[Editor’s Note: A condensed version of this post was published
by ATM Marketplace June 2, 2017.]
A long time ago, 50 years to be exact, a bank installed the first-ever ATM. For the better part of the next quarter century, when a person used an ATM, it was operated by a financial institution. Eventually, times changed and independent deployers joined banks as having the ability to own and operate ATMs. The so-called “non-bank” ATM was born, convenient cash access expanded exponentially, and ATMIA (the ATM Industry Association) was established to represent what quickly evolved into a global industry – deploying ATMs.
With a membership representative of the entire ATM industry,
it is most appropriate for ATMIA to lead the global celebration of the 50th anniversary of the ATM. And yet, despite the iconic global status of the ATM today, it wasn’t always a foregone conclusion there would be a 50th anniversary for the ATM industry to celebrate.
Its demise was predicted 10 years after its creation, when its “path to mainstream acceptance…was not a smooth one,” a February
2017 ATMIA article stated. In fact, in the United States, executives of one of the first major banks to install an ATM were said to be reluctant to fund placement throughout their branches – skeptical of whether consumers would trust unattended machines to properly dispense money. With market forces of supply and demand in question, the ATM’s future seemed very much unsettled in those early days.
ATMs in the U.S.: A Series of Fortunate Events
Without the occurrence of a series of events in the U.S., which is Cardtronics’ market of origin, the early concerns about the ATM’s viability would have led to the end of the device instead of to the valued position it holds today – that of complementing the integration of the various channels of financial services delivery: branch, mobile, online. Most of these events occurred in the late 1980s-late 1990s – and included:
- U.S. Supreme Court ruling that resulted in development of interstate electronic-funds-transfer (EFT) networks, as well as shared ATM networks
- Successful legal challenges that led major ATM networks to lift bans against surcharge fees, allowing for more price and service differentiation within the industry
- Consumer dissatisfaction and elected official criticism spurs development of independent surcharge-free networks
Unshackling the ATM
Although they were viewed by some in the U.S. banking world as modern-day carpetbaggers, ATM manufacturers, independent ATM deployers, and maintenance vendors took advantage of these events to establish a new business model. For example, while simultaneously serving the ATM equipment and maintenance needs of banks and credit unions, manufacturers and resellers started working directly with retailers who had already begun to see the value of in-store ATMs. Soon consumers were gaining more convenient access to cash, thanks to independent ATM deployers.
Hardly a U.S.-specific phenomenon, consumers in many parts of the world have embraced the ATM. In the UK, Europe, and elsewhere, ATMs, or cash machines as they are commonly called, have become a part of everyday life. Regulatory issues have been slightly different depending on the country, consumer adoption and usage levels vary based on nation, and technological advances have resulted in cash machines with different capabilities in different places. But similar to the US experience, because cash continues to be a heavily used payment instrument, the IAD is emerging around the world as a strategic partner to FIs and other card issuers – only in slightly different ways.
For example, in such regions as Africa, IADs are helping FIs, card issuers and finance ministries bring the unbanked and underbanked into the fold of citizens who will benefit from the region’s rapidly growing economy.
In the UK, the ATM is being used to ensure access to basic
banking services in local communities left without a bank branch. For example, in February 2017 Cardtronics UK
worked with a local retailer and county MP to install an outdoor, 24/7 ATM in Blaenau Ffestiniog – restoring this historic small Welsh town with basic banking services after approximately six months without them. This followed providing a similar solution for the town of Glastonbury,
which was left without a bank branch or accessible ATM. Both towns are tourism-dependent, making
convenient ATMs important. This
situation is contributing to why Cardtronics is introducing in the UK a new
service, OnHub, which consists of automated transactions centers – branded Bankzone – that will be available for extended hours during the day and host self-service devices capable of meeting virtually all banking customers’ needs.
The View Forward
Maintaining consumers’ and businesses’ access to their funds, whether they be in a bank account or on a pre-paid card, still drives the IAD today. But the way in which we are pursuing this mission looks a little different than it did 50 – or even 20 years ago when ATMIA was formed.
The experience independent ATM deployers have gained in ensuring access to basic banking services has given IADs expertise unrivaled by most of today’s financial institutions. FIs are shifting their strategic focus back to their core business. The IAD is now a partner in that shift – taking on the role of an advisor to the FI on reducing capital costs, retaining customers through broader ATM networks, and delivering a better ATM user experience.
Those strategic partnerships range from independent surcharge-free networks that help regional banks and credit unions retain customers dispersed throughout the country, to the complete outsourcing of all ATM operations - on-site and off-site - to an IAD.
ATM: The Picture of Vitality
To paraphrase a statement in the previously mentioned ATMIA news
post, “After starting out as a one-trick pony, the ATM (and the IAD) continue to evolve into the Swiss Army Knife of financial services devices.”
But how can this evolution of the ATM occur in a world where many predict the demise of cash – and subsequently – the ATM itself?
We at Cardtronics believe those predictions to be wrong for a number of reasons. First, ATM deployments are increasing worldwide, with three million operating today. The technologies that are said to make the ATM extinct, such as phone payment apps, are now being embraced by the industry as a means for consumers to withdraw cash from an ATM. And most importantly from an underlying strength perspective, cash continues to be one of the top three payment methods around the world.
Consumers are still going to expect access to that cash around the clock, and across the globe. Banks know it. Independent ATM deployers know it. Increasingly, our industries will collaborate to ensure those consumers have cash access where and when they want it.
Chief Marketing Officer