The future of the ATM

Happy birthday, ATM – the machines turned 50 last year – and so the question has to be: do they have a future?

A lot of technology just dies. Think iPods, VCRs, in-car tape players, and, in many quarters, wrist watches.

But know this: most experts believe there is a bold future ahead for ATMs although, very probably, the machines will evolve, get smarter, add functionality.

ATMs at many credit unions are highly consumer friendly because, often, access is fee-free. Some 300,000+ ATMs are in the Culiance ATM network, for instance, and that is bigger than the fee-free networks of the largest banks. For participating credit unions, this fee-free access is a significant competitive advantage against community banks and even some national banks with small ATM fleets.

Here’s why we still need ATMs: “80% of transactions are in cash,” said Paul McMeekin, director of marketing for growth markets at ACI Worldwide, a payments company. His point is that as long as much of what we do requires cash, we will still turn to ATMs for that cash.

Ryan Rackley, an ATM expert at Cornerstone Advisors in Scottsdale, AZ, said similar. “ATM transactions are on the decline – that is fact – but they are not dead.”

ATMs, make no mistake, are under attack. There now are many other places to get cash – Rackley pointed to cash back on purchases at many retailers.

However, this doesn’t spell RIP for ATMs. What it does is highlight the need for ATMs to get smarter. When they debuted, even a basic ATM was genius. Fifty years ago, on a Saturday night when many of us did not even have a credit card and banks and credit unions closed at 3 p.m. on Friday and did not re-open until Monday 9 a.m. – spitting out  that $20 was a welcome miracle.

Enter the smarter ATM. Rackley, for instance, noted that some credit unions are investing substantial amounts in state-of-the-art ATMs that figure into teller staffing strategies. “Some ATMs are getting so good they can do much of what the traditional teller does.”

Some institutions are looking at ATMs as important parts of a branch reimagination.  They seek to close some branches, shrink others, but give members the same – or higher – levels of services by deploying smart ATMs that offer video conferencing with live tellers, easy ways to make credit card and loan payments, and possibly even short loan applications.Many institutions are also exploring cardless ATM access, where cellphones offer convenient ways to communicate with ATMs. Some ATMs also sell stamps, take donations to charities, and even allow biometric logins (retina scans or possibly fingerprints).  

The point: “ATMs need to evolve to stay relevant,” said McMeekin, but much of that evolution already is in view.

There is optimism about the ATM. A research firm, Global Market Insights, said the market for ATMs totaled $12.7 billion in 2015 but would hit $26.1 billion in 2023.

That’s because the many ATM technology upgrades are making new ATM purchases a must at many financial institutions.

Exactly what upgrades does a credit union need to make to its ATM fleet? Rackley said: “the truth is in the data. Get granular. Find out how – exactly – your members are using the ATMs now.”

Not all members want all functions and some members are happy with ATMs exactly as they are. Study your members and what evolutions they will value will come into focus. Rackley, for instance, said that although cardless access has been the buzz for several years in the vendor community, he has seen minimal interest in it with consumers.

McMeekin added that he has seen surveys where consumers express little interest in using an ATM to do a loan application.

Don’t be in a rush to pick out the upgrades needed for your ATM fleet. Do as Rackley suggested, get granular and dig deep into what the members really want.

But ATMs will evolve – that’s a certainty. And credit unions need to take the right steps to stay current with member wants and needs. That’s how to win in the looming ATM wars.