Self-service in the banking industry has gone through quite an evolution in the last five years or so. What started decades ago with the ATM, has now evolved into a delivery channel offering a multitude of different ways that consumers can interact with their accounts. Use of the more recently added mobile touch points has exploded. And the move to automated deposits has probably been the most successful banking industry initiative in recent memory.
To a large degree, though, we are still stuck in the ‘90’s as far as our available transaction set is concerned – balance inquiries, account alerts, simple account-to-account transfers, bill-pay. The interfaces are faster and more friendly and the devices now fit in our pockets. But the environment still lacks one very important capability in order to continue its evolution – the versatile use of cash.
Although the ATM is still the only remote banking channel with the ability to receive, validate, and dispense cash, its inability to connect cash to other forms of payment, continues to drive those transactions to the bank branch, check-cashing businesses, money transfer services, and even the U.S. Mail. Multi-channel delivery will only reach its full potential when it can seamlessly integrate cash (and the ATM) with every other form of payment.
The rapid adoption of automated and mobile deposits is clear evidence of the consumer’s appetite for increased functionality within the self-service channel. So why can’t we satisfy that appetite with, for example, person-to-person transfers at the ATM? The technology to accept cash, pre-paid cards, debit cards, and credit cards at the ATM is already in place at hundreds of thousands of ATMs across the country. And new technologies now provide the means to dispense variable value pre-paid cards, as well as cash. The biggest obstacle to connecting the two might be the debit/credit/ATM card we are accustomed to using to initiate cash withdrawals.
When heading to the ATM today to make a withdrawal, the first thing you do is grab your ATM/debit card. Any transaction that travels along the card system “rails” (even from the ATM) must go through extensive and costly testing and certification processes from both the manufacturer and the networks. Add to that the hesitancy to implement ATM transactions which could potentially slow down the customer queue on a Friday afternoon, and it’s not difficult to see why there has been little will to push new innovations. However, that scenario is beginning to change.
Several implementations are in the works that will provide cash withdrawals without the use of a card. One of the primary reasons your card is required for a cash withdrawal is that it serves as a means of identifying you as the account holder. Both new and old technologies, though, offer other means of fulfilling that need – QR codes, NFC, and biometrics. Those new implementations I referenced will be using QR codes and online banking applications to pre-stage a cash withdrawal. At the ATM, the bar code and a PIN provide two-factor authentication of who you are – no card required.
Cardless is the wave of the future at the ATM and for multi-channel delivery. Going cardless means bypassing the traditional debit networks in favor of ACH and other options – which opens the door to a tidal surge of innovation. And that innovation will include the means to integrate cash with many other types of payment, using the ATM as a secure hub.
The final requirement for taking multi-channel delivery to this next level is that financial institutions demonstrate the will to make it happen. Concerns over the impact of adding new functionality to the ATM channel should be replaced by enthusiasm for the opportunity to better serve existing customers, attract new customers from competitors, and engage the Underbanked. Competition in this arena is also emerging from independent ATM deployers (IADs) and non-bank financial services entities. All of these developments bode well for consumer convenience and the future of the ATM industry.
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