Is the ATM still relevant?. The 55-year-old banking machine faces… | by Barry Silverstein | June 2022
The 55-year-old banking machine faces new challenges
BBanking has never been known as the industry’s most innovative, but fifty-five years ago the unveiling of the first automated teller machine (ATM) revolutionized banking. On June 27, 1967, at the London Enfield branch of Barclays Bank, the world’s “first ATM” was used to withdraw the maximum allowable amount of £10. This momentous event arguably marked the beginning of 24/7 banking.
Since then, the ATM has been a mainstay of modern banking. But with the rise of digital banking, cashless payments, and cryptocurrency, the ATM can feel antiquated. Let’s take a look at the history and role of ATM today to see if it can retain its relevance in the future.
Barclays Bank boasts to create the first automatic teller machine – a cash dispenser based on a design by John Shepherd-Barron, managing director of De La Rue, a ticket manufacturer. Frustrated that he couldn’t cash a check at his bank after it closed on Saturday morning, Shepherd-Barron wondered why there couldn’t be an ATM, much like there was for chocolate. He invented one and approached Barclays Bank with the idea, which resulted in the installation of a “Barclaycash” ATM in the London branch of Enfield on June 27, 1967. Instead of a plastic card , the machine used a paper slip that needed to be cleared first. by the bank.
As with many complex technologies, Shepherd-Barron wasn’t the only one working on an ATM. A Japanese cash machine may predate Barclays, and around the same time the first Barclaycash ATM appeared, the “Bankomat” surfaced in Sweden.
To complicate matters further, an American, Luther George Simjian, invented the “Bankograph” in 1960; it accepted cash and check deposits. The Bankograph was unsuccessful, Simjian reportedly said, because “the only people using the machines were prostitutes and gamblers who didn’t want to deal with cashiers face to face”. Donald Wetzel is credited with the development of the plastic card ATM in the United States; the first was installed in 1969 at a branch of the Chemical Bank in Long Island, New York.
At first, ATMs were just ATMs, or cash machines, and nothing more. Early machines were notoriously unreliable because the technology was so new; ATMs would gobble up plastic cards or jam spitting out cash. Being exposed to the weather didn’t help either. Equally important, for machines to grow beyond single locations, they eventually needed to be networked to a central point. Fortunately, information technology developed in the 1970s and ATM networks followed suit.
While ATMs generally gained traction in the 1970s and 1980s, it was for different reasons in different parts of the world. In the UK, for example, banking unions lobbied for banks to close on Saturdays, so UK banks saw ATMs as a smart way to keep both unions and their banking customers happy. In the United States, however, ATMs were seen by banks as an effective way to extend their hours of operation without opening more branches. Citibank invested over $100 million to install ATMs throughout New York City in 1977. When a blizzard hit the city in January 1978, bank branches closed and the use of Citibank ATMs increased by 20%. Other banks across the country took notice and the era of ATMs began.
One of the biggest advantages for banks and bank customers is the fact that ATMs can handle the bulk of the most ordinary and regular transactions – making deposits and withdrawals. From a bank’s perspective, this means its staff could spend more time marketing high-end services – loans, credit cards, etc. Customers may have the option of banking outside the limited opening hours of bank branches.
Yet the ordinary is far from extraordinary; despite technological improvements over the years, ATMs have offered essentially the same functionality for decades. Today, the use of credit and debit cards exceeds cash transactions. Consumers can bank online and make cashless payments through smartphones. So the question becomes: is ATM still relevant?
NCR, one of the world’s leading manufacturers of ATMs, may not be objective, but the company is bullish on ATM technology. NCR points out that modern ATMs can potentially provide a multitude of services, some of which are not even related to banking services. NCR sees future ATMs dispensing postage stamps, subway tickets and gift certificates. Video conferencing with human cashiers may become increasingly available for more complex transactions; even today, Interactive Automated Teller Machines (ITMs) that provide face-to-face assistance for call centers are used in the United States, Canada, and the Middle East.
Contactless payment/ATM integration is also a reality. NCR reports that ANZ Bank has already “enabled a simple tap of a card to initiate transactions, with banking customers entering their PIN on the PINpad and proceeding with their transaction as normal.” In 2012, according to NCR, “Royal Bank of Scotland launched its Get Cash service, allowing customers to withdraw cash from ATMs using a code sent to their mobile phone, eliminating the need for debit cards. And just last year, Barclays launched the UK’s first contactless mobile payment facility.
The ATM may have started as an ATM, but who knows what ATMs will offer in the future.
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