A couple of stories posted to this site of late have caught my attention. And after a fashion, they surprised me. Not because of the technology they describe, but because of the direction in which they seem to suggest we're headed.
"Which comes first, ATM or branch?" described how powerhouse financial institutions TD Bank and JPMorgan Chase were "taking steps to generate a major bank presence. Instead of using bricks and mortar, they're employing weatherized, hardened steel."
Yes, the banks are building a presence that involves no real commitment to human presence, teller windows, or anything else that would remotely resemble these banks' branches, yet despite this, the branding continues to look the same.
It was almost twenty years ago when we first heard the pioneers of the Internet say that the world of commerce would adapt quickly to the electronic world and that bricks and mortar presence was for legacy mom-and-pop stores. But for anyone cruising America's highways, it's hard to miss the mega-warehouse stores that companies like Walmart maintain. Even the well-known Internet-based tire distributor, TireRack, maintains a number of bricks and mortar distribution centers. As the acceptance of electronic commerce has climbed it seems that the supporting physical infrastructure has climbed right along with it.
Banks building networks of ATMs rather than investing in branch offices might be just a short-term fix. Surely customers will to want to be able to see someone. Or will they? I am of the generation that enjoys human contact and the opportunity for a brief chat, but from all I observe about younger generations, it seems that they are more at ease if you take the human factor out of the equation. To paraphrase the Sun marketing message of more than a decade ago, "the network is the computer." For this younger generation today, the ATM is the bank!
"Among developing countries where governments are initiating payments to those less fortunate, there is an increasing reliance on biometrics and on networks of ATMs as distribution vehicles," Opsol CEO Yash Kapadia told me afterf he returned from a trip to South America. "For communities being served in this manner, getting cash to where it is needed without any middleman is a boon for all those in the community and for them, their only reference point for a bank is the ATM."
The second story to catch my eye said that MasterCard was introducing a new generation of cards. "This coming January, MasterCard Worldwide will make its largest deployment of its Display Card, in Singapore. The card looks and acts like a conventional bankcard, but it also has an LCD display and keypad that allow users to access account information and make more secure financial transactions."
Does this now mean we will be interacting with our ATM card in much the same way we have always interacted with branch tellers: as we make a deposit or withdrawal, we can inquire about our financial position in the same way we would in a face-to-face situation?
The presence of staff scattered throughout myriad branch offices has always seemed to be a less than optimum way for any FI to interact with banking customers – are we now seeing the flip-side of the same coin? If the ATM is the bank, then is the lowly ATM card destined to become our teller?
In more mature markets I am certain any such transition will only happen over an extended period of time, but in emerging markets, where any way to take out cost will prove beneficial, such transitions may happen much faster than we might expect. Look for some serious software development to take place when it comes to monitoring all of this and making sure security is up to snuff.
Clearly, distributing display cards would be a problem with Biometric support proving to be a much cheaper alternative. But for markets that are more mature, who knows? Perhaps we will not see display cards per se, but rather, alternatives integrated into our jewelry or clothing … the comic strip detective Dick Tracy with his watch-phone will have nothing on us, should this materialize.
What I am not prepared to rule out at this time is just how creative banks might become as they compete for greater market share. Not everything they roll out will necessarily develop instantaneous traction, but in time, we will witness a gradual decline in traditional banking infrastructure. There's just no sense in having as many branches open for business as we see today — I have three Chase branch offices within a 15 minute drive of my suburban home and that's a model that will be hard to sustain.
We will continue to rely on cash and we will continue to depend on ATMs. The Display Cards? Well perhaps not to everyone's taste, but likely to morph in time into something a little more useful. For so many years any reference to innovative banks may have been viewed as nothing more than another example of tautology, but from what I have been reading of late, I am no longer of that opinion. The ATM is the bank? Well, why not!
Richard Buckle is the founder and CEO of Pyalla Technologies LLC. He has enjoyed a long association with the IT industry as a user, vendor, and more recently, as an industry commentator.