rather limited opening hours.

In 1967, bank customers had a relationship with only one bank branch and one ATM.

It wasn't until ATMs started to be networked in the 1970s that they became a truly convenient way to access cash. All you needed then was a plastic card and a PIN.

So armed, you could go to any of your own bank's ATMs and get the cash you needed to live your daily life. In those days, most people used cash for all retail purchases, so this new convenient access was a transformative innovation.

Of course, ATM innovation has always been uneven.

Take networking. In the U.K., the LINK National Network, which connects 99.9 percent of the country's ATMs, reached that level of universality in the late 1990s.

The network allows any customer of a U.K. issuer to use any U.K. ATM. However, even today, 20 years later, many countries do not have their own national ATM networks and rely on international card schemes for connectivity.

Another example of uneven innovation concerns cash recycling at ATMs.

In Japan — and with no intervention by a Scot! — the first cash recycling ATM was installed in 1982, just 15 years after the installation of the world's very first ATM.

Thirty years later, almost unbelievably, in most European countries there are no cash-recycling ATMs, although some do accept cash deposits in the form of notes.

The delays in introducing cash recycling are hard to fathom, especially in the context of the focus since the 1970s on "green" solutions.

What could be greener than to reduce the number of journeys by fuel-guzzling cash delivery trucks by allowing people to deposit cash in an ATM conveniently located in their community, which then is made available for withdrawal by neighbors in need of it?

The slow introduction of cash recycling ATMs was hard to understand even when bank branches were ubiquitous. But at least then, bank customers — both the general public and businesses — had somewhere they could deposit their cash.

Now the picture is very different. In many countries, branches are closing as banks seek to reduce their costs.

And in nations such as Sweden, even if a branch can be found, it might not actually accept cash deposits. By accident or design, cash is being made less convenient for both individuals and businesses to use.

Some governments are starting to recognize the problem and are seeking to tap the potential of ATMs to fill the gap left by disappearing bank branches.

In India, the government has even given ATMs the same status as bank branches. This is a positive development and could well be the start of a worldwide trend.

The reality is that the technology exists today to allow ATMs to perform 99 percent of the transactions previously carried out at bank branches. Only a few extra steps are needed to enable such ATMs to start appearing in every community, in every country.

Take the U.K. With 50 percent fewer bank branches than were present 25 years ago, the country is in desperate need of ATMs to fill the gap and provide financial services touch points in communities around the country.

Suddenly, though, there is light at the end of the tunnel. The Link ATM network now has a universal cash deposit transaction available for use by members.

All that is needed is for issuers to sign up to permit the transaction and, Hey presto!, ATMs can be installed in every community, and bank customers can deposit cash without having to search for a branch or ATM operated by their own bank.

Such cash deposit ATMs would also logically incorporate recycling facilities, allowing the cash deposited to made available for withdrawal by local individuals and businesses.

And when I refer to "cash" deposits and recycling, I do not just mean banknotes. There are now machines that allow the deposit and recycling of coins, as well. Coins being crucial to the smooth circulation of cash — how else can change be given when notes are used for retail purchases? — such recycling machines will be needed everywhere.

I have coined (forgive the pun) a phrase to describe the new, marvelous, environments where local smart ATMs replace defunct bank branches: community financial services hubs.

These hubs cab be located on retail premises, at gas stations, in leisure centers, in bars — even in churches. In fact, anywhere with the space to accommodate a bank (sorry, another pun) of smart ATMs.

Of course, these hub ATMs need not just provide for deposit, recycling and withdrawal of notes and coins.

Customers might also be able to deposit checks, apply for a mortgage, loan or credit card, get a replacement card, carry out a video conference with a pension consultant and more.

Hub ATMs will be a one-stop shop for everything to do with financial services in the midst of a revitalized local community.

So this is the truly marvelous future for ATMs. Replacing bank branches, at the very heart of every community, providing a focal point for all who need to engage with financial services. This is true financial inclusion.

And remember — no rocket science is required to facilitate the creation of community financial services hubs. The technology — like the truth — is out there. It simply needs to be applied everywhere, in the interests of all.

Roll on the marvelous future!

photo istock