ATMs: Much More Than Money Machines

Mobile is another channel consumers can use to interact with ATMs.

August 1, 2013

Fans of the cable TV series “Battlestar Galactica” watched in fascination as an epic struggle unfolded between humans and the robots they’d created.

The robots, at first simple machines designed for mundane tasks, became increasingly sophisticated, taking on ever-more complex jobs, and eventually developed intelligence that rivaled their creators’.

ATM experts can’t be faulted if they see at least a partial parallel. That’s not to equate ATMs with the TV show’s Cylons. But ATMs are becoming more versatile; no longer simple cash dispensers.

One of the most promising technologies being rolled out is interaction with mobile services, says Jim Block, director of advanced technology development for Diebold, a CUNA Strategic Services alliance provider. “There’s lots of room for growth there. We see mobile as just another endpoint for the consumer that can interact with an ATM as well as other credit union channels.”

He says credit unions need to make ATM transactions via mobile as easy as they are through other channels. Some applications include using mobile to validate the consumer’s identification at an ATM without having to insert a card, or using mobile to set up future transactions.

“Say, through your mobile application, you signal at breakfast that later that day you’ll be doing an ATM transaction,” Block says. “When you arrive at the ATM, it’s already set up to do what you had planned.”

Cardtronics also sees promise in the intersection of mobile and ATMs. The company is blending mobile and online services with rewards that motivate consumers to use particular ATMs, says Ben Psillas, executive vice president at Cardtronics and president of Allpoint Network.

A consumer may look online for a nearby ATM and see a retailer’s location come up with a coupon, he explains.

During the past few years, additional transaction types, such as lottery ticket sales and donations to charity, have started to appear at ATMs, says James Phillips, vice president, sales and marketing, for Triton Systems. “Many credit unions have partnerships with charities,” he says. “This capability can be universal so customers can contribute to local or national charities.”

Credit unions can use ATM ticket capabilities to appeal to their merchant accounts, Phillips adds. “When something like Powerball is in play, merchants can lose a lot of money as people come in to buy lottery tickets to the exclusion of other items. It’s more profitable to direct them to an ATM so regular customers can come and go easily.”

Another capability in the pipeline is direct currency conversion for international travelers. This function displays transactions in the currency of the users’ home countries so they know the exact fees and amounts they’re withdrawing.

“Also, over the next five years, you’ll see more value-added features, such as gift cards,” Phillips says. “Credit unions are trying to automate more teller tasks, such as gift card sales. It’s much less expensive and time-consuming for all concerned if members can buy them at ATMs.”

Consumers also have the option to receive electronic receipts that are sent via email or text message. “Credit unions can use this to capture email addresses for marketing purposes,” Phillips says.

As acceptance of paperless receipts grows, he predicts credit unions will save substantial money with the elimination of printer, paper, and maintenance costs.

Cardtronics recently acquired a software company that allows for one-to-one marketing by customizing what retailers and financial institutions can present on ATM screens. “A retailer might want, for example, candy bars to appear on an ATM located near a candy aisle,” says Psillas. “Even though many stores have TV screens that display ads, not everybody looks at them.”

ATM users, however, have to look at the screen and are more likely to see and respond to offers, usually housed on a receipt they can cash in at the register.

Psillas says the era of the virtual teller is almost here. “At branches, a host or greeter at the door will direct members to kiosks where a virtual teller will come onscreen to guide them through whatever transactions they want to do.”

Old tech, new tricks

While these capabilities are intriguing, Block says older technologies that are relatively mature are still somewhat new to many credit union members. “These include envelope-less deposits. Users have to get used to it—when you put cash and checks into a slot, you want to be certain it’s being handled properly.

“The interface for these kinds of deposits has to be obvious and intuitive,” he continues. “Credit unions need to have educational programs in place to ease members’ transition to these kinds of transactions. But technology soon enough overcomes initial consumer reluctance.”

Another established technology, which people are used to in the home, is videoconferencing. “We introduced ‘concierge video’ in a pilot stage in 2012, which gives consumers the ability to chat from an ATM with somebody inside the credit union,” Block says.

This allows credit unions to connect with members in yet another way and increase cross-sell opportunities.

“People are more likely to buy from a person versus an onscreen ad,” Block says. “Of course you don’t want this on every ATM, and you may want to limit its availability to times when an ATM is relatively idle. Also, it may be advantageous to provide a vestibule or some sort of private space.”

Another concept Diebold has in the works involves switching the video interaction to audio and continuing the transaction on the member’s mobile device.

EMV issues

ATM providers have dealt with questions about the EMV (EuroPay, MasterCard, and Visa) standard for several years and are confident they can help credit unions make the switch from stripe cards to chip-based cards.

“All of the terminals we currently ship are loaded with software that supports our EMV readers,” says Phillips. “We’re trying to promote the shift to EMV for our customers and have offered to provide insurance on our card reader for any customers concerned by technological changes.”

Psillas says such new requirements can lead to a reinvestment in the ATM marketplace, with better, more efficient, and more feature-laden machines. “This will be the positive side of EMV.”

Still, he says, there’s a question: “What’s the value exchange? EMV not only will require an upgrade, failing to upgrade also may leave owners of older ATMs liable for fraud committed against consumers on those machines. For smaller credit unions, the question will be, ‘Do we do this ourselves or find someone to help us?’”

Block says new machines aren’t the biggest impediment to EMV. “They’re actually a relatively minor element. The real issues are infrastructural because EMV ripples up through the enterprise to affect the network, software, database, and more.”

Virtual branches

Moving forward, financial institutions increasingly will install ATMs and kiosks in place of new brick-and-mortar branches, Psillas predicts. “One credit union CEO I spoke with recently told me it will cost him $2 million to build a branch, plus pay for fulltime employees, furniture, storage, equipment, and safety features. The sheer cost of new construction, when weighed against better self-service capabilities, is leading to a decline in new branch building. In fact, for many consumers, their one and only presence inside an actual credit union is when they first come in to open an account.”

Block’s advice to credit unions: “Don’t think of ATMs in just their historical role as cash dispensers in a wall. Think of their increasing capabilities, including those that take over more sophisticated teller functions. They’ll become more crucial to your credit union as they take on more.”