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How the Smartphone Can Revolutionize the ATM Cash Experience

By: Doug Brown

You have lost your ATM card and need cash for a taxi. Or it is dark in the city and you do not feel comfortable standing at an ATM waiting for cash. A crowd of people around you at the ATM makes you feel like someone is surfing your shoulder to get your PIN.

Smartphone-enabled cardless cash access at ATMs can address all of these real-world examples and much more. Cardless cash access for ATM withdrawals is a faster and more secure way to get cash when customers want it. And when customers win, the financial institutions that provide this compelling experience win, as well.

It Is Safer, Faster and More Convenient

Cardless cash access is more secure because it dramatically reduces the threat of card skimming. Because the card credentials are stored and accessed securely in a cloud infrastructure, thieves cannot use a skimmer to steal customers’ card information. In addition, because the PIN is not entered on the ATM screen, bad guys are thwarted from shoulder surfing where they could watch you enter keystrokes on the ATM. Customers are better protected in the smartphone-based cardless cash model because they must have their registered phones (something they have) and know the passcode for funds access (something they know). And the best applications store no payment data on a phone — so customers are not compromised if they lose their phones. Finally, customers are aware if they lose their phones in minutes versus hours to days before they may notice lost debit cards, thus rapidly accelerating notification and making loss prevention easier.

The process is convenient because most people carry their phones with them at all times, and receipts can be sent directly to the phone. Because transactions can be ordered in advance, they are much faster. During one pilot project, a Chicago bank found cardless transactions to take less than 10 seconds versus traditional, card-based transactions that took more than 40 seconds to complete. That is an enormous leap in checkout speed for the customer.

Cardless Cash Is New and Cool Because It Is Mobile

Millenials and Gen Y consumers look for brands that appeal to them and meet their lifestyles. For innovative banks looking to capture share in these growing segments, there is high brand value in being the first bank in an area to offer cardless cash access from smartphones. Offering new technology brings a cachet that can make a bank relevant to customers versus competitors. The better customer experience reduces the cost to serve customers.

Cardless Cash Is a Digital Foundation to Higher Profitability

Cardless cash access encourages customers to buy more products and services from their banks. Cardless cash will increase adoption of all mobile and digital products offered by financial institutions. Because every cardless transaction requires interaction with the smartphone app versus a plastic card, it creates a digital branded impression where customers can receive targeted and relevant product offers. Active digital customers have 30 percent broader product relationships than their non-digital counterparts.

Many financial institutions also are looking for ways to engage the younger demographic and underbanked segment for its growth potential. A 2013 study by FIS, gauging customer interest in real-time digital capabilities, found that 55 percent of Generation Y respondents and 43 percent of Generation X were attracted to digital services for convenience. If a financial institution can reach these younger customers based on convenience, it has the chance to hold them later when their banking patterns settle and their needs and incomes grow.

Mobile Is the New Norm

Mobile banking use will continue to accelerate — with nearly 33 percent of U.S. households engaging in mobile banking today. Cardless cash access is an extension to the winning formula of mobile banking — making the smartphone the digital epicenter of the client experience. According to the Pew Research Center’s Internet & American Life Project, 56 percent of all adults in the United States are smartphone adopters as of May 2013 — that is up 10 percent over a year earlier. And those with the highest incomes and the most education are most likely to own smartphones, putting them squarely in target demographics for most banks.

Cardless Cash Access Differentiates

Cardless cash access can be particularly attractive to mid-size community banks and credit unions, which often struggle to compete with large financial institutions. In a pair of studies by Javelin Strategy & Research in 2012, 34 percent of customers at the largest banks were found to use mobile banking, compared to only 14 percent at community banks; meanwhile, many customers reported a desire to switch to smaller institutions but were afraid of losing the convenience of larger banks. Cardless cash at ATMs brings a convenience differentiator to mid-size and community banks.

How to Leverage Smartphone Cash Access With Your ATM Business

Institutions ready to embrace the challenge of innovative mobile experience with a capability like cardless cash access need to consider the following:

Banks should choose a technology partner to help design the platform and digital strategy that will best meet their business objectives in delivering a new capability like smartphone cardless cash. It requires expertise in both mobile and ATM environments to successfully design a cross-channnel experience that will delight customers.

Doug Brown is senior vice president and general manager at FIS Mobile. Contact him at douglas.brown(at)

Copyright (c) January 2014 by BankNews Media