The challenge is to find practical pathways for new ATM capabilities that align with the more efficient, more integrated retail banking model of the future.
December 1, 2015
Tony Ipsarides, Product Management Strategist — Card Services, Fiserv Inc.
ATM budgets are stressed.
Regulatory compliance mandates, operating system upgrades and looming deadlines for EMV have fueled reluctant investments.
At the same time, exciting innovations in ATM technology offer new promise to help financial institutions reduce operating costs and grow revenue. The challenge lies in finding practical pathways for deploying new ATM capabilities that are aligned with the more efficient, more integrated retail banking model of the future.
In recent years, financial institutions have been stuck in a costly catch-up mode with regard to their ATM technology.
The Americans with Disabilities Act Standards for Accessible Design, published in 2010, required that all ATMs in the U.S. meet voice guidance, height, reach, input, keypad, function key, display screen and Braille instruction requirements by 2011.
Microsoft’s decision to end support for the Windows XP operating system has compelled ATM owners to upgrade operating systems.
And if these deadlines weren’t enough of a challenge, the MasterCard and VISA requirements for EMV card support at the ATM will come due in 2016 and 2017, respectively.
According to the ATM Industry Association’s 2014 Industry Overview, the industry has spent an estimated $5.5 billion in the past decade and will spend several billion dollars more in operational costs just to keep pace with needed technology updates.
Meanwhile, the rise of mobile and online banking and changing consumer expectations have set the stage for a new generation of self-service banking solutions. Innovative ATM concepts, some being field-tested by early adopters, promise to elevate the consumer experience while helping financial institutions attain their goals for cost reduction and revenue growth.
This presents banks and credit unions with a pressing challenge — investing in new ATM functionality at a time when budgets are already stretched thin. Financial institutions are faced with devising a practical road map to deploy new ATM capabilities at a pace and price point that makes sense.
Consumer acceptance of online and mobile banking is changing the role of the ATM within the new omnichannel experience. Today’s consumers want to interact with all devices, including ATMs, in the same way they interact with their smartphones. They want integrated technology tools that share information and offer a consistent user experience. These changing expectations, along with banks’ need to control operational costs, are driving an array of enhanced ATM functionality.
According to Mercator Advisory Group research, consumers say having more ATMs in their local area, especially those with enhanced functionality, impacts their choice of a financial institution. When asked which new ATM transactions they would like, consumers ask for reward program participation, money transfers, household bill payments and the ability to reload or purchase prepaid cards.
These data-driven ATMs will enable delivery of personalized marketing offers, generating new revenue and deepening relationships. However, timing is critical to the customer experience. Targeted marketing messages at the ATM shouldn’t interrupt a transaction or otherwise delay busy consumers. Promotions must be relevant to an individual’s needs and prior interactions with the financial institution. For example, if a consumer has declined an offer on his or her smartphone, that offer should not be re-presented at an ATM.
ATM industry leaders cited the integration of ATMs with mobile phone transactions, e-receipts, contactless card capabilities and one-to-one marketing campaigns as important future capabilities, according to a 2013 ATM Software Trends and Analysis by ATM Marketplace.
Mobile devices have the potential to reduce ATM lines and improve convenience by pre-staging a variety of transactions.
High resolution smartphone cameras now enable mobile-to-ATM integration, making transactions possible without the use of a card.
Near Field Communications and tokenization, recently given a boost in adoption by Apple Pay, is a contactless method designed to use mobile devices instead of physical cards.
Tokenization removes the actual card number and replaces it with a randomly generated number. That number, or token, can be configured to expire after each purchase.
These solutions aim to improve service by speeding up transactions and lowering the risk of fraud.
For an increasing number of consumers, the need for in-person assistance is unnecessary for everyday banking transactions. And the more services that can be handled by an ATM or mobile device, the more streamlined and cost effective banks can become.
However, consumers still want the option of speaking with a bank representative when needed. These dynamics are driving the development of virtual teller ATMs (or interactive video machines), which use a video camera to connect consumers to a live representative at a distant location. With the ability to control the ATM remotely, virtual tellers can help consumers through their transactions on request.
Virtual teller ATMs are bringing a face-to-face, personalized banking experience to consumers wherever they live and work, 24 hours a day, 7 days a week — minus the cost of a brick-and-mortar branch. In addition, they enable more complex transactions, such as loan applications, to be handled via an ATM — a win for both banks and consumers.
ATM innovations are also helping create “branches of the future” that are more efficient, convenient and profitable. The neighborhood branch strategy, in use by a credit union in Texas, locates virtual teller ATMs in residential areas as a complement to their traditional branches. Eighteen remote tellers support the neighborhood branches, which offer extended hours and face-to-face teller service.
Appealing to consumers’ on-the-go lifestyles, especially in high population areas where real estate prices are high, hybrid branches are offering consumers a combination of self-service options and traditional branch services. Hybrid branches offer a room equipped with kiosks and ATMs for handling routine self-service transactions from getting cash to obtaining a new debit card. Different kiosks may be designed for different transactions, so an individual making a cash withdrawal need not wait while another completes a loan application.
Bank employees are on hand at hybrid branches to provide assistance where required, similar to employees who monitor self-service registers in grocery stores. Traditional bank offices, where customers can meet with a loan officer or financial adviser, may be located onsite as well.
There was a time when consumers understood self- service, whether at the gas pump or at the ATM, required a trade-off between personal service and convenience. Today’s self-service consumers want it all, and with recent advances in ATM technology, financial institutions will deliver. Through enhanced, multifunction ATMs, financial institutions will offer a wide range of services traditionally carried out in branches at a fraction of the cost.
Going forward, omnichannel will be the foundation on which the business of banking will prosper – and ATMs are just one component of the omnichannel experience. Delivering seamlessly integrated services across multiple channels and devices, however, requires a uniquely qualified technology provider. And each financial institution requires a unique solution based on market dynamics, demographics and other factors. Meaningful value and cost savings can only be derived from a cohesive and consistent personal experience.
![]() | Tony Ipsarides is a Fiserv product management strategist responsible for life cycle management of ATM acquiring products and other services related to EFT channel delivery. He has worked for more than 25 years in the financial services IT industry, focusing on product development as well as project and product management. |
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