Competition stirs ATM revolution

Navigant: rising competition between banks is prompting reinvention of the ATM

A new generation of ATMs that offer customers more personalised services will provide a core tool for increasing levels of banking competition, according to a new report by business consultancy Navigant.

“ATMs are a valuable but under-utilised tool to gather data and understand customers better,” said the Navigant document, ATMs: Opportunities to maximise strategic value. “An opportunity exists to cater for technologically savvy customers and to embrace new technical advances. For example, a mobile interface could be used so a transaction or purchase started on one channel can be completed in another.”

Banks have been experimenting with adding new services to ATMs for many years. As far back as the mid-1990s, video banking services were being trialled at the UCL campus in California. But the technology to make such services reliable is only now becoming more mainstream. Other services, such as mobile cash withdrawal, have also been introduced by UK banks such as NatWest since the middle part of last year.

The impending arrival of seven-day account switching in the UK in September is providing added stimulus to banking competition. From that month on, it will become significantly easier for UK customers to switch banks. At the same time, a host of new challenger banks are entering the arena, hoping to capitalise on customer dissatisfaction with the existing providers. Online banks such as Moven and Finnish startup bank Holvi will compete with other new entrants such as Tesco Bank and Marks & Spencer for a slice of UK retail banking business.

According to the Navigant research, the personalised and multi-channel services such as regular savings, favourite transaction settings or cash withdrawals based on customer history, purchasing lottery tickets and paying bills via the ATM all present a chance for the bank to build engagement with the consumer. ATMs can also contribute to banking revenues in other ways, such as via providing a platform for sales prompts and targeted messaging, as well as discounts and vouchers aimed at acquiring new customers. Already, Nationwide has used its ATM network for third party advertising, running a T-Mobile campaign on its remote ATMs. Other tools to build customer engagement include QR codes and links to social media, which can be used to gain survey results or invite free text messages with customer feedback.

“ATM network owners will need to match ATM functionality to the relevant clients and this may drive different functionality by location and core purpose of the ATM,” said Navigant. “It will become increasingly important to sub-segment ATM networks, particularly remote networks, by how customers view the situation and then tailor services and functionality to match the customers’ available time and focus.”

Some such services are already beginning to make their way onto high streets. In January, Citi rolled out a new kind of ATM designed to help customers do virtually all their banking without visiting a branch. The Citibank Express ATM is equipped with an online banking connection, video conferencing and biometric identity authentication. Users can open accounts and apply for loans, cards and cashier’s cheques using the device; transactions can also be started on a computer or mobile device and completed on Citibank Express or vice versa.

The ATM also has a screen that can display personalised promotions and offers and allows users to see and speak with a customer service representative on one screen while conducting business on the other. The machines support NFC and scanning and embossing functions have been included so that the machines will eventually be able to instantly print credit and ATM cards.

Meanwhile, BBVA Compass, a bank that provides banking, wealth management, credit card and financial services, has adopted a drive-through ATM with the help of Wincor Nixdorf that features video banking abilities. Earlier this year, Coastal Federal Credit Union partnered with transaction company uGenius to install five new video banking points on its own US-based ATM network. Installing more powerful ATM services may help banks to reduce overall costs, since an ATM is less costly to maintain than a full service bank branch.

The business thinking is backed up by consumer data, too. According to research released at the end of March by Accenture, UK and Ireland daily and weekly branch visits fell from 19% to 15% and daily and weekly online banking activity fell from 69% in 2010 to 61% in 2012. Meanwhile, inherently brief, daily and weekly mobile banking more than doubled – from 7% in 2010 to 15% in 2012.

“Given their popularity, there is little doubt that ATMs are one of the most powerful ways to reach new clients,” said Navigant. “It will be necessary to develop a new awareness of ATMs and the displacement of transactions from counters – and this awareness will drive a revised strategy and management methods.”