Blog
Do we need luxury ATMs?
October 3, 2013 by Richard Buckle — Founder and CEO, Pyalla Technologies, LLC
I have just returned from a roadtrip to Toronto, Canada — to be more precise, to the city of Mississauga, Ontario, where HP maintains a sizeable presence. The focus of the trip was a presentation I gave to their NonStop users about the megatrends of mobility, clouds and big data — a major theme of messages coming from HP of late.
Crossing the border into Canada at Sarnia, our first stop was at a Tim Hortons café for coffee and donuts. While seated outside I happened to look across the street at a gas station where there was a large advertisement encouraging the use of their ABM — yes, I was officially back in Canada. It's been years since I have seen any reference to an ATM as an ABM!
According to the most recent data published by the Canadian Banker's Association, when it comes to the ABM marketplace, there are more than 60,000 bank machines in Canada and 16,881 of these are bank-owned ABMs. Furthermore, 26 per cent of Canadians report that they conduct the majority of their financial transactions at ABMs.
Stating this a little differently, almost three-quarters of the stations where you can withdraw cash are white-label ABMs and more than a quarter of the population depends upon them, white-label or not.
These are pretty big numbers, but is there more to this story? Is the ABM in Canada highlighting a more general trend in the industry and are the humble ATM/ABM beginning to provide a definitive statement about broader societal trends?
A post to the CNBC website suggested that companies are spurning the middle class. "Companies have reacted for years to the shrinking middle class by developing both top shelf and bargain versions of their product lines," the post said. "Toyota has been successful with the Lexus … Apple's new iPhone comes in both a $199 version and a $99 one with cheaper components. For the wealthy, a 20 percent markup is a small price to pay for 'luxury'."
Re-reading the post I began to wonder whether there could be a marketplace for upmarket, luxury, ATMs and what they would look like.
Could they take on the characteristics of consoles on the flight deck of Star Trek's USS Enterprise, where simple hand gestures triggered actions? Could we see a glass wall, akin to the interface Tom Cruise used in Minority Report? Or, perhaps even more upmarket, could a future ATM project a hologram of our "personal banker," similar to what we first saw in Star Wars when R2D2 projected a 3D Hologram of Princess Leia?
Perhaps not. From all that I have reviewed of late, the growing market is for simplified, less functional, ATMs as the rest of the world catches up to providing just the basics. Global infrastructure has a long ways to go just to meet the needs of emerging markets before further consideration is given to providing greater enticements for the privileged few across developed regions.
"It is still very much about costs," said OmniPayments CEO, Yash Kapadia. When it comes to what really sells into the payments processing marketplace, particularly within emerging markets, Yash has become my go-to executive for the inside scoop. Yash has recently begun selling low-cost OmniPayments solutions on NonStop that have attracted considerable interest, and I am watching how this move by Yash pans out.
In a newsletter just for the NonStop community, and against the backdrop of HP selling lower-priced NonStop systems to encourage more widespread usage, Yash stated that while, "There's no simple way to say this other than with NonStop prices becoming more affordable, there's less inclination to respond to prospect requests with anything other than NonStop."
"More importantly, it now gives me the flexibility to provide a solution at a much lower entry point and this really helps my business," Yash then added. "Should I be looking at a higher-priced version that carries say an additional 20% markup? I don't think so, and not for many years to come – luxury carries many meanings but for many around the world, simply being able to access an ATM is luxury enough!"
My own observations about the placement of ATMs and the conversations with folks who use them suggest that when it comes to luxury, and the demise of the middle class (that I truly believe is under way), those with "financial means" prefer online banking. There will continue to be the occasional trip to the ATM for cash for tips and shoe-shines, but little more.
While it's not a convincing factoid for my argument about the wealthy preferring to bank online, it was still interesting to read in the same report from the Canadian Banker's Association report, already referenced, of how "47 per cent report that they bank primarily online". What this may be telling us is that the middle class members in Canada are not yet an extinct species and are still clinging to the trappings of luxury even as the upper class put more distance between themselves and those of us occupying much less lofty positions.
However, the fact remains; online banking (including that undertaken on our smartphones and tablets) is working against ATMs / ABMs and that eventually, the talks of a cashless society may prove to be a reflection on the actions of just one layer of society. For those who can afford it, pursuing their banking from the still of the luxury home den while sipping a fine brandy, is all the banking they require.
A 20% "luxury fee" for the privilege to execute a particular transaction, considered a luxury, may be well and good for a select few (and no, please don't take this as a market requirement and start looking at such an option, for goodness sake) but fees will remain a major consideration, luxury or not. For the rest of us, it's still very much a case of cash being the king, and ATMs focused on getting us cash quickly, reliably and without a whole lot of fuss, is all the luxury we need!
About Richard Buckle
Richard Buckle is the founder and CEO of Pyalla Technologies, LLC. He has enjoyed a long association with the Information Technology (IT) industry as a user, vendor, and more recently, as an industry commentator, thought leader, columnist and blogger. Richard participates in the HPE VIP Community where he is part of their influencer team.
