Article

Five ways to innovate at the ATM

Channel integration and offering new services are topping the list of priorities for IADs.  

July 14, 2011

The financial crisis has brought about change for more or less every aspect of the retail banking landscape. The ATM channel is no exception, and it has come under particular scrutiny from those focusing on new channels such as online and mobile.

However, ATMs are still one of the most used touch points between a bank and its customers; the number of banknotes in the Eurozone is growing by about nine percent per year and cash, largely obtained from ATMs, still accounts for around 78 percent of retail payments in Europe.

According AITE Group, even if cash usage was to decline by 17 percent every five years, the use of cash still wouldn’t fall below $1 billion before the year 2205.  

The question then becomes in what ways can the ATM compete against the likes of mobile and online banking.

A recent survey of ATM industry professionals conducted by ATM software vendor Level Four revealed that "channel integration" and "offering new services" topped the list of priorities for ATM deployers in the next twelve months. 

Level Four CEO Ian Kerr suggests these five opportunities to innovate at the ATM:

Integrate the ATM with mobile

Rather than seeing the ATM as competing with other channels such as mobile and online, forward-thinking banks now view the channel as complementary.

"Take Kenya's successful mobile phone payments service, M-Pesa," Kerr said. "M-Pesa has included a cash withdrawal at ATM option for some time now, and in March of this year, First National Bank of South Africa also made an announcement about an ATM/mobile link up. It is using mobile phones and SMS to provide temporary PIN codes for customers to make ATM cash withdrawals without the use of a bank card."

Spain’s largest savings bank, La Caixa, has also provided an example of moving toward channel integration. The Barcelona-based financial institution has installed contactless ATMs in three locations. The next step is for that card to be built into a smart phone and for customers to swipe their phone rather than their card.

"Clearly the reliability of such systems needs to be checked thoroughly and ATMs would undergo a thorough round of tests before such technology was rolled out. But because of ever-changing timescales of projects, forward-thinking banks are now moving to automated testing as it allows systems to be tested as they are developed, rather than having to wait for the whole system to be in place. This means a project can run in a more fluid manner as the testing of each component isn’t critically interlinked," Kerr said.   

Tailor the ATM offering to meet the needs of the individual customer

"One of the keys to maximizing the revenue of the ATM channel is getting customers to do more while they are at the device. Critical to this is the ability to customize the ATM to match with the preferences and personal characteristics of each customer," Kerr said.

The look and feel of the ATM can be aligned with a customer’s online banking screen preferences and tailored marketing based on propensity can be offered in order to maximize the chance of cross- and up-selling.

Increase the range of services offered

Offering new services at the ATM is a clear way of boosting revenue and banks have explored this area in a number of ways. Mobile phone top up is a service that has been well received in the UK market, and more recently, the UK government suggested that banks should consider enabling charitable donations through the ATM.

However, thought must be given to which ATMs are most suitable for which services.

For example, offering a full service ATM in a busy shopping area would not be suitable. Not only would the services probably not be fully utilized, but the majority who are just looking for quick cash withdrawal may be held up by those needing to spend considerable time. 

"The location has to be considered carefully, but in the right location, services such as dynamic currency conversion, lottery and event ticket dispensing and bill payment can all bring considerable customer benefit. Banks can also profit from the introduction of one-to-one marketing. Customers may soon be able to sign up for a loan or other bank products through the channel as well," Kerr said.

Increase security

Banks must keep up to date with the latest security, not only to protect the physical ATM assets but also to prevent reputation damage.

"The issue of security in payments and banking has grown considerably in the minds of consumers over the past few years, and the ATM channel is no exception. Fingerprint technology and finger vein technology is already being trialed and, as has been the case with online banking security, I think banks have a real opportunity with the ATM channel for security to be a differentiator between themselves and the competition," Kerr said.

Improve accessibility

Increasing importance is being placed on providing accessibility to those with disabilities. ATMs with audio guidance capabilities are now available, for example, for the blind. This is now a regulatory issue in many countries with U.S. banks needing to ensure compliance with ADA (Americans with Disabilities Act) legislation and guidelines. 

"The U.S. Department of Justice issued its final ruling on ADA earlier this month, so U.S. ATM owners now have until March 15, 2012, to make the necessary updates that will allow disabled people greater access. From a testing point of view, it's the voice guidance that's the most challenging aspect for banks. It's a laborious manual process and therefore banks often don't put as much focus on it as perhaps they should," Kerr said.