Article

The 3 areas of ATM evolution

Whether it's an Apatasaurus or an ATM, if it doesn't adapt it eventually goes the way of the dinosaur.

August 20, 2013

By Brian Scott, vice president of sales, The Members Group

For many financial institutions, the ATM has been the crown jewel of needle-moving self-service strategies. With consumer demand for mobility and DIY banking only increasing, the ATM will continue to be a crucial component for credit unions and banks well into the future.

Of course, these essential extensions of a financial institution's brand will need to evolve to maintain value for consumers. Three areas in particular — data-driven marketing, branch-extending services and integration with mobile devices — rise to the top of the pile as the most important enhancement strategies.

Data-driven marketing

Everything, it seems, is getting smarter. We drive smart cars and talk on smartphones. The ATM, too, is earning some smart cred as it leverages technology and advanced marketing to give consumers exactly what they want — sometimes even before they know they want it.

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Smart ATMs are able to pull off their highly customized tactics because they recognize precisely who is visiting the unit as soon as that consumer swipes his or her card.

This allows the ATM to deliver the right message to the right customer at the right time, greatly increasing the potential for superior customer experiences.

Powered by back-end data analytics and customer segmentation strategies, smart ATMs become clairvoyant avenues for a financial institution's cross-selling endeavors. Does the customer's data trail indicate a major life change is just around the corner?

The ATM knows this and can use that information to promote college, wedding or home financing options.

Branch-extension strategies

As ATMs of the future evolve into miniature financial institution branches, customized marketing will be far from the only trick up the sleeves of these advanced units. When a mortgage promotion, for example, hits the mark, the customer will be able to begin the application process right there at the ATM.

Because the machine already recognizes the customer, it will also know if he or she has been prequalified and can then kick-start the documentation process at the customer's convenience.

But what about the personal touch? Younger generations of consumers appear to place a much lower value on it, and for those who still want face-to-face interaction, ATM video tellers appear to be satisfying their needs.

Evolving to next-generation services, of course, requires leaders to think about the ATM from the global perspective. Even domestic operators, particularly if they reside in coastal states, must consider the needs of international visitors to the U.S.

Increasingly, dynamic currency conversion is joining the list of ATM upgrades that not only improve the customer experience but also generate fee income.

Integration with mobile devices

The ATM Industry Association predicts that mobile transactions at ATMs will be the fastest-growing service in the next five years.

Think of the smartphone as a sort-of remote control for the ATM. Consumers with certain mobile wallets or apps installed on their devices can already withdraw cash, make person-to-person transfers and pay bills from the ATM without a plastic card.

Often the recipients of these transfers do not have to be customers of the financial institution that operates the ATM, which opens up a world of Big Data-powered marketing possibilities.

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Finding ATMs is becoming easier for consumers with the help of technology such as augmented reality, which superimposes computer-generated images onto a view of the physical world. In an ATM environment, augmented reality is used to help consumers locate the nearest machine.

Google Glass, for example, is a wearable device displaying information in the user's field of vision. It's one thing to imagine a world where customers more easily find ATMs; it's quite another to imagine ATMs finding their customers.

What if an ATM were able not only to recognize, but also to communicate with customers located just blocks away? What if it knew the customer liked to purchase coffee across the street every morning?

Integrating customer-level intelligence with ATMs has the potential to change the way consumers earn and redeem discounts, rewards and loyalty perks.

With emerging options for cash access, namely P2P and point-of-sale cash-back options, the ATM must enhance its value proposition in the minds of consumers.

Much of the technology to power this evolution is still in development or is currently too cost-prohibitive for most financial institutions. After hefty ADA and EMV hardware upgrades, financial institutions are likely to have limited budgets for additional enhancements.

Therefore, credit unions and banks should purchase only what they need today, but opt for flexible equipment that can accept upgrades as they become available.

Brian Scott is a vice president for payments processor at The Members Group. He visits nearly 100 financial institutions annually to consult on ATM, credit, debit and mobile payment strategy. He is also a frequent speaker on payments technology evolution. He can be reached at brians@themembersgroup.com.