Blog

Stories we tell ourselves: ATM myths and narratives

A narrative, as Nobel laureate Robert Shiller defines it, is a story with a moral that can rise to the level of an economic narrative. In the ATM world, we have our own stories, as Bernardo Batiz-Lazo explains.

Photo: iStock

November 29, 2019 by Bernardo Batiz-Lazo — Professor of Business History, Bangor University

In his new book Narratives in Economics: How Stories Go Viral and Drive Major Economic Events, Robert Shiller highlights the importance of the stories that we tell each other to understand the world around us. In the ATM world, we have our own stories, which I will get to in a moment.

Shiller needs little introduction. Having made fundamental contributions to finance theory and behavioral economics, he was awarded the Nobel Memorial Prize in Economic Sciences in 2013. The core argument in his new book is that one cannot understand individual decision-making without considering "economic narratives."

A narrative, as Shiller defines it, is a story with a moral — that is to say, a story that packages a set of values with implications for how individuals should act. 

Consider the importance of economic narratives of start-up companies. Given their lack of actual track record, start-up companies want a good narrative around the time of an IPO to get the financial support of investors. However, these narratives can be abused, run wild or simply create a huge gap between the promise and actual performance, as was the case of WeWork, King Digital Entertainment (that is Candy Crush Saga for you), or Grupon. 

According to Shiller, a narrative rises to the level of an economic narrative — or, more precisely, a macroeconomic narrative — when it is widely embraced. That widespread acceptance leads in turn to a common behavioral response according to the narrative’s "script" — the sequence of actions that people think they should pursue for no better reason than that they understand that others are doing the same.

Think, for example, on the narrative behind quantitative easing, that is, the extraordinary interventions by governments and central banks from several developed countries (including the U.S., Japan, Euro-zone and the U.K.) to prop up the stock market through monetary expansion that has taken place since 2008. According to this narrative, greater liquidity in the market and low interest rates should translate into economic growth. The problem is that although bond yields are at all time low and the stock market almost doubled in market valuation (as the Dow Jones Industrial grew 170% between 2008 and 2017), the channels these resources are to follow to deliver economic growth were hampered because the unprecedented injection of money translated into share-buy backs and conspicuous consumption rather than new investments in production or R&D. 

The ATM industry also has its own economic narratives. Two readily come to mind.

A single person invented the ATM

The first, around which I've worked for a long time, deals with the invention of the cash machine and whether there was a single inventor of the ATM. Before I started working on this around 2006, the common belief was that the cash machine resulted from a eureka moment from either John Shepherd-Barron, James Goodfellow, Luther Simjian or Donald Wetzel.

Ultimately, debunking this myth was important to show that innovation in this industry results not from one individual but from a group effort.

The death of cash

Another such economic narrative is the death of cash. For me this is an economic narrative with potentially undesirable consequences for the ATM industry. It is my view that a number of actors working behind the drive for a digital economy masquerade their intention for profit and increase tax revenue under the cloak of enhancing people’s lives and well-being through technology enabled financial inclusion. 

Many associate the death of cash with the end of the ATM industry. However, those perceptions are correct only if the ATM remains a single function device. The death of cash narrative also underestimates negative impacts of the financialization of the unbanked (who often go beyond their financial limits and into over indebtedness). 

The ATM and cash management industry has been working not only to defend the right of people to multiple mediums of payment but also to reposition the ATM as a multifunction device. 

In my view, more could be said about the importance of learning while deploying ATM networks to go beyond branches in the distribution of retail financial services or indeed enable new forms of financial services and products. In a parallel development, banks, manufacturers, bank regulators and ancillary companies invest significant resources to maintain and keep ATM networks running. 

Such examples have been a major accomplishment for this industry, something that the narrative on the death of cash neglects to acknowledge. The industry could work in enhancing its significant contribution to the overall running of the economy through some more positive narratives.

About Bernardo Batiz-Lazo

---

None

Connect with Bernardo: