As ATM Networks Grow, Experts Believe They're Not as Vital

Almost two-thirds of financial institutions expect their ATM networks to grow, but far fewer expect the ATM channel to become a more important part of their business, according to the 2018 ATM and self-service software trends survey from KAL ATM Software.

The survey of 470 financial institutions, ATM vendors, and ATM service providers and processors found that only 56% expected ATMs to increase in importance and do more; far more (72%) said the same thing in 2017. Nonetheless, 65% of the respondents this year said they planned to increase their ATM counts. About a quarter had no plans to change the number of ATMs, and 10% planned to decrease their ATM counts.

“There is every reason to believe that this useful and durable device will continue to break new ground as a banking channel for as long as consumers continue to seek convenience, utility and a personalized touch from banking services,” the survey report said.

Improving the member experience, improving ATM uptime and migrating in-branch transactions to self-service transactions were the three most critical changes financial institutions said they needed to make in their ATM operations.

However, many ATMs are also still running on older software. The survey found that about one in six financial institutions (16%) ran all or most of its ATMs on Windows XP. Two-thirds said all of their ATMs ran on Windows 7. Almost half (41%) said they had no definite plans to migrate to Windows 10 but expected to do so at some point. About a quarter (27%) said they had definite plans to do so.

ATMs’ increasing capabilities also stood out in the survey data. Over half (59%) of respondents said their ATMs dispensed multiple note denominations, 53% offered bill payment and 41% allowed cardless transactions. At least a quarter of the respondents said their ATMs also offered person-to-person payments, e-receipts, targeted marketing, deposits with mixed media, cash recycling, mobile phone top-up and business deposits. Fewer than 10% offered cryptocurrency transactions, video conferencing, the ability to schedule meetings with bank staff, or multitouch screens that allowed pinching or zooming.

However, a third of the respondents expected their ATMs to support cardless transactions in the next few years. Almost as many (31%) anticipated contactless transactions, and 29% said they expected biometric authentication to be part of their ATMs’ functionality in the next few years.

Consumer requests were by far the most important factor in determining which new ATM functionalities to add, according to the survey. Just 18% said competitive pressure was the most important factor; 12% cited security improvements and technology refreshes. Only 10% said cost reductions were the most important factor in prioritizing adding new ATM functionalities.

“If you ask me what was priority No. 1 for banks over the last 10 years, it would be cost reduction. But now I’d say that has fallen further down on the list,” KAL ATM Software CEO Aravinda Korala noted.

New ATM functionality might arrive slowly, though. Only 29% of the respondents said they considered themselves early adopters that were on or near the cutting edge. About one in five (19%) admitted they wait until other banks adopt new ATM technology. Three percent said they did very little with the ATM channel unless required by regulators.

“This is about automating branches as much as possible and about moving customers away from tellers to a self-service device that enhances and integrates with the customer’s digital banking to create a seamless banking to create a seamless banking experience, whether that’s in a branch or at another location altogether,” Korala said.