(Editor’s Note: This is the first installment in a three-part series on the transformation of the banking industry and its impact on ATMs)
No longer do we trek to a video store to rent a movie. We stop at a kiosk outside the grocery store or even easier, press a few buttons on our TV remote and…Boom! Last month’s blockbuster starts playing. Or we pay a small monthly fee to our favorite online superstore, order an item, and…Boom! The item arrives two days later. Or we subscribe to a weekly food delivery service and…Boom! We’re having home-cooked gourmet meals with no barely-used bottles of ingredients to store.
It’s an on-demand, do-it-yourself, no-hassle world, and we’re beginning to expect that experience everywhere, including that age-old institution, banking.
Couple these expectations with the FI shareholders’ call for lower costs and higher revenue, and an evolution in banking is transforming how and where
banks and credit unions deliver services.
For now, the how is through digital, mobile or traditional channels. The where is the smart phone, online, ATM or branch. But rather than treating each channel differently, strategic financial institutions are adopting an omni-channel delivery strategy focused on ensuring that customers have a consistent experience across all channels.
This transformation of banking services delivery has probably had the most impact on the bank or credit union branch. Digital innovations are attracting customers away from the branch, and FIs are redeploying more capital funds to more innovations. As these funds are shifted, branches are being downsized or closed, while others are redesigned to meet customers’ desire for consultative services. As a consequence, as the traditional branch goes, so goes the presence of the ATM.
However, the demand for cash continues to grow and, indeed, cash remains the most commonly used payment method. Cardtronics’ 2016 Health of Cash study found that more than half of surveyed consumers use cash as frequently as they did a year ago, and 23 percent are using it even more often.
And what’s the most popular way to obtain that cash? The ATM.
Here are just a few statistics on consumers' use of ATMs from Mercator Advisory Group:
One 2016 report found that the number of banking customers who reported visiting an ATM many times a week doubled.
A second 2016 report found that 80 percent of consumers use ATMs at least a few times a year, with half of young adults – up from 40 percent in 2014 – using ATMs weekly or more often.
So how does the financial institution
continue to give customers easy access to the cash, while it meets its own need
to redeploy capital? It rethinks how it manages the ATM channel.
This re-examination is leading more and more
financial institutions to supplement in-house ATM services or outsource them, enabling
them to keep their significant ATM footprint while controlling costs.
For example, Allpoint, Cardtronics’ surcharge-free network that connects ATMs in every state, now has relationships with five of the nation’s top 25 retail banks and more than one-fourth of the top 100 credit unions. In 2016, First Tennessee Bank and Fifth
Third Bancorp joined Allpoint
Network, and Comerica Bank became a new partner in our program that offers ATMs as physical points of presence for financial institutions.
ATM outsourcing is another representation of
how financial institutions are changing the footprint and structure of banking
as we know it. And transformation of the
banking industry will continue. KPMG consultants predict the potential for digital technologies and analytics to create an invisible bank of the future, powered by artificial intelligence.
Eventually, “banking” will be less a place to go and more a service at the fingertips of the consumer – whether it’s via an app on a phone, a website on a laptop, or an ATM in a supermarket or airport terminal.
Watch next week for the second installment in our series on the transformation of the banking Industry and its impact on the ATM.
Executive Vice President, Global Product & Marketing