Article

The ATM industry: Bound for ... where?

Industry experts fielded questions at PayThink 2014 in a session dedicated to sussing out the future of the ATM.

October 23, 2014 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

What a difference a year can make.

The penultimate session in the ATM track at last year's ATM, Debit & Prepaid Forum was a panel discussion about the future of the ATM. The dominant topic: EMV, and whether it would work in the U.S.

Fast-forward to 2014 PayThink (the forum rebranded), the penultimate session in the ATM track was again a panel discussion about the future of the ATM. The dominant topic: EMV — and how soon it will be working in the U.S.

Twelve months of data breach headlines does have a way of turning a conversation.

Panel moderator Ed O'Brien, director of banking channels advisory services at Mercator Advisory Group, posed questions on a number of hot-button issues in the ATM industry — EMV being one of the hottest. Here's an abbreviated version of panelist points of view.

EMV

Erin Kolb, VP and senior ATM channel manager at TCF:

When the conversation is about EMV, I have deeper concerns that everyone is talking about more of the operational challenges of EMV, of the fraud liability shifts. And no one really seems to be talking about the significant change in the customer experience — that's what really keeps me awake at night.

Douglas Miraglia, president of the MoneyPass Network:

I am actually quite amazed at how much progress has been made in the last year or 18 months or so. ... We in the industry have experienced the turmoil [EMV] has caused already, but the consumer has no clue. So until we get the consumer ready, until we get the consumer educated, until the consumer adapts to the technology, all this work has perhaps gone for naught.

Kathie DeRuiter, EVP and senior operations officer at Horizon Bank:

When we did our Windows 7 upgrade we also did EMV. The software's not downloaded but we are capable now. My motivation I have to tell you ... after that Target breach, our customers were not unhappy with Target. They were right back there the next day. They were unhappy with us as their little community bank that didn't protect them.

Mobile cash access

Suzanne Galvin, SVP of product management at Elan Financial Services:

We're seeing more and more interest in cardless transactions at the ATM, integrating the ATM with other channels. And of course the natural extension is into mobile. If you look at the channel preference by demographic, you'll see that a younger audience is obviously wired toward mobile technology, but they also are very cash dependent for many reasons. ... And so we see that that natural convergence of the ATM with mobile is going to continue to expand.

This mobile capability at the ATM tends to be for an on-us transaction rather than for the utilization of foreign transactions at the ATM because we've got issues associated with use of PIN and other fraud concerns that might exist. However, I see over time that issue will be resolved.

Added functionality

David Tente, executive director of the ATM Industry Association U.S. chapter

We've had a vision for the last few years of the ATM being a secure hub that financial institutions and independents could leverage. And really use it to connect cash to any other kind of payment that's out there. If you want to generate a wire transfer and have that come out at the other end at an ATM to cash — great. ... We've seen a couple of P2P payment solutions being offered out there now with one-time PINS, so we're pretty optimistic.

Video teller

Kathie DeRuiter:

If you had asked me a couple of years ago if Horizon Bank would be interested in a personal teller machine or a video teller, my answer would have been no. But as we've seen branch transactions decline, I think that's pushed it to the forefront. We've built some real wonderful locations in commercial lending and mortgage origination. Unfortunately, it's not brought the retail market. We're not going to be able to pull out, but we're going to have to reduce costs and I do think we're going to have to look at the ATM to help us with that.

Issues

David Tente:

A lot of regulatory issues we're tracking now and concerned about are more at the state level than the federal level ... I was just having a conversation this morning about a new bill we heard about in the state of New Jersey, which is going to limit benefits on the EBT card to financial institution-owned ATMs, which is the kind of thing that doesn't make a whole lot of sense to us ... because over half of the ATMs in the U.S. are operated by independents and a lot of markets that people use those ATMs in are underserved already by the financial institutions.

Douglas Miraglia:

There should be protections for all consumers, but when the rules and regulations begin to have us focus as an industry on very, very small segments, I think it takes away from real development, it takes away from real growth, it takes away from real innovation. I think that for the last few years what we've been suffering from in this industry is a lack of ability to innovate because we're forced to worry about the regulations that we've come under.

Opportunities

Suzanne Galvin, SVP of product management at Elan Financial Services:

What we're seeing is a request from many more of our customers for advanced functionality at the ATM and leveraging the technology inherent in the ATM from a software and hardware perspective to reach their customers more effectively — and also expand their branding beyond their current footprint.

Many, many of the smaller banks that we support today have a big challenge in terms of the capital required to open new branches but through the utilization of these video teller-type devices, they're able to locate a presence in markets that historically have been unattainable to them. And they're doing that in a very effective manner and showing great returns. So we're really seeing the role of the self-service devices as a much more strategic area for the retail bank and for their strategy as a whole.

photo courtesy vero villa | flickr

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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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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