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More than a cash dispenser: How banks are rethinking the ATM

Arguably no banking technology in the last 50 years has been as disruptive as the ATM machine, celebrating its birthday Tuesday.

Banking may look different on the surface, but its core functions look the same. Growth of mobile banking usage is slowing, mobile payments haven’t really taken off, and banks are re-investing in their branches as an important and evolving channel for their evolving customers. Like branches, ATMs are an important point of contact for banks and their customers that aren’t getting phased out because some people are becoming more digital — they’re getting upgrades. Banks want sleeker machines with larger screens and the functionality to perform as an automated teller that does more than dispense cash and take deposits.

“The activities you can do on ATMs and mobile are very similar for those who are super mobile users with super high expectations of how an ATM should behave,” said Jose Resendiz, general manager for global financial services at ATM producer NCR. “For those who are not, it’s the perfect training ground for a financial institution to get their customers comfortable with how they’re interacting and engaging.”

According to PwC, customers are leapfrogging banks’ omnichannel banking strategies and seeing more all-digital users. However, banks are still re-investing in their human interaction channels. TD Bank just employed voice recognition technology for its call centers to help emulate the retail experience in that channel and banks across the U.S. are upgrading their branches. Wells Fargo, Bank of America and Chase are also upgrading their ATMs.

“The ATM isn’t going away any place yet, it is continuing to grow,” said Kevin Tynan, svp for marketing at Liberty Bank for Savings in Chicago. “The movement is for ATMs to become more convenient. Customers have higher expectations than they did 20 years ago when they just went to an ATM for cash. Now they’re looking to do more transactions and they want it more secure.”

This month Bank of America introduced “Extreme ATMs” or “XTMs.” These 32-inch monitors act as marketing vehicles to display ads and targeted offers to customers, as well as video tutorials to teach people about online banking and to find time with a personal banker. It plans to roll out 100 this year and another 1,000 in the next couple of years.

Bank of America is upgrading its whole ATM network with new technology and giving customers greater choice of transaction type, including check cashing, making credit card payments and choosing their preferred denominations when withdrawing cash. It was also the first to deploy cardless ATM capability last year.

“We’re really committed to the integration of digital and physical channels to provide our clients with a seamless experience across all channels, including our financial center and ATM network, as well as our mobile and online banking platforms,” said a spokeswoman for the bank.

Wells Fargo began introducing cardless machines this spring. Last year Chase deployed 5,000 “eATMs” across the U.S. that give a similar tablet-like experience, also with cardless capability. This year, it’s focused on migrating transactions that happen through teller to digital, Thasunda Duckett, JPMorgan Chase’s consumer banking CEO, said at the company’s Investor Day in February.

Last year, more than 400 million transactions were completed through tellers, 70 percent of which could have been done through a digital channel — online, mobile or ATM — Duckett said. Resendiz put that number at 80 percent, and suggested video-assisted ATMs could be something that motivates customers to visit their branches.

“The challenge — and opportunity — is to make that customer connection across the channels,” Resendiz said. “Cash will still be around quite a while, people will still be able to go to physical channels, but more and more, people continue to adopt digital payment methods and experiences.”

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Why banking’s ‘omnichannel’ dreams haven’t become reality

For years banks have been talking a lot about executing an “omnichannel strategy,” which is supposed to help them learn more about their customers by giving them a greater view into their needs and behavior through more channels – the mobile device, the tablet, the computer. But that dream hasn’t yet become a reality.

The reasons, as usual, are in the mundane details — and in the difficulties in executing sensible strategies within large, hidebound organizations while keeping up with new complexities that inevitably arise from tech advances.

For instance, an omnichannel strategy requires banks to be able to integrate each of the channels into a single, quality experience. But most haven’t gotten there. According to a report this week by researcher and consultancy Celent, half of the 112 institutions it surveyed haven’t even begun “substantive” efforts on their omnichannel delivery and just one in 10 institutions is actually executing a strategy.

“There’s a huge disconnect,” said Bob Meara, senior analyst at Celent. “Everyone agrees omnichannel is important but they haven’t actively executed.”

One reason is that artificial intelligence is driving a proliferation of new channels – like Alexa or connected cars – that make it impossible to build experiences for individual channels well and in a scalable way. So while many banks still struggle to perfect their mobile strategy, the ones that are nailing the “omnichannel” idea are now having to move along pretty quickly anyway as new technologies and therefore, new experiences, emerge, said Meriah Garrett, chief design officer at USAA.

“Our members just expect us to be there wherever they are,” she said. “That’s not always in this pure mechanism of traditional channels as we once thought of them – mobile, web, voice, physical. Those things are blurring together at such a fast rate.”

To keep up with the constant change, banks need to implement AI into their interactions and services, and that’s how the “channels” expand beyond what people traditionally consider a channel to experiences like a Facebook Messenger conversation or a mortgage profile in Zillow.

“It becomes less and less about any individual’s channel and more about different distributions of experiences that aren’t necessarily owned properties anymore — that’s the part we as an industry have not even reached yet.”

Most financial institutions have invested a significant amount on the front end of their banking portals – the parts that interact with customers. Some might say they’ve over-invested in that experiences when they should be pouring more into the middle- and back-end – the areas that actually connect with other experiences, other parts of the business and improve seemingly boring efficiencies that actually make a world of difference to the customer.

For example, getting approval on a personal loan has traditionally been about a 72-hour process – unheard of for customers living in an on-demand world where you can get a car at the tap of a button. That kind of thinking is what makes digital lending startups like Prosper, Avant or Kabbage so attractive when they advertise decisions in minutes. If banks invested more in this stage of the experience, customers wouldn’t just be happier, they would probably engage more consistently.

It’s how Amazon rose to dominate retail. Jeffrey Brown, global banking and financial services leader at consulting firm Genpact, uses Amazon as an example when advising his bank clients, he said.

“You want to create Amazon Prime in your banking experience for your customers,” he said. “You wouldn’t use Amazon if it took 10 days to turn around a delivery. You get the Best Buy experience when you do your banking.”

Using mobile or online banking as a reference for account balances and activity is more common than ever. But actually executing on more complex things like credit applications is still a sticky spot for banks and their customers. The user interface of complex activity may be enjoyable, but the parts of the experience that follow need to meet the same standard to keep customer satisfaction levels high.

“Just like they shifted from retailers and other people who couldn’t get them the goods they wanted quick enough and thats why amazon took share.

“Being able to actually deliver, execute or fund is going to move market share over the next 12-24 months, Brown said. “People want speed. They shifted from retailers and other people who couldn’t get them the goods they wanted quickly enough and thats why Amazon took share.”