The ATM card could be on its way out, with small banks the unexpected leaders of the charge. Wells Fargo, Bank of America and JPMorgan Chase are upgrading their ATMs this year to allow customers to withdraw cash from ATMs using their mobile devices instead of their plastic cards. But banks like Wintrust Financial that brought the feature to customers two years ago are already looking to take it further today. “We’ll continue to build out Cardless Cash so it doesn't just withdraw, there'll be other things we can set up,” Tom Ormseth, svp of Wintrust Financial, suggested. “We could go to gifting cash; if I want to send cash to a friend of mine, they can go to a Cardtronics ATM and get that money. It’d be a Zelle-type service, only it’d be cash.” Wintrust has $25.8 billion in assets and 15 banking subsidiaries, all of which have an integrated digital banking and online payments offering through branded apps on tablets and mobile. It was the first in the U.S. to provide this kind of service at about 175 ATMs in Chicago and southern Wisconsin. Cardless Cash is a service by nearly 50-year-old financial technology provider FIS that allows customers to withdraw cash from ATMs using their mobile banking app. FIS has some 40 other regional and community bank clients that range from $30 million to $1 billion in assets. A partnership this month with ATM provider Cardtronics, which counts 45,000 ATMs (that’s greater than the combined ATMs of the top four banks) in its U.S. network will expand Cardless Cash even more. FIS is also in talks with some of its partners that want to see deposits for small business customers at the ATM, according to Doug Brown, general manager of FIS Mobile. Brown also said “peer-to-peer sending and pick-up of cash” is another potential use case it could offer based on client feedback. The war on cash hasn't progressed as much in the U.S. as it has in places like India or Sweden. U.S. cash transactions declined from 40 percent in 2012 to 32 percent in 2015, according to the Cash Product Office at the Federal Reserve Bank, but it continues to be the most frequently used form of consumer payments and dominates small-value transactions. But while cash is far from obsolete, access to it is becoming more sophisticated. Bank of America customers can activate an ATM transaction by selecting their B of A debit card in their digital wallet and holding it over the ATM's contactless NFC card reader. Wells Fargo users can log into their banking app and request a single-use, 8-digit access code to enter at the ATM. Turkish bank DenizBank is implementing beacons that push notifications to users suggesting they might want to withdraw cash. Indian bank ICICI allows people to send cash to any mobile phone at any time -- the recipient doesn't even need to have a bank account or smartphone, just the details received through an SMS. FIS Cardless Cash uses QR codes.For Wintrust, jumping on Cardless Cash wasn't just about beating the big banks at innovation. Community banks have been customer-centric all along (an approach that today’s banking behemoths are just waking up to); Wintrust knew people would inevitably begin using mobile wallets and that the capability would add real value to customers. “If we can show businesses in our communities that, hey, we have 20,000 customers using their cards on their phones to go to the ATM -- why wouldn't they with you? We can add some value there,” Ormseth said. Mobile wallet adoption has progressed more slowly than the bank anticipated, Ormseth said, but added that he’s starting to see more traction with some prominent retailers in the Chicago area, where he’s based. Security was also an objective in adopting Cardless Cash, Ormseth said. By eliminating the use of plastic cards, customers remove the risk of their card credentials being “skimmed” by fraudsters who plant scanners where customers would insert their card to steal the sensitive information and use it to recreate a card they can use going forward. “If you don't have a card presence, [fraudsters] can’t capture anything. So we continue to promote it from a security standpoint,” Ormseth said. That’s another thing that makes the partnership with Cardtronics so significant, since card skimming is much more rampant at nonbank ATMs at gas stations and drug stores, for example. But security just isn't enough to win customers over, he found. “We've been fairly successful in this but still the overall thought of the customer is, ‘So what? How much easier is it really to get cash through the phone?’” So Wintrust began promoting how fast the transactions are. The experience of standing in front of an ATM for 45-50 seconds, at least, goes down to 10 seconds, Ormseth said. The hardest thing is getting customers to use the function for thefirst time. “They don't see the advantage until the first time they actually try it,” he said.
The rise of mobile and digital has forced banks to keep up with consumer payments products like Apple Pay and Venmo and modernize ATMs. Hundreds of fintech startups are working on solutions for every part of financial services -- payments, wealth management, investing, saving. But the reality is that in the U.S., cash is still king, and that arguably, the last real innovation that took place in banking, the ATM, is the only thing undergoing true innovation today.