Will the ATM live to see another 50 years?
Technological innovations and the maintenance costs of ATMs threaten the future of the traditional ATM as its 50th anniversary is marked on June 27, 2017.
While Barclays has celebrated the date by unveiling a golden ATM, Fujitsu looked at how technology is transforming the model for the modern age. Others believe that the death of the so-called cash point will be brought in as we embrace a cashless society.
Raheel Ahmed, Barclays head of customer experience and channels, argues that cash remains significant in today’s society. “Even though recent years have seen a huge uptake of digital banking and card payments, cash remains a crucial part of most people’s day-to-day lives – whether it’s paying for groceries or doing the office coffee run,” he says.
Is cash still king?
Rather than heralding its extinction, Fujitsu is currently working on renovating the existing ATM model. It is partnering with Spanish bank La Caixa to roll out contactless cash withdrawal from ATMs, with payments being made via contactless cards, mobile phones or wearables. In the Far East and South America, Fujitsu has worked with banks to deploy biometric technology on ATMs. The company claims this solution has allowed Brazilian bank Bradesco to reduce ATM fraud to almost zero.
Anthony Duffy, Fujitsu’s director of retail banking, UK and Ireland, says: “It will be interesting to see how the ATM develops over the next 50 years. As technology continues to change banking, at Fujitsu, we expect to see self-service devices such as ATMs take on a new importance within branch operations.
“We expect to see the deployment of cost-efficient machines which blur the distinction between cash dispensing, internet banking and advanced marketing.
“With each machine increasingly being built from individual components, ATMs can be made to appear bespoke to the user by making their shape, casings and colour consistent with the needs and brand identity of the deploying bank,” Duffy adds.
He also predicts that the market will increasingly look to cut the costs associated with maintaining ATMs through power and energy savings, easier installation and simpler maintenance.
“The costs associated with cash replenishment and machine maintenance are becoming a growing challenge for the bank, leading to machines equipped with banknote recycling capabilities being deployed in markets where regulators permit such a capability,” Duffy explains.
Contactless and cashless
Sudhesh Giriyan, chief operating officer (COO) of Xpress Money previously predicted that the ATM will soon be obsolete. “Phone boxes and ATMs offer a location-based transaction. Today, though, only 3% of the [UK] population use phone boxes – and our assumption, over time, is that the same decline in use will apply to ATMs as consumers become more accustomed to the use of money transfer services via their corner store or via an app,” he told GTNews.
In the UK, more than £120bn (US$153.13) is now withdrawn from machines each year, via more than two billion visits to the country’s 70,000 ATMs, according to Fujitsu. These may be impressive statistics, but the comparative surge in the UK’s non-cash payments dwarfs those of the humble ATM.
UK non-cash payments will reach £1.44trn (US$1.84trn) by 2026, research from global law firm Paul Hastings has predicted. This is a 26% increase on 2016’s figure of £1.14trn (US$1.45trn), with there being 19.1 billion contactless transactions per year within a decade.
In 2015, cash accounted for less than half of all payments made by consumers, businesses and financial institutions in the UK for the first time. In the first three months of 2016, meanwhile, use of both contactless credit and debit cards overtook cheques, Paul Hastings reported.
By 2026, researchers at Paul Hastings have forecast that 68% of all transactions will be non-cash transactions – up from 55% today. The law firm also predicts that 74% of businesses will accept alternative payment methods, up from 2016’s figure of 41%.