The ATM at 50: Still evolving ... or slipping toward extinction?
This summer we celebrate the 50th anniversary of the deployment of the first cash machine.
More often than not we associate this instance of invention with the device that was manufactured by De La Rue and deployed in Barclays' Enfield branch in London.
However, we must also bear in mind two other independent groups of bankers and engineers that also deployed a cash machine in 1967 within days of the Barclays launch — one from the U.K. (the Chubb machine at Westminster Bank) and another from Sweden (the Asea Metior machine deployed at Swedish savings banks).
In fact, the groups behind the Chubb and Metior ATMs were particularly successful in deploying devices overseas, whereas De La Rue was largely limited to the U.K.
These three instances of invention are the genesis of today's ATMs. It is appropriate that we recognize all of them because they attest to retail payments innovation that embodies complex technologies.
This innovation results from team effort that is increasingly diverse (in terms of gender, expertise and geographic location) and that cuts across several organizations and industries (as opposed to the vision of an isolated inventor working in a garage or experiencing a eureka moment in a bathtub).
The ATM is today an icon for digital banking, and the advent of the cash dispenser certainly was a pivotal moment for today's self-service technology.
At its dawn, the device only supplied crisp new banknotes and had to contend with many challenges: exposing electronics directly to the weather; enabling secure transactions; and changing longstanding customer habits.
Early ATMs were unreliable, clunky and hard to find. For almost 10 years, each manufacturer had its own activation token as it took a while to agree on the standard for plastic cards.
Since then, the cash machine has evolved from a standalone, integrated, offline device to a modern machine whose features include video display units, closed circuit TV, printers, online encrypted communication and general computer technology (namely the Windows operating system), among others.
Much more importantly, ATMs no longer work in isolation, but have been integrated into a global interconnected network through Visa and MasterCard.
Proponents of the cashless economy see ATMs as dinosaurs. However, the ATM retains one great advantage in that it is a channel fully under the bank's control — from the make and model of the device to its location and the security of the transactions performed.
Meanwhile, as malware moves into the mobile phone and tablet space, banks' lack of control over these devices has huge implications for security.
The ATM can serve as a channel to secure card-present transactions or to finalize a transaction with a card-not-present transaction with a high degree of reliability. This difference gives the ATM a distinct advantage over software and fintech startups.
At the same time, customer-owned devices can be (and often are) more powerful and modern than legacy systems at banks. This seems to be opening the door to disruptive innovations by new entrants in some aspects of the retail transaction space.
But the reliability, trustworthiness and security of all these innovations have yet to be tested — as opposed to the 50-year successful track record of the ATM.
Bernardo Batiz-Lazo Bátiz-Lazo is Departmental Chair in Business History and Bank Management at Bangor University, Wales. He has written about ATMs for publication, been a guest on BBC Radio, and spoken at the Federal Reserve Bank of Kansas City and the ATMIA conference. www