Jul 11 2014

Banks and Credit Unions Can Turn the ATM into an Innovation Hub

With competition from mobile and digital payment companies on the horizon, a financial institution’s best defense might be the trusty old ATM.

Innovation comes in many shapes and sizes. But would you believe the future of banking might be saved by a 500-pound hunk of metal?

The automated teller machine, or ATM, as it’s more affectionately known, has been around in some form or another since the 1960s. Its main purpose has always been to dispense cash to bank customers. Over the years, features have been added, such accepting deposits or emailing receipts instead of printing them, but it’s safe to say the ATM has faithfully been doing the same thing for over 40 years now.

But here’s an intriguing question for the financial services industry: Can the ATM become a source of innovation?

An article from Bankrate explores some of the more radical recent advances in ATM technology:

These futuristic ATMs are destined to become bank must-haves. Better security measures such as voice recognition or even biometrics, where you can use your fingerprint to prove your identity, will become commonplace at ATMs too, Wintrust's Ormseth says.

Banks now need to think like Google, Ormseth says. They've got to quit being slow adopters.

Within three years, ATMs in major cities also will accept alternative currencies like bitcoin, Natoli says. Bitcoin, a digital currency that exists only in cyberspace, already is starting to get its own ATMs worldwide. And mobile transactions are more appealing to bitcoin users, he says.

Similar to how many cities are exploring turning pay phones in wireless hot spots, banks must consider how the ATM can evolve and adapt to an era in which people increasingly prefer to do their banking electronically and on their own terms, not the bank’s.

As the Bankrate piece notes, bitcoin enthusiasts are quickly building out ATMs of their own. While it’s hard to say with any certainty what the future holds for the cryptocurrency, that’s not stopping companies from building Bitcoin ATMs on their own. In fact, ATM Marketplace recently called Bitcoin ATMs a “booming market.” Whether it’s as a result of mobile, social or digital changes, the reality is that most banks can’t afford for their ATMs to become dead weight.

That’s why the Diebold Federal Credit Union was especially proud to announce in March that it had rolled out its first ATM without a card reader or a PIN pad. Customers must instead rely on their smartphones to access this new kind of ATM.

“Diebold's Millennial-inspired ATM offers a new way to meet the needs of our members,” said Dan Gann, president and CEO, DFCU. “They're readily downloading the mobile wallet application and adopting the technology. In addition, by offering a branded mobile wallet solution, we're reinforcing our connection to members' retail purchases and reminding them that we're enabling this convenience.”

By leveraging the 24-hour convenience and access of an ATM and adapting it to fit the preferences of today’s customers, other financial institutions could follow DFCU’s lead and gain the upper hand.

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