WHAT BANKS CAN DO TO GET THE MOST OUT OF THEIR ATMS

Mark Aldred, Banking Specialist at Auriga

 

Banks continue to face strict competiton from both traditional and new entrant banks. In addition to this, Covid-19 has caused a change in consumer bahaviour that has accelerated digital transformation based on the customers’ apparent appetite for smart and digital-first services. A recent survey by Mastercard unsurprisingly found that 22% of respondents have stopped using cash entirely, with cash usage receding amid the pandemic.

Although consumers are becoming more and more familiar with digital payments, the desire for cash has not diminished significantly. After an initial decrease of cash usage in the pandemic, we see worldwide that the trend is reversing and that the amount of cash being circulated through the ATM is now going up in aggregate. Additionally, research from RBR’s Global ATM Market and Forecasts research revealed that the compound aunnual growth rate (CAGR) of worldwide cash withdrawals will increase by 2.1% between 2019 – 2025.

Despite this, banks continue to close down ATMs. While ATMs are facing increased regulatory and operation costs, as well as increased risks from fraud and cyberattacks, this simplistic approach should be called into question, as this may involve leaving some people and communities behind. In the UK, Community Access to Cash pilot schemes have been developed in order to provide cash to underbanked communities, boost local economies, and put payment choice back into local hands.

As a result, financial organisations in the next few years must action policies that enhance ATM security, reduce the total cost of ownership, and improve, modernise, and personalise the customer experience.

FIs must ensure their operating strategies prioritize efficient, nimble, highly scalable and continuously available service channels, both physical and digital. Where this is not the case, it will leave consumers feeling excluded from banking services, which will ultimately reduce the quality of service customers receive.

 

Mark Aldred

What ATMs can do for banking customers

Contrary to popular belief, ATMs are so much more than just cash-and-dash machines. As long as consumers need cash, however, ATMs remain the most convenient tool for them to access it and for FIs to make it available. Therefore, self-service will continue to play a major role in the customer journey and a fundamental part in consumers’ brand perception.

With the correct technology, self service devices can offer basic banking and community services, such as managing your account, bill payments and loan applications. However, in order to make this a reality for communities, the right software and infrastructure is needed, especially since the customers’ needs and demands already exist.

In the context of branch transformation, multifunctional ATMs are already seen as part of many branch transformation initiatives and can also be an excellent complement or alternative to face-to-face interactions in a branch, as they can offer an extensive number of features and capabilities, 24 hours per day. We predict that they are sure to gain ground in a post-pandemic, interaction-averse landscape.

In addition to this, assisted self-service terminals (ASSTs) have also proven a sound  investment in a number of markets. According to a study from RBR, 340,000 assisted self-service terminals have been deployed worldwide. They allow customers to perform an even wider range of transactions with the assistance of bank employees. The reduced workload on branch staff will allow them to focus on other advisory duties. Because ASSTs encourage greater use of self-service terminals, many banks see them as the ideal bridge between physical and digital channels. They also preserve the human element in banking, which continues to be valued for certain transactions.

It is vital to enable access to cash for all communities, from inner cities, to the most rural areas. Not only do communities need access to cash, but they also need access to an array of banking services that support their local economies. There has been a demand from some areas of the financial industry to implement advances in self-service banking technology in all communities. This can include giving a community a bank branch or reforming a bank branch in a community so that it serves as a focal point for financial and other services. In addition to this, by customising modern ATMs so that they can provide additional services, it can allow cash access to be subsidised through generating extra revenues. These additional services can range from paying a bill, to doing a live call with a financial product specialist.

The pandemic has accelerated digital transformation plans for organisations across all industries, and has led to increased interest in cardless cash withdrawals. A report from RBR found that the number of ATMs offering this solution is increasing as deployers from different markets continue to utilise contactless technologies and implement new alternatives.

 

How banks can better manage their ATMs

Banks are constantly searching to review the way they are managing their ATMs, from decreasing the ATM management cost, to the costs of cash handling. These efforts are all aimed at reducing the total cost of ownership for ATMs. Banks are now considering pooling and collaborating with each other in order to further reduce the cost of ownership. The benefits of this can include an increased network and more opportunities to commercialise the offering with the increased services provided through ATMs.

Some banks are launching joint ATMs, whereby they share their ATMs with other banks. For example, the Geldmaat initiative is a cooperation between three major banks in the Netherlands. This initiative guarantees the availability and accessibility of cash for the banking customers of all three banks. Some banks are also externalising the complete management of their ATM channel, with BPCE in France serving as an example. Even after the current pandemic, we should expect to see the financial services industry continue to innovate in this area and develop new forms of ATM architecture. And if this is possible, why shouldn’t the concept be extended to branches. In this and other respects it’s only the beginning.

 

Next-Gen ATM Acquiring

In IT terms, banks should look to adopt a channel integration model that allows both the connection and the isolation of the external channel independent entities (e.g. Transactional Switch, Core Banking, and Services), to make them completely independent and seamlessly usable across all channels. The benefits from this model include a much simpler, cost effective, standardised and generally accepted interface (usually based on ISO-8583, ISO-20022 or Web Services) that focuses on the business services, forgetting all the complexity linked to ATM management, and more broadly to the self-service branch automation.

Further operational advantages include a modular approach and accelerated time to market by having a single point of control of the branch automation channel without the need to define, agree, coordinate, and implement across different products.

This capability finally allows users to extend automation to cover all the functionalities currently managed within the branch. This allows banks to deploy new lean branch concepts that automate the transactional banking services, with 24/7 availability, leveraging video banking technology, and focusing branch personnel on consulting and sales activities.

Customers still require access to cash and will need (and are entitled to) convenient access to the money they hold in their accounts. Having ATM software that enables seamless alignment with current and future needs is going to be key for the future. Customers demand consistency between mobile and physical channels – ATMs that meet those needs will lead to greater usage and could even reduce the cost per transaction of maintaining an self service channel.

 

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