Marking its 50th Anniversary, the ATM Is at a Crossroads

By Toni Lapp, Senior Editor

This year marks the 50th anniversary of the automated teller machine, an invention that former Fed Chairman Paul Volcker once called “the most important financial innovation [that] really helps people and prevents visits to the bank.” The ATM did not really catch on until the mid-1980s, when its acceptance brought a fundamental shift in banking and beckoned a culture of 24/7 self-service. ATM fees and impact on branch traffic have been the subject of debate over the years.

Early ATM image

NCR Corp., which started out as a manufacturer of cash registers, pioneered the earliest ATMs in the United States.

And now, the ATM is at a crossroads, its status in question as new banking channels emerge.

Meanwhile, the EMV liability shift for ATMs goes into effect in October, prompting banks to evaluate strategies for aging ATM fleets. Smaller institutions are more likely to have delayed purchasing upgrade components or replacement ATMs, according to the ATM Industry Association.

When it comes to accessing bank services, 61 percent of consumers use the ATM at least once a month, more than any other channel except for online banking (at 64 percent), according to a study by Accenture. And banking with mobile devices continues to grow, further reducing consumer visits to ATMs as well as branches. Just last month, Personetics revealed a survey that found most financial institutions are researching the potential use of chatbots, deployed by digital device and messaging platforms, to help consumers with banking issues.

Many banks are choosing to upgrade the stalwart ATM with an eye toward additional third-party applications, said David Tente, executive director of the ATMIA.

“The ATM is affording opportunities to bring in the unbanked and underbanked by enabling money transfers and bill payment,” says Tente.

ATMs could be akin to the Swiss-Army knife of banking, as cash dispensing has become just one of many tasks they perform. ATMs can now be used to take deposits, transfer money between accounts, pay bills, send money, view statements, talk with a banker, apply for a loan or replace a lost debit card. Innovations in deposit-capable ATMs, which both accept and dispense cash, enable “recycling” ATMs that redispense deposited currency – offering further cost savings to banks. And ATMs are not diminished by an omnichannel approach to banking, in which banks are becoming more strategic about customer-facing interactions.

“Leading banks will start converging mobile and online banking into new digital banking applications composed of widgets built on an agile microservices architecture,” predicts Danny Tang, channel transformation leader at IBM. “The new digital banking applications will offer many cross-channel services, such as text with contact center, video with relationship banker, cardless withdrawal at ATMs, appointment making and transaction pre-staging prior to a branch visit.”

The ATM: A Timeline

1967: The first ATM appeared at a Barclays Bank, London.

1968: U.S. patent filed for PIN technology. 1969: Chemical Bank installed the first ATM in the United States.

1972: The first modern ATM — an IBM 2984 — debuted at Lloyds Bank, London.

1973: IBM, Lloyd’s Bank collaborate on networked devices.

1979: Introduction of a switching system enabled shared ATMs between banks in Denver.

1984: Joint venture between IBM and Diebold paired self-service technology with global distribution network.

1996: MasterCard and Visa networks lifted their ban on surcharging; number of U.S. ATMs doubled over the next five years or so – mostly from independents.

2012: Cardless ATMs relying on six-digit PINs introduced.

2017: An estimated 3 million ATM units in existence globally. Save Save

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