Since its introduction in 1967, the ATM has become ingrained in society. According to the RBR "Global ATMs and Market Forecasts to 2020" report, the number of installed ATMs worldwide reached three million in 2014, and is expected to increase to more than four million by the end of 2020.
Originally brought in to reduce congestion in branches and to prevent banks from having to extend their opening hours, the ATM has come a long way. Its continued and predicted growth demonstrates how significant the channel has become for financial institutions and consumers across the globe.
Recent cost pressures have meant that financial institutions are looking to self-service channels to get better value from the branch.
Step forward the ATM. Financial institutions are increasingly equipping the machines with more functionality to enable customers to carry out transactions at their own convenience, both away from and inside the branch.
Not only does the ATM offer a convenient yet personalized interaction point for an FI's customers, but it also brings the added benefit of being a direct touch point with their competitors' customers, providing an excellent opportunity to showcase their differentiators.
Despite its appeal and obvious benefits, the humble ATM is often underutilized. Widely referred by consumers as "cash machines," "cash points," and "cash dispensers," the terminals have become synonymous with cash withdrawal.
It is not surprising therefore that a recent survey conducted by Compass Plus in the U.K. found that almost 96 percent of participants had withdrawn cash from an ATM in the past month, but only 15 percent had used other ATM services within the same timeframe.
With RBR reporting that cash withdrawals from ATMs globally increased 7 percent to 92 billion in 2014, FIs need to look beyond its cash-dispensing functionality and utilize it as a key part of their branch transformation strategies.
ATMs around the globe provide basic standard functionality, such as checking balances, viewing the last few transactions on a statement, and the obvious function of withdrawing cash. However, some FIs have begun to use the terminals to offer more advanced services.
For example, in the U.K., ATMs offer the capability to top-up prepaid mobile phones; in the US, ATMs sell stamps; and in Dubai, consumers can withdraw gold from the machines.
All of these are useful and, although they can be market specific, they add value for the consumer. Nevertheless, these types of function do not substitute transactions that usually take place in-branch.
It is the more recent introductions of cash-recycling ATMs, video teller machines, and terminals that allow you to deposit checks that are really going to help FIs reduce branch footprint while maintaining a positive customer experience and cultivating loyalty. Inside many U.K. banks, there are ATMs that enable customers to pay in checks and cash, print statements, check direct debits and standing orders, and even make faster payments, with branch tellers often moved out of sight to encourage the use of these machines.
But is there more that the ATM can offer?
A recent report by ATM Marketplace asked consumers what they wanted to see from their FI's ATMs. The list included the ability to make bill payments, the sale of prepaid cards, cardless cash withdrawals, setting personal preferences and email receipts.
While some FIs do offer these services, it is clear that many do not, and that these functions would certainly benefit customers by saving their valuable time and allowing them to access these services when a branch is not open.
Enabling these features on ATMs might also open up opportunities to reach un- or underbanked consumers, which would undoubtedly add value to an FI, not only by increasing its reputation and potential customer acquisition, but also by adding to its bottom line.
There are many examples of innovative uses of ATMs that could certainly lead into an FI's branch transformation strategy:
If used to their full potential, ATMs offer an FI numerous opportunities to differentiate from competitors through this channel by turning ATMs into self-sufficient mini-branches.
Although primarily used as a tool for financial interactions, FIs might also think about opening up ATMs to horizontal and vertical markets by partnering with event organizers or entertainment venues to enable the purchase of tickets, or by offering the ability to make charitable donations.
Of course, FIs have to be careful that the ATM doesn't stray too far from its core proposition. It is not a good idea to alienate customers by making them wait in line to deposit cash while another customer is buying concert tickets and taking their time choosing seats.
However, integrating other functions outside of financial services that add value and bring convenience to consumers will also potentially bring in new revenue streams for FIs.
ATMs are one of the most underused channels by both FIs and consumers, yet the opportunities for adding value for consumers and increasing an FI's bottom line are vast. FIs really need to explore the sheer volume of possibilities the humble — yet cost-effective and multifunctional — ATM has to offer.
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