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ATMIA: ATM Future Trends Report 2012

Conference presentation condenses 'ideas, data and nuggets of intelligence' about the direction of the ATM industry.

March 5, 2012 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

What a difference three years makes.

In a closing-day session at the ATMIA US 2012 conference, Tom Harper, president of NetWorld Alliance (parent company of ATM Marketplace), gave attendees a look at how the industry has changed in the past three years — and how it's likely to change in the very near future.

Harper shared findings from the freshly published 140-page report from ATM Marketplace, ATM Future Trends Report 2012. And he said this third edition revealed major changes since 2009. "In only three years since our last report, the top four trends have changed completely," he said. "And never has any single trend stood out like mobile."

Harper presented a snapshot of the top industry concerns then — and now.

In 2009, ATM deployers' concerns included:

Technology to protect PINs – 29 percent
Deployment of more Windows ATMs – 20 percent
Software upgrades – 17 percent
Movement to VPNs – 13 percent
Vendor compliance – 12 percent

By 2012, their preoccupations were:

Mobile – 42 percent
Cash recycling – 14 percent
Government regulations – 9 percent
Lower interchange – 9 percent
Protect PINs – 8 percent

Only PIN protection carried over from ATM Future Trends Report 2009, and its relative importance fell by 21 percent.

Quoting both stats and statements from industry leaders who contributed to the report, Harper offered a 30-minute glimpse through findings that map out the industry's most likely future direction:

On banks and branches …

Harper quoted Debbie Bianucci, CEO of BAI, who commented in the report, "Retail banks face a grim outlook for revenue growth and profitability in the years ahead due to the recent regulatory restrictions on overdraft and debit card fees, sluggish loan growth and continued downward pressure on the net interest margin. Some banks have entered into major expense reduction programs, including reducing their branch footprints."

Harper also cited comments from contributors who said that branches are "critically important" in Europe, while in the U.S., "digital natives would rather use a kiosk than face-to-face."

"The focus of many banks will be to find a way to reduce the number of branches, but to keep the right branches for face-to-face customer interaction," Harper said.

On EMV …

The trends report highlighted two pending difficulties with the implementation of EMV for ATMs in the U.S., Harper said.

"Number one, users will need to be retrained from dipping their card to using the EMV 'latch' card readers; something as simple as that is going to be an issue," he said. Customers were likely to experience rejected transactions and frustration as a result, he said. The second thing, he said, was that unlike magnetic stripe readers, EMV readers require a lot more maintenance on an ongoing basis to ensure continued uptime.

"U.S. financial institutions have issued one million Visa EMV cards as of December 31, 2011," Harper said. "Could this be the year for EMV? Well, I think all we can say is that it's trying."

On NFC and the digital wallet …

Harper presented staggering numbers on the mobile trend:

5.5 billion people worldwide use mobile phones
115 million mobile devices were sold in the third quarter of 2011 alone
22 million mobile users became mobile bankers in 2011
60 percent of mobile bankers fall into the 18–34 demographic
By 2016, mobile remittances are expected to reach $55 billion (up from $12 billion in 2011)

"These are some statistics that the ATM industry needs to understand and deal with on some level," Harper said. "Especially the magnitude." He said that in 2011, mobile device sales beat PCs, laptops and netbooks combined.

Harper quoted a statement from the report by Alan Walsh, vice president of banking for Wincor Nixdorf US, who said, "I am beyond confident that there will be a great demand for NFC upgrades with our customers' machines …"

On U.S. surcharging …

"I remember when we started in this industry 15 years ago," Harper said. "[ATMIA] came about not long after the Visa and MasterCard restrictions were lifted on the surcharge. And the surcharge has been around as an issue ever since."

Harper cited Tom Stevenson, president of Cash Connect, who said in the trend report, "Beyond ADA regulations, the move to limit or eliminate ATM surcharging is perhaps the biggest threat to the ATM industry." Stevenson also said in the report that many consumer advocacy groups continue to list the elimination of ATM surcharges as one of their primary initiatives.

On fraud …

"ATMs are now worth more to criminals for the card data they can be used to obtain than for the cash that resides in them." Harper quoted from Peter Kulik, vice president of Vantiv.

Mobile will make things more difficult, Harper said, because a mobile phone interfaces to ATMs and offer criminals many more entry points than ATMs do on their own. "This could give criminals a greater return for less effort than they're devoting to today's cyber-attacks, so this is an area we need to watch," he said.

On ATM design …

The Future Trends Report indicated that ATMs will eventually adopt a virtualized or "thin client" format. "Kiosks have for years been running in this mode where they don't have an onboard computer," Harper said. "4G will enable ATMs to communicate directly with a monitoring center … It will also enable greater customer service through two-way audio/video right at the ATM."

On cash …

The report predicted a "renaissance" at the retail ATM due to an expanding culture of consumer convenience, Harper said. "It's driven in part by mobile. We have the ultimate convenient device in the palm of our hand all day long."

Harper cited independent research sponsored by Cardtronics that said 82 percent of consumers refused to pay the ATM surcharge. However, the same study found that when push came to shove, 31 percent of this group did pay the surcharge after all.

"Why is this?" Harper said. "Well, when faced with the decision of convenience versus making an extra trip and the time and the gas money requires, of course, convenience wins out over saving a couple of bucks. And this convenience factor will drive more surcharge fee programs of all kinds at financial institutions that want to compete with retail ATMs."

On the big picture …

Harper said the report had found that IADs were reluctant to invest in EMV upgrades for their machines, not even to mention NFC upgrades. But a resurgence in ATM deployments across North America in coming years is sure to be accompanied with mobile features. Harper cautioned that with these changes are coming to the market, "If you're not investing in or at least investigating how to integrate mobile into your business, you need to do it now and do it fast."

Tom Harper is president of NetWorld Alliance, a publisher of online trade journals for the banking, retail, restaurant and church leadership markets. Tom is also a co-founder of ATMIA and is currently serving as president of the association.

For more on this topic, visit our trends/statistics research center.

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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Cash Connect

Cash Connect is the nation's premier and longest standing vault cash and logistics provider to the ATM industry and now allows you to generate growing new revenue streams with Smart Safes, Recyclers and Kiosks.

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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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