The evolution of the 'hole in the wall'

Half a century since their launch and with technology constantly evolving and talk of a cashless society, has the life of the ATM expired?

Most people will lose interest when the subject of the cash dispenser arises, as it is not the usual topic of conversation among friends. However once prompted, there will always be a memorable story to tell. 

Someone always has an anecdote of the time when their card was swallowed by the ATM prior to a night out, or finding a wad of notes sitting in the dispenser having been left behind by the forgetful owner, or even a detailed account of the night when their friend was robbed by a chancer lurking by. 

We’ve all used them. We’ve all relied upon its services and for the foreseeable future, it will continue to be part of our lives.  However, a study last year found that only one in five people take cash from a bank once a month, rather than daily or weekly, as we rely more on cards and contactless payments.

But it is perhaps interesting to note that while the times are changing, the modern day ATM has evolved itself over the last half a century. It has been shaped by the average consumer in its appearance, how it operates and the multiple functions it offers, so maybe this isn't the end at all. 

Brief history of ATMs

It has been fifty years since the first Automatic Teller Machine was invented in 1967 by John Shepherd-Brown in London. The idea soon went international and despite an initial technical glitch when it was rolled out in Zurich (where tramlines unexpectedly affected the mechanics of the machine), the new method of retrieving cash took off. It offered convenience to shoppers who could retrieve money more readily than going into a bank and the humble ATM produced tangible evidence that retail banking was changing. 

Since then, ATMs have become more sophisticated and quite different from the early machines, performing transactions no one could have envisaged.

However, half a century on, technology has continued to constantly evolve. With talk of a cashless society, what is next for ATMs?

Has the life of the ATM expired?

Maybe not completely. Manufacturers are looking at alternative functions of the traditional ‘hole in the wall’ system. In fact, ATM manufacturer NCR has claimed to have revolutionised the system with their introduction of a tablet inspired screen. This will allow the user to type, swipe and pinch as they would with their own devices.  These new screens have already been installed in the United States, and are due imminently in the UK and Australasia. 

ATM manufacturers are also reviewing new technologies such as iris scans, thumb prints and there are even devices that can measure your individual heartbeat. Machines that allow consumers to access their accounts by using biometrics, such as scanning one’s palm print or irises, have been popular outside the US, particularly in Latin America.

However, with new payment systems being launched, could we then be looking at the demise of the ATM as we know it? Well one thing we can be sure of. As a society, we rely on cash dispensers more than ever. They give us the freedom to travel the world with just a piece of plastic, giving us quick access to dispensing cash all over the world. Remember travellers cheques? They're a thing of the past. 

ATMs and banking

ATM manufacturers who are willing to go with change will be rewarded with enormous future potential. They need to embrace the changing culture by introducing flexible and adaptive business models.

Banks themselves are being forced to rethink the way things have been done by digitally minded consumers. They are under pressure from multiple angles to take action and update their ways of working including: 

• Reducing and eliminating fees and charges
• Battling against scams that affect public trust in the safety and security of ATMs
• Considering the effect of rising government interest in promoting a cashless society.

With all of the changes required, there is no clear way forward. However, if used to their full potential, ATMs could offer banks numerous opportunities to differentiate from competitors through this channel by turning ATMs into self-sufficient mini-branches.

Still going global

Modern technology aside, it appears popularity of these machines are still very evident in many countries. In fact there are currently over three million cash dispensers all over the world, including a mountaintop dispenser in the Himalayas! 

Recent studies have shown rapid growth in the ATM, with over 200 dispensers being introduced daily. Brazil, Russia, India and China have all shown ATM growth in recent years. In particular India which has introduced solar-powered ATMs in rural locations. 

It has been reported that Portugal has the highest percentage of machines in Western Europe. The main reason for this is Portuguese ATMs offer other functions and services, including cinema and other ticket purchases, tax and bill payments and mobile top-ups. Sweden, in contrast, has the lowest proportion of cash machines in Europe, which is believed to be related to Scandinavia becoming a cashless society.

In the Gulf,  there is even an ATM which dispenses gold bullion bars! Located in the lobby of Abu Dhabi’s Emirates Palace Hotel, the machine is coated with a thin layer of gold and offers customers 320 items to choose from, ranging from gold bars that can weigh up to 10 grams, to customised gold coins!

Overcoming the security risks

Of course, security has always remained a fundamental issue for ATM providers. Despite the convenience of the machine to consumers, the very fact is that within the walls of each machine, there may be thousands of pounds worth of cash. 

This is enough to attract the attention of even the most desperate criminals. Methods include the straightforward approach of ripping the machine off the wall or the calculating criminals, who opt for more sophisticated methods such as installing hidden cameras, fake pads and even fake card slots. The information they collect can then be used in a variety of ways. Often the easiest way is to use the details to impersonate the card owner through online purchases or simply empty the account. Previously it was common to sell the information, particularly corporate card owners, onto a third party. However this method has not been so lucrative in recent years. 

We are, of course, regularly advised to be vigilant when using ATMs. But are we? In the UK high street, we could soon see cashpoints that customers can access with their mobile phones – no card required. This would help reduce fraud carried out using skimmer devices.

In conclusion

So the question remains, what is the future of the ATM in a world of digital money?  Well it seems fair to say, we’re not losing it anytime soon given the rapid and continued spread of ATMs worldwide. And with the introduction of brand new technologies to offer greater convenience and increased security in years to come, who knows what functions the ATM will provide…watch this space.