Thirty years ago, who would have ever guessed that today ATMs (Automated Teller Machines) would be ranked more important than e-mail and ranked 4th to the personal computer 1?

The ATM has evolved over the years to become more than just a cash-dispensing machine. Now it can be a one-stop shop for cell-phone top-ups, stock quotes, and cross selling other products. In addition to changes in the ATM, the industry has evolved from mostly small, regional ISOs (Independent Service Organizations) to large, worldwide ATM solutions companies. For the past several years, many have thought that the ATM industry had reached its maturity; perhaps, it is just about to turn another corner.

Feel the Surge

The ATM industry is about to experience another surge of activity, similar to the lift of the surcharge ban in 1996. Due to economic hard times and slow industry growth, businesses within the industry have changed and diversified. In the past two years, major consolidation has taken place and surviving ATM companies have been looking for new ways to conduct business and stay profitable. Some companies will continue as ISOs and others will begin to sell new types of products and services. Some of these new ATM companies will look to be international players and may shift their focus from ISO-type customers to larger players, such as retail chains and financial institutions. Furthermore, the increased complexity and ownership issues surrounding ATMs and ATM management, including: the Check Truncation Act, Triple DES (Data Encryption Standard) and ADA (American Disabilities Act) requirements, may provide new opportunities for ATM companies to offer managed services to financial institutions.

In addition to changes in the ATM industry, the future will bring even more changes at the ATM. With the financial institution industry becoming more competitive, there will be a great increase in the number of branded ATMs, whether the financial institution owns the ATMs or not (more often the latter). A great number of basic cash dispensing ATMs will transform into CRM (Customer Relationship Management) devices, offering customized services based on insight into ATM user behavior. These CRM capabilities will help drive revenue by enabling up-sell of both financial products (e.g., loans, investments) and non-financial offerings (e.g., coupons, gift certificates). Even the un-banked may increase their use of the ATM through cell phone top-ups, ring tones and other prepaid services. All at once, the line will become blurred between the ATM and the financial Kiosk. In addition to new marketing aspects, ATMs will have more functionality, such as check imaging capabilities. In response to market demands caused by changes in regulations and the need to increase customer service, ATM manufacturers will need to develop ATMs with more and different capabilities in order to stay competitive.

The industry has quickly shifted from simple to complex and will continue to become more focused on the ATM user. Although most would have said that the industry has reached its maturity, others are now proving that this is just the beginning of a whole new generation of ATM products and services.

1 eFunds, the Harris Poll, a Harris Interactive� Survey, May 2003.