Article
6 questions about the future of the ATM
A panel discussion asks whether the ATM will be just a 'must have' or a sales and services accelerator in years to come.
January 30, 2014 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications
A closing-day presentation last week at Wincor World 2014 addressed the ATM industry's biggest question: What lies ahead for the ATM? Moderator Flora Hamilton, executive director of the ATM Industry Association in Europe, set the stage for the discussion with her opening remarks.
Should we be regarding the ATM as a must have? By that, I mean as a necessity in achieving efficiencies in the provision of cash services to consumers. Or, should we be looking at the ATM channel as a means to accelerate excellence in the provision of customer services and a means to grow sales? Or — is the ATM's primary future role there to achieve cost efficiencies or as a means to generate brand differentiation and loyalty and deliver organic growth amongst our customers?
To get to the answer of this larger question, Hamilton put a half-dozen related questions to four panelists from around the financial services world:
- Jose Palacios, director of branch channel and automation at BBVA (Spain)
- John Staley, CFO at Equity Bank (Kenya)
- Stephen Gaskin, VP of self-service customer experience at Scotia Bank (Canada)
- Reinhard Rabenstein, SVP and CTO at Wincor Nixdorf (Germany)
Here are selected excerpts from the discussion:
Are you experiencing ATMs moving beyond cash provision?
SG: We don’t really feel there is any competitive differentiation you can achieve from being the best vendor of $20 bills. So it really is important for our ABMs to be multifunction.
At Scotia Bank we have 4,000 ATMs — two-thirds are multifunction, two-thirds of the transactions on those are cash. One out of 10 are bill pays or transfers. We offer a lot of other services — passbook updates and so on — so we have certainly taken a multifunction device approach.
We are starting to use ABMs to support our brands and distribution. We are associated with the NHL and have big sponsorships and signs in rinks around the country. This gives guests a consistent customer experience.
What are the key drivers for developing your self-service strategies?
JS: We are focused on financial inclusion; we are going down-market. We do not believe we can provide financial services to the poor as long as they are done in cash. So my enemy is cash. I have to get cash out of the system in order to be able to provide financial services to the poor.
Let me give you some numbers ... We are digitizing transactions in Kenya at $30 up. Poor people transact from $5 down. Where most of you are coming from, the transactions are bigger than $30. You can do those through an ATM; it is cost-effective. I cannot do those transactions. ...
Our strategy is for self-service, because absolutely we have to go self-service. The tool that most Kenyans will have is a mobile phone. 90 percent of Internet connectivity in Kenya is through the mobile phone. People are not going through the channels you think. Our self-service channel is the mobile phone.
Do you regard the ATM as a customer touch-point to cross-sell services?
RR: The ATM and self-service devices in principle have a major advantage because the ATM is the only electronic channel where you have physical access [between the customer and bank staff]. What does this mean? If [you] are moving toward a multichannel integration, then you can provide messages to customers.
[However] the personalized messages depend on how well you are prepared from the CRM point of view. What about the quality of the data from the back end? We have been talking about direct marketing for years, and the problem all the time is to get the right data deployed to the customer. ...
It has to be as personalized as possible. And the feedback the customer has to give at the ATM can only be yes or no, because if they start to talk then they extend the time of the ATM transaction. And nobody has any interest to extend the transaction time of the ATM.
How important is customer behavioral culture in defining the role of the ATM in your retail banking operations?
JS: Obviously in our environment, customer behavior is incredibly important. It's all about accessibility. And when you're dealing with a poor person, generally they're a farmer or they're running a small business. It costs them money to leave that point and go somewhere to do a financial transaction.
When you have a look at going to a branch, we estimate it costs roughly about 500 shillings, which is about $6 to go to the touch point to do a transaction. When they withdraw cash or deposit cash at a branch it costs them nothing — it's the actual cost of getting to the touch point that's the problem. ...
So we have a tiered structure: High-value transactions we will do at the branch; medium-value transactions we do at the ATM; low-value transactions, we do at our banking agents. So we are trying to respond to what our customers want and be able to provide them a cost-effective channel.
The branch is our most expensive channel at about $1; the ATM is the next most expensive channel at about 30 U.S. cents to do a transaction in Kenya — our cash-handling is quite expensive due to the nature of our infrastructure; and then to do a transaction at an agent is 10 shillings, which is 10 U.S. cents.
What other trends in self-service banking can you share?
RR: I think the interoperability between mobile and ATM plays in the future a big role. Everybody has a mobile phone in their pocket. It could be a good idea — and we are discussing it with some of our customers — to put the ATM menu on the smartphone; create the transaction on that smartphone and just tap and go at the cashpoint, which is enabled for this technology.
Two other things I can see: One is the new graphical user interfaces for customers. So we have to take the mobile as an example of how we can make the user experience better using ATMs.
The other part was discussed some four or five years ago; it's coming back now like a tsunami. The question is what could be the platform in the future in regard to the operating system of the ATM. Of course this is not from the business perspective but from the technical point of view.
A lot of customers are using the smart client; they are taking out the complexity of the software of fat client, and putting this at a central point. We call this a net-centric paradigm. And if you have done this, why do we need the PC and why do we need Microsoft as the driver of the ATM.
What is a summary prediction of future trends?
FH: We get the message from Jose at BBVA that the ATM is indeed a major and a very important touch point and that it is absolutely crucial that they can give a customized service to their customers via the ATM.
We learned from Stephen at Scotia Bank the importance of the ABM, you call it in Canada, in terms of integrating new customers and it really is the future for delivering their customer services.
John said that for him, the touchpoint for customers is the mobile. And obviously we've got a very different environment, very different structure, a very different set of objectives ... But we also got to understand where the ATM plays a vital role in the strategy of Equity bank in that very different market.
And from Reinhard, I think it what was very interesting that I picked up in your final point was the future of interoperability between the ATM and the mobile.
Read more about trends.
photo: marc crowther
About Suzanne Cluckey
Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally.
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ATM Industry Association (ATMIA)
The ATM Industry Association, founded in 1997, is a global non-profit trade association with over 10,500 members in 65 countries. The membership base covers the full range of this worldwide industry comprising over 2.2 million installed ATMs.
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