The ATM has been around since I can remember and before, 1965 I believe. I recall some early models with a periscope to ensure no one could see your details! Things have (fortunately!) changed since then and with a changing world we need to change our perceptions, and may require a little guidance in navigating this new and potentially tumultuous landscape.
ATMs have grown in functionality however few banks have embraced the technology to the extreme with functionality remaining at a ‘cash and dash’ level in central Europe.
Why have the banks either refused to or been cautious to launch new technology? Is it because the users are worried about the functionality and how to use it? I doubt that, we only have to look at how laptops and smartphones have grasped mankind to see humans embracing technology at an accelerated rate. We now see AI being built into home appliances as “Alexa’ becomes the new command to order carrots, play the radio or turn the lights down.
We believe the banks have been slow to embrace new technology because of the domino effect within their IT departments. Whereas Independent ATM Deployers have deployed ATMs at an accelerated rate because they are lower risk and only acquirers – in that they purely provide cash to the public as an authorised transaction.
Banks have the complex environment where they are the acquirer and the issuer and so any ATMs need to be married to the issuing services and so fully aligned with the core bank systems, licencing and full regulatory approvals.
What would happen if we divorced the acquiring and issuing, amicably of course, where we have the acquiring environment operated for the user and then 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 that open or closed will become the norm with banking solutions, the API will integrate, link and marry together systems to the benefit of the bank and the user.
We encourage banks to take a new view on their systems. The need is not to purchase new systems which must integrate through a massive project where the bank must not only buy the system but also must pay a huge integration fee. Banks can now build systems like Lego, acquiring the blocks they require as long as the blocks use the same physical connection as does Lego and in this new technology world this is known as APIs.
Let us come back to our subject of ATMs, our world is changing as we speak. Challenger banks and online banks are coming to the fore because they do not have the handcuffs, shackles and roadblocks of the traditional banks.
We have no doubt the traditional banks wish to embrace the new ATM technology for several reasons:
- Automated bank branch services fully driving towards an unmanned branch
- Bringing new functionality to the user such as tokenisation, click & collect and others
- Drive cardless transactions
- Introduce recycling with deposits
The list can go on and on.
This is now possible as technology allows us to connect the bricks easily.
Numerous organisations are willing to work with the banks, and indeed take some of the risk with the new ventures.
After all, if the legacy banks don’t change then they will evaporate in the overheated banking sector, we must face facts the legacy banks are no longer trusted and people are willing to take a risk with the new challenger banks. The legacy banks need to embrace the opportunities, partner with the new providers and break the traditional service mould.
This all sounds risky and therefore in the opposite direction to the bank train of thought. However, solutions exist which can challenge the norm, break the mould and allow banks to bring new services to the user, services the user is demanding.
ATMs can offer one of two functions:
1. Cash & Dash – where we support the basic need for cash; OR
2. Stop & Shop – where the traditional bank branch services can be automated.
To deliver these models the banks do not need to be the first to market but merely embrace technology already deployed in certain pockets of the globe – be that recycling in Germany or Tokenisation seen in Austria or full automated branch services as seen in Azerbaijan.
The key point is the technology is proven, the concepts work. And we are using our experience of this tumultuous landscape to bring this to market and add value to the user experience and customer journey to the benefit of traditional banks and new challenger banks.
Written by: Andrew Martin, CEO, Retail-BCG