For years, banks have explored ways to expand ATM functionality beyond simple cash withdrawals, but many of these ideas have struggled to gain traction. The challenge has largely come down to economics. The cost of upgrading machines and supporting new services often outweighs the potential revenue, especially for products that fall outside a bank’s core offerings. Still, new examples are beginning to emerge, from card-based withdrawals to expanded payout options, suggesting that both technology and consumer expectations may be catching up. The question now is whether banks can find a model that makes these enhanced ATM services both practical and profitable.
Financial institutions leveraging ATMs to deliver products other than cash has been on the radar for many years. For example, postage stamps were an early strategy and gift-card dispensing strategies also had a long shelf life. See a video from 2009 about this technology.
Why haven’t these seemingly complimentary strategies received more traction in the market? It’s because of the unexciting cost/benefit ratio of course. Simply put, there wasn’t enough money to justify the upgrade needed to deliver anything other than cash and receipts, not to mention the cost of marketing products that were not core services for financial institutions.
But, resurrecting good examples of lukewarm ideas is present in every industry and ATMs are no exception as stated in this article from The Consumerist:
You can already make your withdrawal in card form at a few credit unions in Washington, D.C. and Arizona, and more big banks are prepping to introduce the technology to their ATMs soon.
Over the years, ATMs have become more feature-rich and offer a wider range of services including envelope-free deposits and mini-statements, all of which make depository services more convenient. On the non-bank side, Coinstar allows consumers to add funds to a gift card or a PayPal account. Its core business is coin counting, so giving people options as to how they receive their payout makes business sense and their business partners help to fund the necessary technology enhancements.
It’s entirely possible that consumers are ready to do more at their bank’s ATMs, but most banks struggle with gift-card economics, and even general purpose reloadable cards require more of strategy than simple dispensing capabilities can cover.
Click here to read more from The Consumerist.
