The Future of ATMs

Keeping Cash and the Cashpoint Relevant.

Written by Rebekah Moss 23 Sep 2019 - 5 minutes. reading time

Though society is growing dependent on cards, cash withdrawals are still prevalent. Though growing fewer and farther between, cash accounts popularly, for the payment of smaller purchases under £40 (originally $50 USD).

However, cash dependency at least is still high; and accounts for 40% of all payments worldwide; performing well as the global back-up payment method.

That being said, the ATM has still had to adapt quickly, and not just in recent years. Though the ATM is considerably different from its original concept, the circulation of cash now lies mainly in reserves; leaving us to consider the main use case of the ATM in a card-first, cash later, society.

The Origin of the ATM:

The first ATM can be dated back to the UK in 1967 with Barclaycash; a concept that was phased out in 1980. This ATM was primitive in offering the dispensal of cash with a paper slip and a personal code number. It was Martin’s Auto Cashier that first used a plastic card and pin in order to dispense cash just months after Barclaycash’s introduction of an ATM.

Since then, ATMs have had to adapt for convenience, currency and branch capabilities.

Keeping Cash Relevant:

First and foremost, low income consumers are the biggest users of cash. Whether this be based on geopolitical or age demographics, the one defining statistic concludes that 40% of consumers aged 18-24 prefer to use cash.

Despite the developing capabilities of banking and open banking, in which any older demographic has a disposable income or a credit account; younger demographics are typically cash or debit based:

Millenials - the largest demographic aged 18-30 - whilst leading the digital wallet age - prefer to get paid and use cash; giving up carrying plastic and using newfound, durable polymer notes as a failsafe to their smartphones.

Though 78% of banking consumers feel that it is important to have access to cash, it does not negate the 42% of millennials that use their smartphone to pay for purchases, and ATMs are adapting.

The first way an ATM has adapted is to evolve its withdrawal process. In catering for the largest demographic, the ATM is adapting to mobile banking as the first point of call - even when it comes to cash withdrawals.

Banks such as Natwest offer a ‘Get Cash’ service for consumers who forget or don’t carry plastic. Natwest cardholders are able to withdraw £130 every 24 hours from any Natwest, RBS or Tesco ATM so long as they hold a £10 balance in their account via an app available on iOS and android.

To do so they need to provide both PIN and biometric access.

This same option is available at a higher limit for lost or stolen card scenarios.

With Banks such as Barclays, you can use the NFC/contactless support within cards and smartphones to replace the functionalities of inserting your card to withdraw cash via your phone or card at the ATM.

Omnichannel ATMs:

ATMs are also evolving for dynamic currency conversion and functionalities; catering to customers beyond travel accommodation. With the rise of Bitcoin and other cryptocurrencies - Bitcoin ATMs are prevalent not only for their ethos of increasing the volume of a decentralized currency - but for their conversion rates.

With a heavy emphasis on cryptocurrencies being a purely digital entity, the appearance of BTC ATMs across 77 countries are very different, offering users the ability to buy the currency on the high street and top up their e-wallets/cards, or convert their currency into cold hard cash.

Whilst a BTC ATM is a separate entity to the regular highstreet ATM, the highstreet ATM is no doubt finessing in its capabilities.

Banks are logistically struggling to set up branches everywhere, and with a populus not necessarily calling for it; they are met with a growing age of mobile-banking millennials. This has resulted in ATMs having evolved to meet the demands of branch in a box. With bank branch numbers declining - financial inclusion is a necessity to be fulfilled nonetheless.

ATMs today are often found to be functional computers equipped with biometric security, smartphone integration and bank-teller assist. The evolution of ATMs has led to 80% of users replacing their use of going in-branch with the ATM.

Branch in a box:

Studies reveal that ATMs have catered to:

34% of Bill Payments

22% of Currency Exchanges

5% of Loan applications

Furthermore, 16% of the world’s ATMs are cash-recycling enabled, allowing you to eliminate the teller and deposit cash in the same place you withdraw it, in an automated process.

17% of the world’s GDP is still withdrawn from ATMs, whilst it’s not as significant and surely still a smaller amount than it was; it would be wrong and implausible to foresee the end of ATMs.

The ATM has become an omnichannel service, inclusive of multiple needs with rarely the geographical restriction, and this is perhaps why it will survive - despite the fact that by 2021 countries such as Sweden are predicted to be cashless. Despite the decline in cash use, as the UK's use is also estimated to fall from 2007’s 61% to a 10 year low of 16% in 2017; cash on a global consensus is forecasted to remain as the preferred back-up payment method through this same period.

Concluding where we began, cash will - for the future - have its place in society; but the prevalence of ATMs has for a while now, long succeeded its former role as a dispensary.

With £70bn of notes in circulation, it is less surprising in this day and age to hear that whilst this figure is twice the amount it was a year ago, most of this lies mostly within ATMs, or other banking systems and the shadow economy; as a reserve for those depending on it as a back-up.

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