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The ATM in consumers' pockets

July 15, 2013 by Terry Dooley — SVP & CIO, ITS, Inc

The ATM and banking industries are continually working to embrace new technology, including mobile commerce. ATMs can cost-effectively provide the link between the digital world and the physical world, where consumers still need to access cash.

According to a recent ATM Marketplace paper that addresses some of the basics of mobile and ATM convergence, there are five specific ways that mobile technology will change ATMs:

1. Pre-staging transactions — Pre-staging an ATM transaction on a mobile device provides a simple-to-use, cardless way to get cash at the ATM. Consumers don’t need to use a card or enter a personal identification number, and they receive cash within 10 seconds. An e-receipt for the transaction is sent automatically to the customer’s email address. This process allows consumers to access cash from their accounts without the need for a card, furthering the value proposition of the mobile wallet.


2. Contactless transactions — EMV migration will also lead to migration to near-field communication at the point of sale, and at the ATM. Forecasting firm ABI Research expects shipments of NFC-enabled devices to climb dramatically from 102 million in 2012 to 1.95 billion in 2017.


3. Serving the unbanked — Nearly 60 million Americans are either unbanked or underbanked. Smartphones allow consumers to carry a virtual financial institution in their pocket. The result is that the unbanked have options for many financial services without the need for an FI. However, they may still need ATMs. Prepaid card providers could offer mobile-enabled ATM transactions to give unbanked prepaid card users the same access to cash available to customers with traditional FI relationships.


4. Expanded ATM services — Given the growth of cash-accepting ATMs, the industry is poised at the center of channel convergence in the mobile era. ATMs and mobile digital commerce can leverage technology to improve the customer experience. There’s more to consider than a direct relationship between ATMs and mobile devices. Mobile is changing the entire banking landscape, meaning that more transactions are being done by mobile devices, hitting deployers’ margins. The answer to the increase in mobile device transactions may be to look beyond cash dispensing at the ATM in order to increase ATM usage. Offering new services and sources of revenue including lottery tickets, loading prepaid cards, content downloads, device-charging services, and buying prepaid phone minutes or money orders are all viable possibilities. In a number of markets outside the U.S., ATMs offer an array of expanded services that provide a revenue stream in addition to interchange and surcharge fees.


5. Expanded ATM/mobile capabilities — Mobile devices have radically altered consumers’ expectations of what technology can deliver to them. They expect services beyond simply dispensing cash. FIs could lead the way in providing mobile technology that offers advanced services as well as ATMs that can do everything from dispensing cash to processing loans. In the future, the ATM could become the hub linking the bank and the branch to the consumer, using existing payment systems. Devices including smartphones, tablets, desktop terminals, and automated stand- alone kiosks, could use the ATM to deliver cash and other transactions. The distinction between an in-person and online consumer is blurring, so the FI of the future will be a multichannel, multifunction and multi-device environment, with self-service channels simply a part of the entire range of transaction types.

With the right strategies and technologies, consumers could come to see their mobile phones as ATMs in their pockets. However, there are limits to how much the majority of consumers will risk in adopting technologies connected to their wallets. Is your FI ready to meet the challenges and opportunities mobile commerce will undoubtedly present to the ATM?

Gain a critical understanding of trends, technologies and business models driving ATM/mobile channel convergence at the ATM & Mobile Executive Summit, where you'll hear from top-level industry insiders including ATM and mobile payments executives, government officials, bank executives, regulators and security experts.

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