The Customer Effect
What war on cash? ATMs are the distributed bank of the future
- The number of ATMs continues to grow globally.
- Locating ATMs away from bank branches gives banks a competitive edge.
As a technology, the automated teller machine has been around the block. In the U.S., Chemical Bank debuted the ATM in 1969 in Rockville Center, New York. That first machine, also known as a Docuteller, disbursed cash when customers inserted a specially coded card. Almost 50 years later, as financial institutions work to transition customers to bank outside of expensive branches, the ATM is beginning to look a lot sexier. In an effort to shift the service burden away from tellers, some of the largest U.S. banks like Chase and Bank America are undergoing significant upgrades to their ATM networks. New ATMs, some of which include cardless access and video chat, are able to provide around 90 percent of the services tellers can provide from within a bank. ATM activity continues to rise -- Chase now sees more transactions from ATMs than tellers. Banks are to growing their ATM networks outside their branches, too. According to a recent study conducted by RBR on the global ATM market, in 2015, there were more ATMs located away from bank branches than located within. 51 percent of automated teller machines in the global market are disconnected from the physical real estate of banks, giving banks a smaller but broader distributed presence within their target markets. "It's all about access and convenience in our click-and-mortar world," Cardtronics' CMO Tom Pierce told Kiosk Marketplace. "And that bodes well for retail ATM deployers, because we are the convenient access to cash that consumers demand as part of their omnichannel lifestyle." Replacing tellers and branches with ATMs can lower costs and if placed in high-traffic areas, see enough surcharge and interchange fees to be run at a profit. In rural areas that are hard for retail banks to service, ATMs serve an important role in financial inclusion for customers who would otherwise go unbanked. Distributed ATM networks give banks added visibility within their communities, even as some banks shutter local branches. It's possible that for more communities, in just a few years, the modern teller machine will be the only physical banking presence around. Instead of making customers come to branches, ATMs bring the branches to the customer. “As independent ATM deployers expand their fleets, more and more retail centers, transport hubs and other non-branch locations will host ATMs," said RBR's Rowan Berridge. "Coupled with increasing off-site deployment by banks, in the future it will be even easier for customers to find a convenient ATM away from branches."