The past few years have been ones of tremendous upheaval for financial institutions. Advances in technology, economic turmoil, demographic changes, regulatory uncertainty and changes in the workplace are likely to reshape the financial landscape for years to come.
Financial institutions face a dual challenge when dealing with those challenges. On the one hand, FIs need to control costs wherever possible.
For some institutions, that means shifting some of the functions that would typically be handled at the branch to other, more cost-effective channels. At the same time, FIs need to offer an increasing array of new products and services as a way to attract new customers and retain existing ones.
And in many cases, those tasks are being accomplished at the ATM.
ATMs are just one piece of the puzzle, however. While in years past different facets of a financial institution operated in their own silos, today the ATM functions in partnership with the branch, a website and a smartphone application. And more and more FIs are looking for ways to make those channels work together to deliver a consistent brand message.
"Today when people talk about an ATM, they really don’t want to talk about it in terms of it being a discreet silo, they want to talk about how it plays its part in the enterprise," said Steve Hensley, executive vice president for global sales with Edinburgh, Scotland-based KAL. "It is a channel that delivers cash, but it is also delivers a user interface to my customer that has to be consistent with the other channels."
The latest buzzword
The effort to develop that consistency among the various channels has popularized a new phrase in recent years: multichannel integration. And although the concept seems simple, in fact it can be extremely complex.
"Multichannel integration is one of the things people talk about but it is a little hard to deliver," said KAL CEO Aravinda Korala. "The benefits are not quite as clear as it might seem when you do it on the back of an envelope."
Still, nearly everyone agrees the concept is important.
"Multichannel integration will provide a similar experience across all channels," said Rajesh Vaish, IT facilitator with the State Bank of India. "The bank can develop one product which can be available for every channel rather than develop the same product separately for each channel."
In addition, the customer relationship management functionality that banks possess today offers them tremendous power to deliver a personalized message across a variety of channels.
"To be able to do that you need the right kind of software in the different channels to deliver that common user experience," Hensley said. "And ultimately, it can be all tied together by a CRM system that can deliver the same messages to different channels, to know that the customer acted upon the offer on one channel so don't offer it to him again on another channel."
Drilling down even further, banks are looking to not only deliver a consistent message across channels, but to deliver a personalized experience on specific channels, particularly the ATM.
"We've done numerous workshops with banks specifically to discuss this issue," said Nicole Sturgill, research director in the retail banking and cards practice at Needham, Mass.-based research firm TowerGroup. "I think the No. 1 request I've heard is personalization – letting the customer know that the ATM already understands their preferences."
Such features may be as simple as remembering that a particular customer likes to have his balance displayed, or that he prefers an email receipt to a printed one. Or, the features may be as complex as serving up ads for a home-equity loan for a homeowner or information about student loans to customers with college-age children.
Wells Fargo, which operates more than 12,000 ATMs in the United States, has recently begun offering users of its 191 Wells Fargo- and Wachovia-branded ATMs in San Francisco the option to have transaction receipts sent to their email accounts. The company emphasizes the environmental aspect of the service when marketing it to customers.
Once a customer chooses to have a receipt sent to his email address, the network remembers that preference and offers it for subsequent transactions no matter which ATM the customer visits.
"We wanted to give the customers another choice," Alicia Moore, head of ATM banking at Wells Fargo, told ATMmarketplace.com. "We have always wanted to offer options and help our customers go green, if that’s their choice."
And as banks expand their reach around the globe, they are seeking to carry that personalization capability with them.
"I think one of the goals for us is to work towards an environment where a customer can go country to country and have their profile follow them," said Ken Justice, senior vice president, ATM channel manager with New York-based Citibank.
"When you get on any PC, it doesn't matter if you are at home or at your brother's house, when you go to your Yahoo page or your Google page, it is the same," he said.
"It doesn't matter that you are on someone else's hardware at someone else's house; your experience followed you," he said. "Today, in the ATM world, it doesn't work like that."
New functions driving development
ATM software development is being driven by both a demand for new functions and a competitive need for the fast introduction of new services.
According to this year's survey, 41 percent of respondents chose the ability to add new functionality as a key driver behind their reason for changing ATM software.
"Customer service is our bank's fundamental purpose," said Zhong Cheng with Shenzhen, China-based Zijin Technology, a KAL partner and application software development firm. "Providing better customer service is the most important way to retain customers, and adding new functionalities and providing a better experience is the way to accomplish that."
From the view of the customer, functionalities on the horizon include the dispensing of products ranging from gift cards to concert tickets, and the offering of services such as loan applications or the changing of customer preferences.
From the view of the bank, those functionalities include deposit automation, cash recycling and the ability to segment ATM deployments by region, state, city or even neighborhood, giving the bank the ability to offer targeted messaging based on a variety of criteria.
"All around the world, consumers are responding enthusiastically to self-service technology, and deposit automation is perhaps the most embraced form of self-service that we've seen from consumers," said Michael O'Laughlin, senior vice president of Duluth, Ga.-based NCR Financial Services, a provider of self-service technology.
According to London-based Retail Banking Research, a strategic research and consulting firm, the market for intelligent-deposit ATMs, or envelope-free ATMs, is forecasted to grow two times faster than the installed base of traditional ATMs.
"We clearly see demand for intelligent deposit and optimized cash cycle management," said Uli Nolte, spokesperson for Paderborn, Germany-based ATM manufacturer Wincor Nixdorf. "We also see demand for integration with branch processes and an ongoing shift of further services from tellers to self-service, as well as an integration of ATMs into the marketing and sales processes."
For instance, a group of ATMs in a particular town may offer the option for customers to donate to a local charity. In a college town, the bank might choose to have the ATM interface reflect the school's colors.
"The larger the bank footprint, the more important this is," Sturgill said. "Banks will break out their ATMs by type – onsite, deposit-taking, event-based, shopping malls, et cetera. As we go further, functionality differences will become important. In some locations, remittances might be important and in others, check cashing could be required."