Long Live the ATM: Automated Teller Machines Are Still An Important Delivery Channel for Banks The automated teller machine may not be as hot as other banking channels, such as mobile, but the ATM remains a critical component of banks’ multichannel delivery strategies. By Lisa Valentine June 05, 2012 URL:
Perhaps because they’ve been around for more than 40 years, ATMs just don’t garner the excitement of newer channels, such as mobile. But the ubiquitous ATM — used by 85 percent of consumers, according to a recent Mercator Advisory Group report — is still delivery channel royalty. out new delivery channels, ATMs will remain an important part of the mix, notes Ken Patterson, VP of research operations and director, credit advisory service, for Maynard, Mass.-based Mercator Advisory Services. As such, banks need to tightly integrate ATMs with these additional delivery channels, he stresses. “How all these channels affect each other as part of the entire retail banking mix is the question,” Patterson says. Ed O’Brien, director of Mercator’s banking channels advisory service, adds, “ATMs are the co-anchor of a multichannel bank delivery strategy in which consumers touch every channel, perhaps even in a single day. It’s all about consumer choice.”It’s also all about the customer experience, and today’s ATMs, with advanced features and functionalities, can be a flagship part of a bank’s multichannel strategy, the experts agree. Old Dogs, New Tricks:Many banks were forced to upgrade their ATMs to meet the March 15, 2012, deadline for ATM accessibility in compliance with the Americans With Disabilities Act (ADA). Some banks parlayed compliance into a business case for installing intelligent deposit (ID) ATMs, according to David Albertazzi, senior analyst with Boston-based research firm Aite Group. ID ATMs, which came on the market about five years ago, combat the biggest roadblock to widespread consumer adoption of ATM deposits: trust. For consumers it’s still a leap of faith to hand over checks or cash to a machine. Unlike traditional envelope-based depository ATMs, however, ID ATMs allow consumers to verify deposits in real time and even dispense check image receipts to increase onfidence.”Consumers understand the value of intelligent deposit,” explains Bob Tramontano, VP of marketing for Duluth, Ga.-based ATM manufacturer NCR. “A single slot enables customers to deposit mixed cash and checks very quickly and very safely. Usage is increasing and even driving deposit growth.” Indeed, consumers are becoming increasingly comfortable with ATM deposits. Nearly half (47 percent) of respondents to Mercator’s survey reported having deposited a check at an ATM in the past year, and 22 percent made a deposit without an envelope in the preceding three months, up from 17 percent the prior year. Return on Investment:Of course, ID ATMs can be costly to install across an entire fleet. But even with a higher price tag, next-generation ATMs deliver ROI, since they can offload certain teller and call center tasks and can add value by providing messaging for new products and cross-selling, Mercator’s Patterson contends. The Search for the 2012Elite 8 Is Underway:Each year, the editors of Bank Systems & Technology recognize eight bank technology executives based on their accomplishments, leadership and vision. This year’s Elite 8 will be honored at BS&T’s 2012 Executive Summit, to be held Sept. 30-Oct. 3 at The Royal Palms Resort & Spa in Phoenix, Ariz.Since encouraging self-service deposits allows banks to redeploy branch staff to improve the customer experience and reduce costs, ATMs are transforming branches, asserts NCR’s Tramontano. “Offloading some tasks to the ATM allows banks to rescale their branch size.” he says. For example, NCR’s Interactive Teller ATM technology allows tellers and customers to talk via videoconferencing, Tramontano relates. This allows banks to centralize tellers, expand their teller reach beyond traditional brick-and-mortar branches, and provide teller service even when the branch is closed, he says. Although ATMs may be the epitome of self-service, some banks are positioning ATMs as part of a hybrid service model. Mercator’s O’Brien says banks are positioning an experienced teller to act as a “greeter” at an advanced-function ATM to answer questions, encourage self-service and even cross-sell, just as they would at the teller line. But banks must be aware of a possible backlash from newer-generation ATMs, he cautions. “Customers process more complex transactions at the ID ATM, increasing queues,” O’Brien warns. “An insufficient number of ATMs in a high-volume area can cause customer dissatisfaction.” Chuck Somers, VP, core self-service solutions, for North Canton, Ohio-based Diebold, acknowledges that banks need to be cognizant of customer wait times. But he points out that most transactions at the newer ATMs are not significantly more time-intensive than simple withdrawals or balance inquires. Nonetheless, the ATM will continue to be a big part of banks’ overall channel strategies, Somers predicts. “The key is to make sure that information the customer receives at the ATM is synchronized with other channels so there is consistency,” he says. “Banks want more than operational efficiency from their ATMs,” Aite’s Albertazzi adds. “They want a competitive advantage by introducing a personalized and integrated user experience supported by ATMs with feature-rich and advanced functionality.” Mobile Devices and the ATM:Allowing customers to use their smartphones to activate and deactivate their debit cards is just one example of a truly integrated customer experience across channels. Chris Rowe, VP of self-service products at Diebold, expects to see continuing integration between mobile devices and ATMs. For instance, Rowe suggests that customers will be able to stage a transaction by initiating a withdrawal via a mobile banking app and then using a one-time PIN, sent to the mobile banking app, or an NFC-chip-enabled card to complete the withdrawal at the ATM.
And rather than print a paper receipt, the ATM can send a text message to a mobile phone, providing an additional level of security, adds Chuck Somers, VP, core self-service solutions, Diebold. A customer receiving a text message about a $200 withdrawal he or she didn’t make will immediately report the possible fraud, he explains.