Article

Time for the ATM Industry to get on board with mobile?

ATM Marketplace publisher Tom Harper says operators should look into profit opportunities with mobile.

June 28, 2013

As publisher of ATM Marketplace and co-founder of ATMIA, Tom Harper has seen ATM innovations debut to great fanfare, then quietly fade away. He's also seen innovations achieve such success and widespread adoption that, today, they seem commonplace — envelope-free deposit, for instance.

The convergence of ATMs and mobile devices is an innovation that will fall into the latter category, according to Harper. He's closely watched the emergence of the technology since first hearing about it some years ago.

"I was on the beach during a reception at an ATMIA event, talking to an R&D guy at one of the major manufacturers," Harper said. "He told me the next big thing in ATMs was interactivity with mobile devices. It may not have happened in the time frame he envisioned, but it’s certainly becoming a reality now."

It's become enough of a reality that, last fall, Harper judged it was time to launch an executive level event around the opportunities and challenges that ATM-mobile convergence presents to the ATM industry — and the financial services industry at large.

The first ATM & Mobile Executive Summit — co-developed by ATM Marketplace, sister publication Mobile Payments Today, and the Electronic Funds Transfer Assotiation — will take place this September in Washington, D.C. 

In advance of the event, ATM Marketplace spoke with Harper to get his take on the future of ATM-mobile convergence — and why he thinks its time for the ATM industry to get on that train.

Q: Where do you see room for growth in ATM-mobile convergence?

A:I see major growth potential in serving the underbanked around the world. This market has shown healthy uptake with mobile money services, and with more mobile phones than bank accounts out there, the trend will only continue. Mobile device sales continue to break records.

And since cash is also on the increase with this same market, there is a growing market for ATM/mobile services. It’s strange to think that mobile phones and old-fashioned cash will thrive together into the future, but I believe this trend is backed up by irrefutable research data and consumer trends. The ATM is becoming a hub for paper and electronic money to comingle.

Another growth area I see is the Millennials, the largest generation in the history of the U.S. These 20- and 30-somethings expect high-tech conveniences like P2P remittance. The comingling of money is something that seems natural to them. If a friend hands them cash to pay for half the lunch check, the recipient often wants to convert the cash to digital currency.

And the reverse is true — electronic payments need to be convertible to cash. We’re seeing the major ATM manufacturers respond with machines that have phone-like navigation, widescreens, QR code readers and transaction pre-staging on the handset.

Q: To some in the ATM industry, the rise of mobile payments looks like a threat to their business. What do you say to those people?

A:I encourage them to get on the train and strategize how they can profit from this exploding market. FIs already have footprints and trusted brands with consumers, so they’re in a great position to introduce new mobile services.

IADs who can roll out branded mobile payment programs for smaller FIs will become indispensable to a market segment that desperately wants to cater to Millennials. Leveraging legacy systems and upgrading mobile banking offerings will be major market needs.

Q: Do you see the rising use of mobile NFC for small purchases driving down the demand for cash?

A:There may be pockets of cash reduction, but the sector most affected I believe will be plastic cards. NFC replaces credit and debit functionality more than it does cash usage. People will always carry cash for those situations when electronics don’t work or aren’t available. So if I can put my plastic cards on my phone, I’ll feel like I’ve accomplished a small part of my goal to leverage technology to simplify my life. 

Q: What about NFC at the ATM? Do you believe that contactless will be come a standard for transactions ATM?

A:That’s a tougher question. La Caixa in Spain has certainly proved the case for NFC, but I’m not seeing it catch on with other leading FIs. It could be that they’re waiting to see what Apple does with NFC, or waiting for one main technology to emerge as the standard.

NFC is not necessarily better than QR codes or other authorization solutions, it’s just different. There’s not a compelling reason in my mind for NFC to be the de facto winner.

Q: Does mobile ultimately offer the security required for banking safety and customer peace of mind?

A:Security has always been a huge issue throughout the payment chain. Every channel, from cards to cash to online has its challenges and potential breach points. I think younger people will view mobile as more secure than other payment channels, and older demographics will be more wary.

The U.S. government is keenly interested in mobile payments and is trying to get its arms around this new market so they can regulate its safety.

Q: How did the idea come up to create a combined ATM and mobile summit?

A:It grew out of the success of two of our media properties, ATMmarketplace.com and MobilePaymentsToday.com, along with the surge in innovation combining the two payment technologies.

As statistics kept coming out forecasting increases in global cash in circulation and unprecedented growth in mobile payments, this summit seemed inevitable. When you add in all the regulatory activity surrounding ATMs and mobile payments, we had a another compelling reason to orchestrate in-person interaction between policymakers and payment executives.

Kurt Helwig, CEO of the Electronic Funds Transfer Association, is a personal friend and serves on the ATMIA board with me. When I ran this idea past him, it immediately struck a chord, and we decided to work together on this truly unique summit. His extensive contacts in Washington, D.C., have been invaluable as we’ve built the agenda. He’s brought in speakers you don’t see at typical payments conferences — people from the Treasury, Fed, Secret Service, CFPB and FDIC.

photo: denim dave