Back to the future: An argument for the 'retro' bank ATM
by Daryl Cornell, CEO, Triton Systems
In the beginning was the bank ATM.
This through-the-wall machine dispensed cash to any customer with a card, a PIN and available funds.
This basic ATM was the very essence of disruptive technology, facilitating the closure of tens of thousands of bank branches around the world, and taking countless bank teller jobs with them.
Customers rejoiced at their newfound freedom from the teller queue. Bankers were thrilled as branch operating costs were slashed. Former bank tellers were mostly redeployed to other sectors of the economy and all was well in the bank.
And then something went horribly wrong …
ATM functionality exploded. No longer content with ATMs that merely dispensed cash, manufacturers urged banks to upgrade their ATMs to automate other routine tasks.
Cash deposit, check deposit, coin dispense, money orders, stamps, loan applications — you name it, bank ATMs now did it. Unfortunately, all of this sophistication came at a price.
Higher hardware costs, software licenses, hardware licenses, technician training, customer training and parts inventories all drastically increased the life cycle costs of operating a fleet of upscale ATMs.
Still, this was all fine while bank branches continued to be shuttered and bank operating costs continued to be reduced. Until…
ATM vendors became greedy and misread changes in the market and in customer behavior. As banks continued to spend millions of dollars annually on their ATM programs, vendors came to believe that bank ATM budgets were limitless.
Taking a page out of Microsoft's book, the ATM vendors began to shorten product life cycles. Why support 10-, 5- or even 3-year-old ATMs with hardware and software upgrades when you can simply discontinue product support and force banks to buy expensive new gear?
Banks were now firmly on the upgrade treadmill. They were also largely hesitant to undertake expensive migrations away from ATM vendor software, whose tentacles in some cases reached throughout the bank.
Surely the ATM manufacturers now had the banks right where they wanted them. Only…
Consumers' banking habits and needs changed and they had less need for the overpriced ultra-functional ATM.
While the death of cash has been greatly exaggerated, the death of checks is real and documented. For a couple hundred bucks, businesses of all sizes can now have desktop check scanners.
Consumers, meanwhile, can deposit checks at most banks by taking a picture of the document with a cell phone. Those consumers who do choose to tote their checks to bank branches are likely seeking conversation with a teller, not an ATM with advanced check deposit functionality.
Cash deposits have also been significantly reduced as "merchant fill" retail ATMs have been deployed at retail locations throughout the U.S. Estimates are that $5 billion to $8 billion is efficiently recycled annually as merchants "deposit" till cash into 300,000-plus retail ATMs.
The sale of stamps at bank branches and ATMs has now moved on to the internet or back to post offices.
And finally, banks have realized that people, not ATMs, are best equipped to handle loan applications and grow customer relationships. Which brings us …
Back to the Future.
As savings derived from shuttering bank branches have waned in the last few years, the staggering costs of operating bank ATM programs are now readily apparent.
In fact, the forced migration of bank ATMs to Windows 10 before 2020 may indeed be the straw that breaks the camel's back for bank ATM programs.
An estimated 85 percent of all bank ATMs will need to be upgraded or replaced in order to remain on a Microsoft supported operating system in 2020.
This will be a huge expense — and distraction — in exchange for benefits that are being described as somewhere between "nominal" and "nonexistent."
In response, many financial institutions are going retro, fielding CE-based, through-the-wall, cash dispensing ATMs. Not only are these ATMs 60 percent to 70 percent cheaper, they come without expensive factory hardware and software maintenance licenses.
In addition to shorter manufacturer lead times, they are also much more secure than PC-based ATMs.
Perhaps most surprising, these cost-effective ATMs normally come with 10-year life cycle support guarantees, getting banks off the upgrade hamster wheel.
Retro is here. Look for it at a financial institution near you.
atm Atom Posts for the atmAToM blog are contributed by a collective of writers from Triton Systems and ATMGurus seasoned ATM pros who thought they might like to share a few things they've learned during the last 30 years in the ATM industry. www