Article

Tackling the generational divide at the ATM

Diebold's Keith Lewis says regardless of the transaction, ATMs must meet the needs of all ages and provide convenience every generation appreciates.

January 4, 2010 by Tracy Kitten — Editor, AMC

With 1.6 million bank ATMs stationed around the globe, there is no question society is addicted to the speed and accuracy these machines bring to the banking experience. The American Bankers Association reports that half of the U.S. adult population uses ATMs every month, with 40 percent performing self-service banking 10 or more times each month. These statistics reveal an opportunity to better understand customer preferences and more effectively communicate with them via the ATM channel.

A strategic approach to optimizing the ATM channel enables financial institutions to connect with customers — of all generations — on a more personal level. Innovative ATM software is helping FIs easily accommodate customer preferences and deliver dynamic marketing campaigns that seamlessly integrate into the FIs' service-oriented architecture to deliver timely, consistent and accurate service — attributes that speak volumes to any generation. By enhancing the user experience, FIs have a greater opportunity to increase customer retention, cross-selling and cost savings. But the roadmap for success doesn't lie in just identifying similarities within each generation; it comes from employing technology to better understand and embrace generational differences with pinpoint accuracy.

The opportunity

In an era when customers — and money — are on the move, FIs need to constantly focus on service offerings to help build and retain customers. As new generations move into and out of the workforce, it's become even more evident that the technology that once divided generations will now bring them together as FIs adopt a more comprehensive approach to servicing customer needs. With self-service terminals becoming common place in everyday life, such as airport check-ins and grocery store check-outs, ATMs are proving to be a powerful tool for FIs to attract, retain and empower customers.

ATMs serve as an extension of staff and in-branch experiences via a platform that promotes the security and personalization required to gain and sustain customers across all generations. By utilizing ATMs with Windows-based functionality, FIs can develop one-to-one marketing messages at the ATM based on specific market segments, physical ATM locations and customers' bank identification numbers to deliver personalized banking services that drive traffic to and from the ATM itself. Both the message and content are dynamic, giving FIs the flexibility to control and change messages to keep information relevant. Marketing through the ATM has proven to be wildly successful with around a 10-percent conversation rate, as compared to traditional direct mail campaigns with only a 1 percent to 2 percent response.

Dissecting the demographics

Generation Y (ages 18 to 25): According to a recent Microsoft survey, banks seeking to capture the estimated 80 million Gen Y customers should strongly consider stepping up their efforts to reach them via higher-tech services including instant messaging and text messaging. Gen Y grew up with computers and the Internet, so they appreciate banking products and services that are fast and electronically driven with interactive content, whether accessed in-branch, at the ATM or on a mobile device.

New ATM technology allows FIs to make swift and customized changes to graphics, images and copy to deliver dynamic marketing messages that resonate with specific users. FIs can then use the data gathered during the transaction to determine customer preferences that will help speed up future transactions, as well as deliver relevant marketing messages to promote cross-selling opportunities. For example, banks can advertise personalized lending rates across all banking channels to allow these customers to respond to a loan offer when and where it's convenient for them.

Network speeds over the past decade have also conditioned younger consumers to expect instant access to information. ATMs are able to keep pace with this demand through proven, open architecture that allows FIs to implement customized applications that run across the entire ATM network, giving customers speedy and consistent user experiences. Advanced functionality such as check and cash deposit automation, mobile device integration and real-time transactions, further enhance an ATM's appeal to younger bank users.

If FIs want to establish common ground with these new customers, they need to provide channels that allow them to control their banking experience when it's convenient for them and how it's convenient for them. Advancing online and mobile interactions to drive traffic to the ATM satisfies the needs of younger customers to use mobile devices to perform basic transactions while also allowing them to process cash withdrawals, generate electronic checks and transmit wireless payments at the ATM.

Compounding personal requirements for the on-demand, anywhere, anytime mentality of this generation is their commitment to eco-friendly transactions. ATMs that feature advanced technology, such as envelope-free deposits and personal preferences for no ATM receipts, help support a movement toward paperless transactions. Through deposit automation technology, specifically, ATMs can capture and transmit the check image, eliminating the transportation costs paper checks require, while expanding the geographic possibilities for FIs to accept envelope-free deposits.

Using the ATM as a catalyst to establish formative building blocks such as access, personalization and customized offers will help develop the members of Gen Y into long-term customers.

Generation X (ages 26 to 42): Anderson Analytics places Generation X in the No. 2 slot (right after Baby Boomers) as the most important marketing demographic. Since most Gen Xers are earning full salaries, they have income to spend, invest and save. According to Javelin Strategy and Research, Gen X's total income was $3.67 trillion in 2007—and that figure is projected to grow to $4.2 trillion in 2017.

Gen X (and Y) customers desire a need for speed and access as it applies to their information delivery. They're also seeking a more compelling user experience, such as digital interactivity available through smart phones. These devices provide both cellular and WiFi access to information through wider displays with browsing capabilities and sophisticated applications. Advanced-function ATMs offer engaging graphical interfaces to strengthen the connection between mobile and ATM channels while capturing user preferences to offer timely user-centric experiences.

Gen X has come to expect a more customized approach to doing business. ATMs that are able to report back to the FI a customer's fast cash and other personal preference data will arm the FI with important details to take the banking experience to the next level. By integrating ATM data with the CRM, FIs can offer unique marketing campaigns and personalized announcements outside of the branch any time of the day or night. Since this generation stands to inherit wealth from their Baby Boomer parents, providing an elevated user experience at the ATM that is supported throughout all other banking channels helps strengthen customer ties and presents new opportunities for wealth management services.

To further build relationships with Gen Xers, FIs should look to offer innovations that help save them time, including in-branch Internet access or Wi-Fi and customization of information to speed up ATM, online and mobile transactions. Gen X is unique in that they appreciate traditional and nontraditional aspects of banking, which is why ATMs are a comfortable option for them to adopt and a logical channel for FIs to optimize. Today, FIs can enhance ATMs to not only conduct efficient banking transactions, but also to provide extended services to customers such as recharging mobile phones, prepaid connections, paying utility bills and even buying stamps to support on-the-go lifestyles.

Thanks, in part, to more user-friendly ATMs and the growth of online and mobile banking, FIs are able to provide more timely access to banking services delivered via a consistent user experience at all major bank touchpoints which further builds value for FI services among Gen Xers.

Baby Boomers (ages 43 and older): It's estimated that there are more than 80 million Baby Boomers in the U.S. alone, which accounts for 30 percent of the total population. As Boomers begin liquidating assets, they will look to their FI for personal and knowledgeable assistance to help them with retirement accounts and investment products. An FI that helps educate these customers not only on what to do with their money, but also on how to tap into their money conveniently, will truly be viewed as a financial partner. And, as many Baby Boomers retire out of state, enabling them to rely on ATMs and other electronic channels will allow them to stay connected to the FI they trust, regardless of its location.

Reaching the Baby Boomer generation is rooted in personalization. The Boomers have grown to appreciate the convenience of an ATM but still appreciate the personal touch of a handshake deal. By employing ATMs that are able to access in-branch intelligence, such as demographic and account data, the ATM can feature new rates on luxury car loans to a retiree which not only speaks to their interest, but also drives them into the branch for additional personal support. This level of personalization enhances the customer experience and improves FI-customer relationships.

As of April 1, 2009, India's entire ATM network is now available to customers from any bank for transactions for no fee at all, irrespective of the banks in which they have their accounts. As a result, a recent survey by Banknet India indicates that 95 percent of people now prefer the ATM channel to traditional banking with almost 60 percent of people using an ATM at least once a week. In addition, banks are finding it cheaper to pay membership fees to these networks as opposed to setting up additional units in expensive-to-deploy areas.

According to Diebold Inc. research, a percentage of all generations consider themselves increasingly tech-savvy — 50 percent of people younger than 30 and 20 percent of those older than 45. As evidence of this, many countries now encourage customers to open new accounts, transfer funds and pay their bills online, without ever stepping foot in a bank. But, much like with younger generations, fees to use automated services will only plague the adoption rate. The latest move by banks in India, where transaction fees have been removed all together, is positively impacting ATM preferences for customers and FIs.

Lewis is the director of global marketing for North Canton, Ohio-based Diebold Inc. To submit a comment about this commentary, please email the editor, Tracy Kitten.

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