A history of ATM innovation
Picture it: It’s 1967, and the U.S. is watching the first Super Bowl as Celtic F.C. fans in Glasgow, Scotland celebrate their team’s European Cup win—and the Congress of Columbia creates the “Day of the Columbian Woman” national holiday.
But that’s not all.
Around the world, bankers have just learned about a new technology. Something called an automated teller machine has been deployed in London and it’s going to allow consumers to get cash...without anyone having to walk into a branch.
It was a big deal for financial institutions (FIs) and their customers.
No longer bound to banking hours when they just needed some cash, customers widely embraced ATMs—which probably didn’t surprise the man most often credited for its invention: British inventor John Shepherd-Brown.
But where he got the idea might surprise you. As the story goes, Shepherd-Barron was in the bath when he had a thought: If a vending machine could dispense candy bars, why couldn’t another type of machine distribute cash?
And, in 1970, with engineer James Goodfellow’s invention of the personal identification number (PIN), the self-service banking technology was born.
Now, with 3.2 million ATMs across the globe, the ATM is the most-used method for consumers to interact physically with their bank. And the technology can do much more than dispense cash—today, you can walk up to one and handle all kinds of financial services.
And you increasingly have a number of ways to authenticate as reliance on Goodfellow’s PIN begins to fade.
Seeing the value they bring, FIs start investing in ATMs as new models emerge
The decades that followed the introduction of the ATM transformed this new form of banking. In the U.S., Dallas-based engineer Donald Wetzel pioneered the development and deployment of the ATM, with the first being installed at the Chemical Bank branch in Rockville Center, New York, in September 1969.
And ATM popularity continued to grow around the world. In the early 1970s, with 1,000 ATMs installed by the end of 1971, FIs understood the convenience it brought to their customers—and they invested accordingly.
In 1977, Citibank put more than $100 million into the installation of ATMs across New York City. People thought it was a gamble at the time, but when a blizzard hit the city, banks were forced to close for days and ATM use rose by 20 percent—so, it certainly paid off.
It was in that same year that NCR, a leader in innovative transaction technologies and computing, launched its first ATM, the NCR model 770. It came just three years after NCR changed its name from National Cash Register to NCR Corporation. The easy-to-operate self-contained 770 unit included a terminal, controller, cash dispenser and depository, all within one safe. By the early 1980s, NCR had launched the 5070 ATM. Developed in Dundee, Scotland, it achieved global success through new standards of excellence including reliability, flexibility and increased capability.
And the name checks out: The 5070 could handle 5,000 transactions before needing to be restocked. It featured modular components that could be snapped in and out very quickly to minimize maintenance. It was also based on completely new software and an electronics platform enabling connections to worldwide networks.
In addition to NCR ATMs, other ATM inventions were growing at a quick rate. By 1984, there were 100,000 ATMs installed globally. And, the growth since then has been huge—both in the amount of installed ATMs and what they can do for banking customers. There are now more than three million ATMs around the world and most countries see growth in ATMs, according to the latest research from RBR.
Once the ATM became an established and familiar part of the banking system, the next frontier of innovation was usability. In the 1980s, NCR played a big part in driving the channel forward with the introduction of color displays and FDK buttons. In 1989, the world’s first intelligent deposit ATM was installed. By 1992, functionality such as thermal receipt printers, audio input and signature capture were becoming common.
ATM’s in the 20th century: Doing much more than original inventors imagined
In the early 2000s, ATMs got another big boost: growing the ability for consumers to make deposits (cash and check) anytime they wanted to, just like their access to cash. This added significant flexibility for customers—and FIs were able to move more transactions from the teller to the ATM.
Today, people can make many more transactions at the ATM, from simple cash withdrawals and balance inquiries to opening an account and applying for a debit card. And, as reported by the Economic Times, some ATMs offer even more unique services like paying income taxes, applying for personal loans and paying bills.
A seemingly small ATM advancement leads to big benefits for FIs
With ATMs taking in cash, cash recycling was the logical next ATM development. Now, the same cash customers deposit can be used again for withdrawals, significantly improving efficiency in the FI’s cash management processes.
In Greece, for example, Attica Bank deployed new self-service technology so they could easily manage higher transactions and high-volume cash deposits at the ATM—that might have been a risky move without cash recycling.
Today, that efficiency benefit is making cash recycling the largest growing ATM segment globally, and, according to the UK’s RBR, their numbers are predicted to rise by 25 percent over the next five years to 2025
RBR’s Sam Blackwell, who led the study, said: “Recycling ATMs play a key role in many banks’ transformation projects by improving customer experience and cutting operational costs. Whereas previously some deployers were dissuaded by a perceived lack of reliability, or issues regarding integration or security, these concerns have now largely been assuaged.”
Automated Teller Machines go live action with ITM
Sometimes, though, customers still wanted to be able to talk to a teller—without having to go to a branch. Equally, FIs needed to do more than provide automation; they needed to enable customers to make more complex transactions outside of normal banking hours.
And, then came the solution: the Interactive Teller Machine (ITM). Launched in 2012, the ITM uses a two-way video link via a call center to provide face-to-face teller support to ATM customers.
The ITM is used widely across the US, Canada and in the Middle East. NCR has an estimated 70 percent of all such machines globally. The benefits for customers include all the convenience and ease of using an ATM for nearly all of their banking services, plus they get the assistance they need from a teller without having to visit their bank.
For FIs, ITM benefits include increased customer loyalty plus smoother operations inside the branch with reduced queues and faster transaction times while still providing that critical face-to-face connection.
And, during the pandemic, that has been significant as FIs want to help their customers while having to close branches and operate social distantly. With ITMs, many FIs were able let their tellers work from home—read about the changes First Ontario Credit Union made to their business during the pandemic.
ATMs that perform like a smartphone, just like consumers want them to
Smartphones, devices that have changed the face of consumer electronics and set society on a path to digital domination, have had a big design impact on ATMs, too. Since the launch of smartphones, the form and function of ATMs has been built to mimic the smartphone intuitive user experience.
From touchscreens, finger pinch and zoom and mobile authentication, to pre-staging FI transactions on a mobile device, banking customers now enjoy a similar experience at the ATM that they have on their handheld devices. So, they can have a seamless transaction experience, from banking on their phone to banking at the ATM. The design of ATMs such as NCR SelfServ 80 Series was “industry leading” – being the first to mirror the design aesthetics of modern consumer electronic devices.
Even more, the smartphone and the ATM also work hand in hand to offer contactless banking, the first to do it was ANZ with NCR. The personal banking financial institution enabled a single card tap to initiate transactions, with banking customers entering their pin on the PIN pad and proceeding with their transaction as normal.
And now, thanks to mobile device authentication, FIs can take contactless to the next level—completely removing the need to use the PIN pad. And this contactless connection can go even further by using the financial institution’s banking app to pre-stage the entire transaction, with the ATM solely providing the cash after banking customers have tapped their smartphone on the contactless reader.
In 2012, Royal Bank of Scotland launched its Get Cash service, allowing customers to withdraw money from ATMs using a code sent to their mobile phone, eliminating the need for debit cards. And just last year, Barclays introduced the UK’s first contactless mobile cash facility.
There’s now 1.5 million contactless enabled ATMs in the world and this number is skyrocketing. According to RBR’s Global ATM Market and Forecasts to 2025 study, the number of ATMs offering cardless cash withdrawals increased 26 percent in 2019, 16 percent in the US alone, while the number of ATMs offering Near Field Card (NFC) readers rose by 86 percent globally.
If ATMs came this far in 50 years, what might they be like in another 10?
So, what does the future hold for the ATM? One thing is clear: this channel will remain extremely important and continue to evolve, even though the use of contactless and mobile wallets has reduced consumer reliance on cash in some markets.
Customers will have access to an ever-expanding range of services at the ATM, from core functions like paying bills and transferring money between accounts, to buying stamps, subway tickets and gift certificates. Video conferencing with human tellers is also likely to become more widely available for people who want to complete more complex transactions at the ATM.
As far as security is concerned, biometric authentication (via facial recognition and fingerprints) is something consumers can expect to see more of, along with improvements in software to combat evolving cyber threats.
The emergence and development of the ATM over the past five decades has had a transformative effect on the banking industry. Now it’s time to look forward to what the channel can achieve in the decades to come—and for FIs to plan and implement a solid ATM plan that best serves their customers. ATM Marketplace has a host of articles that address making changes during the pandemic and what to put into place with post COVID-19 in mind.
More innovation ahead
In a little more than 50 years, the ATM has come a long way to meet growing market trends—and it will continue to evolve to meet changing consumer demands. In 2019, no one could have predicted the wildly changing market demands of 2020 and the quick pivots FIs had to make to enable their ATMs to meet the challenges of them. What seems certain is that the ATM—something that started as an idea that came to a man while taking a bath—will continue to meet consumers’ expectations for easy, convenient and digital first banking services well into the future.
