A wave of innovation is breathing new life into the automated teller machine.
As consumers cut back on cash, bankers, ATM manufacturers and entrepreneurs are experimenting with myriad enhancements for the middle-aged cash dispenser.
They see two-way video connections to remote tellers, cardless mobile cash access machines that people instruct via smartphone and ATMs dispensing lottery tickets, coupons, bus tickets or loaded prepaid cards — even an ATM that gives cash for old cellphones or spits out a mortgage application.
“I look to see the ATM getting more and more involved,” said Todd Nuttall, co-founder of Better ATM Services.
Nuttall’s Arizona start-up outfits ATMs to dispense loaded prepaid gift cards. That’s not mainstream yet, but Nuttall’s optimism about the future of the ATM is widely shared.
Despite the steady advance of credit and debit cards, cash is not going away. There are 418,500 ATMs in place across the United States, and manufacturers are looking to squeeze more services and revenue out of each one.
Meanwhile, banks and credit unions are seeking to shrink branches and cut costs, while all businesses try to meet customer demands for simplicity and speed.
“I think the ATMs of the future are going to be like the branches of the future,” said Tom Ormseth, senior vice president of Wintrust Financial Corp. in the Chicago suburbs.
Wintrust Bank is installing nearly 200 mobile cash access machines in the Chicago area and southern Wisconsin. Customers can program their withdrawals before they get behind the wheel or while they queue up. Then they can get cash with a wave of a smartphone over a single-use quick response code displayed on the ATM screen.
The machines, made by Diebold Inc., slashed Wintrust’s average ATM visit from 40 seconds to just nine.
“It doesn’t sound like much,” Ormseth said. “But people are in a hurry when they want their cash.”
Cardless machines also eliminate the possibility of theft by crooks who attach card-skimming devices to machines such as gas pumps or ATMs, which continues to be a major security problem for banks.
Also debuting in the United States are interactive video teller machines that give customers one-on-one face time with a live teller or other specialists who can be thousands of miles away. The technology can give financial institutions a presence in new or remote areas where an actual branch isn’t cost-effective.
Bank of America Corp. and SunTrust Banks Inc. are starting to roll out video ATMs. Separately, Bank of America is installing video terminals in about 500 branches to hook customers up with specialists.
Credit unions have been ahead of the curve on video ATMs, said Brian Bailey, vice president and general manager of branch transformation for NCR Corp., one of the world’s largest ATM makers.
Expanding into Duluth
In Minnesota, Lake State Credit Union in Moose Lake recently invested in three of NCR’s interactive video teller machines to help it expand into Duluth. It installed two in its new branch in the downtown Duluth Technology Village, and one in the building’s lobby.
Lake State’s president and CEO, Tim Smith, said the ultimate goal was to help build the credit union’s loan portfolio. It’s working, he said.
“We signed a fair amount of new membership as a result of just the interactive technology machine,” Smith said. “There’s no question that it has been a component of what is driving new business.”
Companies are tinkering with next-generation machines that could hook up with a mobile banking application to know, for example, when you’re near a car dealership. The ATM could be “a platform to print out a mortgage application, sign it, scan and complete it without ever having to be in front of a loan officer,” said NCR’s Bailey.
NCR already is working with several credit unions on technology allowing customers to remotely talk to a mortgage agent or insurance agent.
Other industry players see a world of possibility. ATMs are underused, argues Better ATM Service’s Nuttall.
“The ATM is the best and largest self-service financial device on the planet,” Nuttall said. “Why isn’t it doing some of these other financial transactions?”
In many other countries ATMs function as financial kiosks, he said, allowing people to pay bills, get subway and bus tickets or top off their prepaid cellphone minutes.
Nuttall thinks the U.S. will gravitate to kiosks. As evidence of support for the concept, he pointed to Outerwall Inc.’s (formerly Coinstar) $350 million purchase last year of ecoATM, whose mall kiosks dispense cash in return for cellphones that can be resold.
There are myriad other innovations. ATM providers are “looking hard” at incorporating couponing and advertising via high-definition “video toppers” that provide a constant stream of news, weather and other information, said Bruce Renard, head of the National ATM Council, a trade association for independent ATM providers and suppliers.
Still, not everyone is tricking out their ATM fleets just yet.
Minnesota’s banking giants, U.S. Bancorp and Wells Fargo & Co., are cautious. Neither has debuted video or mobile cash access.
“We’re still kind of exploring and looking at ways to deploy and reasons to deploy,” said Jeannie Fichtel, U.S. Bank’s executive vice president of 24-hour and ATM banking.
Dominic Venturo, chief innovation officer for U.S. Bank Payments Services, doesn’t see a compelling case for a cardless ATM yet. “Right now it’s sort of creating as many issues as it would solve,” he said.
Nonetheless, souped-up ATMs for greater self-service banking are featuring heavily in Branch of the Future ideas.
The general idea is to get customers out of the teller line when it comes to standard transactions, said Devon Watson, Diebold’s vice president of new business and solution incubation: “Research shows consumers would rather do it themselves if it’s efficient and they feel in control.”