KAREN EPPER HOFFMAN_resized
Karen Epper Hoffman Jul 24, 2017

The ATM turns 50—and hits a digital crossroads

In 1967, Thurgood Marshall became the first black U.S. Supreme Court Justice, Middle East fighting flared with the Six Day War and The Beatles released “Sgt. Pepper’s Lonely Hearts Club Band.”

In fact, less than 30 days after “Sgt. Pepper” hit record stores, another history-book moment took place just 12 miles due north of the Abbey Road studios where the band recorded their watershed album. On June 27, Barclays Bank rolled out the first automated teller machine at its Enfield Town branch.

The poignant question for 2017 could apply just as well to money as music: Is the ATM just a classic of a past age? Or has it matured—make that, is it maturing—into something that occupies an important place in 21st Century banking?

Indeed, banks have added or tested myriad capabilities through ATMs. Among them: scanned check deposit, video chat, personalized marketing pitches, and most recently, cardless withdrawal where customers use smartphones to authenticate themselves and transact. Some even sell stamps.

But in an age that overwhelmingly prefers email, the stamp perk might say something about one nagging failure to keep pace with the times. That is: Despite their undeniable convenience for cash access and ongoing innovations in screen and back-end technology, ATMs have never quite caught on for marketing purposes.

According to most reports, the number of U.S. bank ATMs sits at about 440,000, and percentage growth is in the low-single digits, according to Troy Cullen, executive vice president and head of ATM banking at U.S. Bancorp. “We’ve seen a number of different types of ATM marketing experiences in the industry with varying levels of success,” says Cullen. “The challenge is to be present with our brand but not disrupt the user’s experience.”

Nine times out of ten, customers use ATMs to withdraw cash, Cullen reports. “We run marketing campaigns at our ATMs that allow customers to ask someone to contact them if they’re interested in products or services we highlight,” he adds. “But more often than not, they want to get in and out quickly, and the experience we deliver is sometimes more important to their appreciation of the brand than the ads we run on the screen.”

Nonetheless, bankers agree that while ATMs may not pull their focus the way that the fast-growing mobile channel does (or even declining and changing branches do) the ubiquitous machines still represent “a critical aspect of delivery,” says Justin Dunn, senior vice president for WSFS Bank.

Last year, 13 percent of the $6.8 billion-asset bank’s overall customer interactions took place at one of 450 branch-based or off-premises ATMs, Dunn says. Whether the ATMs directly serve up advertising or marketing for the bank itself, Dunn maintains that they boost brand awareness—especially among prospects and customers from newly obtained institutions as WSFS continues to grow. “We’re seeing more of our acquired customers taking advantage of those off-premises ATMs,” he adds.

And in their simplest form, ATMs extend and expand a bank’s retail footprint, points out Dan Goodman, vice president of global products and solutions for MasterCard. Goodman stresses that consumer research still indicates that two key aspects of ATMs—proximity and presence—remain top criteria when consumers select a bank. 

“Consumers still feel that having an easy, anytime access to cash from their trusted bank brand provides significant peace of mind,” he says. “In a competitive field, where gaining access to consumer deposits is a top bank priority, the ATM can be a significant marketing tool in attracting local customers and their deposits.”

Since 2010, Boston-based Celent LLC has interviewed bankers about their channel preferences, according to Bob Meara, senior analyst and author of Celent’s most recent study, “A Survey of Retail Banking Channel Systems in North America” (released in February 2017). While mobile has skyrocketed in importance—transplanting online access as the most critical delivery method—the ATM has quietly fallen to dead last as a priority, according to bankers.

“I honestly don’t think it has become much of a marketing channel compared to others,” says Meara. “This year, it was all about customer relationship and experience and satisfaction scores.” While mobile and online channels have become more personalized to meet customers’ needs and preferences (and the branch has always been personal), the ATM has moved in fits and starts. It struggles to make a commodity experience more customized; Meara concludes that digital appointment booking through ATMs “never took off.”

There have been some pockets of promise in making ATMs more marketing-friendly. Cullen reports that U.S. Bank “found success [making] the message cause-related.” When disaster strikes in a community, for example, the bank allows customers to contribute money to the Red Cross via ATM.” Past causes have literally run the fire-to-water gamut: from wildfires in the west to the flooding in Louisiana last year.

Nonetheless, the ATM is increasingly taking a supporting role among retail delivery—“meant to complement our other channels, not replace them,” Cullen says. Meanwhile, the notion of funneling more marketing messages—which might also include coupons or other perks—could mean less speed and convenience.

“Some institutions are starting to run videos on their ATMs,” he notes. That could happen at U.S. Bancorp with its next generation of machines, “but it’s a delicate balance. Customers really don’t want to stand there while the video runs.”

Here’s what they do want, more or less: to take the money and run. Customers expect that after a few seconds, their cash will be dispensed and they’ll get on their way. “It’s similar to watching a video online—the commercial that comes on is fine for the first few seconds but if it doesn’t allow you to skip it, it can be a turnoff because it gets in the way of what you want to do,” Cullen points out. “We aren’t there yet with ATMs.”

That established, it’s not as though a mobile phone or laptop can put cash in your palm, either. Perhaps banks will break the code that allows them to meaningfully market, too; perhaps not. Regardless, this much remains true: As a dispensary of currency and convenience, the ATM after 50 years remains golden.

 

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Karen Epper Hoffman has written about banking and technology issues for nearly a quarter of a century for publications including American Banker, Bloomberg Businessweek and Financial Times’ The Banker. She has also spoken and moderated panels at industry conferences. She lives in Olympia, Washington.

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