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Evolution of ATM technology: Trends and ATM 2.0

​ATMs are and will maintain its important role as a core banking touchpoint with the customer. Now, the question is how it can be developed to be more than a cash dispenser?

​50 years after the inaugural ATM was installed outside the Westminster Bank in Charring Cross, London by Barclays, the total number of ATM installments has declined for the first time ever. In Europe and the whole world, the number of ATMs maintained steady ever since its introduction but especially in '90s and 2000s when payment cards became more developed and convenient for use. However, ATMs are and will maintain its important role as a core banking touchpoint with the customer. Now, the question is how it can be developed to be more than a cash dispenser?

ATM and its uses

Despite the number of innovative services being made available at many ATMs, cash withdrawal still remains the most accessed service at ATMs. Cash deposits and balance inquiry, as well as currency exchange, are probably the second most important usage regarding ATMs.

In fact, ATMs are currently built to be an ideal channel for selling and handling paper-based product and services such as tickets, wireless phone recharge cards, financial products, etc. The screen interface allows browsing and customization, access to bank accounts facilitate payments and printing capabilities produce the actual product/service.

Some of the innovative ATM solutions that brighten its future are cardless cash withdrawal. It enables cardholders to withdraw money only using smartphones:

This proves that the possibilities of redefining ATMs are not yet all exhausted.

Is the ATM business dying

In many European countries, ATM usage statistics are falling as non-cash payments increase and cash payments decline. In 2017, the total number of automated teller machines (ATMs) in the EU decreased by 1.0% to 0.43 million, while the number of point of sale (POS) terminals increased by 9.9% to 13.5 million. By 2018, the number of ATMs in Europe had decreased to approximately 406.5 thousand.

This, however, does not spell certain doom as many have immediately started predicting. ATM service providers have stepped up to the challenges of the digital revolution that is sweeping the financial sector and this ongoing transformation has, fittingly, been dubbed ATM 2.0.

In Sweden, however, one of the first cashless countries, ATM cash withdrawals value went down greatly by 63.05% from 2016 to 2017.

This doesn't mean people aren't still withdrawing cash or using ATMs. With the progress in teller automation, it is predicted that bank branches will eventually decrease which will put the spotlight on the new and evolved 2.0 or some higher versions of the ATM. Self-service kiosks seem something like a hybrid phase of this and are proving very useful and practical.

In fact, by 2022, the self-service kiosk market is expected to reach 19.64 billion dollars. (Business Wire).

Pros and cons of ATMs

Until cash becomes obsolete, there will still be one remaining prevalent advantage of ATM technology - immediate cash as required without the users standing in long queue in banks. It also works round the clock meaning that ATM provides banking services to its customers 24 hours a day, 7 days a week and 365 days a year. Enabling access to the bank from any part of the world is yet another advantage.

The disadvantages are:

  • ATM machines are a continuous target for criminals to carry out fraudulent attacks.
  • The cost of ATMs and having cash as compared to electronic alternatives is an argument often made to promote phasing out cash.
  • For younger generations, the main problem is in the user experience and even interface with the many apps and methods nowadays available for making payments.

Future of the ATM machines

First and foremost, the evolved ATMs will still be, at their core the same - they will dispense and receive cash, as well as dispense cash previously deposited by engaging the ATM recycling functionality. However, in some markets, their role has already evolved from being a primary banking customer touchpoint to a channel complementary to branch, mobile and internet banking (Accenture).

Despite the fact that the choice of this new moniker appears as an attempt to court the contactless, online crowd, the name ATM 2.0 does indeed point to an entire spectrum of new functionalities ATM could offer its customers. The interaction between ATM 2.0s and online systems may allow customers to perform certain transactions that the previous generation could not, from redeeming online gambling winnings to withdrawing funds from mobile payment services such as PayPal, Google Pay or Apple Pay.

Banks will be the first to benefit from the reduced costs of having fewer branches. Then come the customers, who will benefit first from the convenience of the new automated tellers and secondly from a highly upgraded user experience along with the interface.

Cryptocurrency ATMs are also a trend that came in 2013 and spiked from 2016 up until today.

According to statistics from Coin ATM Radar, the total number of crypto ATMs around the world increased from 501 ATMs in 2016 to almost 4,300 in 2019, further showing that ATMs have doubled almost every year for the last 4 years.

Since the Bitcoin's value is uncertain from day to day and changes violently, the crypto trend is having its own issues, but the future is yet to be determined.