The Changing Role of the hole in the wall – the ATM

By Diane Stickland on 26th April 2018

Diane takes a closer look at an every day convenience – the ATM. Half a century since their launch, 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.  An anecdote of the time when their card was swallowed prior to a night out, 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 it, 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 know, that the modern day ATM has been shaped by the average consumer in its appearance, how it operates and the multiple functions it offers.

It is 50 years since the first Automatic Teller Machine was invented in 1967 by John Shepherd-Brown in London and, despite an initial technical glitch when it was rolled out in Zurich: tramlines had affected the mechanics of the machine, the new method of retrieving cash took off, producing tangible evidence that retail banking was changing.  Since then, ATMs have indeed become more sophisticated and quite different from the early machines, performing transactions no one could have envisaged.

However, half a century on, with technology constantly evolving and talk of a cashless society, 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, have claimed users will never look at it in the same way, with their introduction of a tablet inspired screen, which allows 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.  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. ATM manufacturers are reviewing new technologies – iris scans, thumb prints and there are even devices that can measure your individual heartbeat

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 access to quick dispensing cash all over the world.  Remember travellers cheques?

It has now been made apparent that ATM manufacturers who are willing to go with change and embrace the changing culture, by introducing flexible and adaptive business models, will be rewarded with enormous future potential. Banks are being forced to rethink the way things have been done, by digitally minded consumers and are under pressure to reduce and eliminate fees and charges, face up to scams that affect public trust in the safety and security of ATMs, and consider the effect of rising government interest in promoting a cashless society. If used to their full potential, ATMs offer banks numerous opportunities to differentiate from competitors through this channel by turning ATMs into self-sufficient mini-branches.

Modern technology aside, it appears popularity of these machines are still very evident in many countries, in fact there are currently over 3million 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 shown growth in recent years, in particular India with the introduction of solar powered ATMs in rural locations.  It has been reported that Portugal has the highest percentage of machines in Western Europe, which may be related to the fact that they 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, which is coated with a thin layer of gold,  offers customers 320 items to choose from, ranging from gold bars that can weigh up to 10 grams, to customised gold coins!

Of course, security has always remained a fundamental issue for ATM providers, and despite the convenience of the machine to consumers, the very fact 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 – ripping the machine off the wall, to the calculating criminals, who opt for more sophisticated methods, which may include installing hidden cameras fake pads and even fake card slots.  The information they collect can be used in a variety of options, often and perhaps the easiest way to earn them money, is to use the details to impersonate the card owner, or simply empty the account.  Previously it was common to sell the information, particularly corporate card owners, on to a third party, but this method has not been so lucrative in recent years.  We are of course advised regularly to be vigilant when using ATMs, but are we?  In the UK high street we could soon see cash points that customers can access with their mobile phones – no card required.  This would help reduce fraud carried out using skimmer devices.

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, and in years to come, who knows what functions the ATM will provide…watch this space.