THE EVOLUTION OF ATM: CASH DISPENSER TO REMOTE BRANCH

Now-a-days long queues at Bank’s Branch for Cash withdrawal are a rare sight. But not very long ago, before arrival of ATMs, it was the only way of getting cash out from Bank accounts. Well from then to now, Automated Teller Machines (ATMs) have definitely changed our ways of cash withdrawal. But we are not going to talk about that change.

In this blog we’ll discuss about a new evolution which is pretty much recent. This has started around 3 – 4 years back and now it’s distinctly evident at some of the high end Banks who take pride in providing exceptional customer services.

It’s about ATM working as a Remote Branch which can provide services 24*7 to Bank’s customers

Though modern ATMs were in use since 1972, they were primarily used as automated cash dispensers. Post 2008 financial crisis, when Banks were trying to cut down their operational expenses and improve the standards of customer services, ATMs emerged as a viable solution.

According to a survey in the US, per Transaction cost at an ATM ($0.27) is much less than per transaction cost at any Branch ($0.75). Such surveys on Banks’ operational expenses suggested that branches were best suited for specialized services which require human interaction.  They also indicated that leveraging the available digital channels (like ATMs) to support simpler transactions would reduce the cost of transactions for banks.

This is how the recent evolution of ATM began.

Banks started putting a lot of effort to make ATM banking more popular. Customer convenience, accessibility and secure technology were used as buzzwords. Moreover Increase in hardware capabilities, software competency, and network bandwidth helped technology providers to build new features and functions into these ATMs. In an attempt to make people identify themselves with the banks, newer facilities were introduced more frequently. Advanced machinery (e.g. audio and video enabled ATMs) and personalized experience (e.g. Welcome messages, favourite transactions) were also provided. ATMs were given a complete makeover to work as an efficient customer touch point which can cater to most of the customer requirements. Along with many advanced features, some promotional offers were also introduced to make ATM usage more popular. Soon ATMs started to support many banking operations like Cash withdrawal, Cash deposit, Cheque deposit, balance inquiry, Passbook update, Printing Statements, etc.

However, the accessibility and convenience provided by ATMs were only matched by their vulnerability to fraud. All the efforts that Banks had put to build and promote ATMs as a secured transaction point were marred by multiple fraud incidents. There were numerous “Cash-out” incidents reported using various cyber-attack methods, where the common denominator was introduction of undetectable malware to the system. These malwares allowed criminals to issue cash-out commands to ATMs for cash dispensing. Similarly incidents of cloning of customer cards at ATM and using the same for transactions were also reported.

Before long Schemes and Regulatory bodies intervened to protect both Banks and customers from these frauds. They issued some guidelines and mandates to curb these frauds and make customer transactions more secure.

PCI DSS compliance for ATM and implementation of EPP7 were made mandatory to improve security of ATM acquiring environment. Similarly EMV Cards mandate and Liability shift clauses for chargeback were also introduced to protect Issuers from ATM frauds. These measures not only reduced the number fraud incidents but also helped to instil customers’ trust in ATM.

Gradually Banking was untied from physical branches and made available 24/7 through ATMs.

Initially ATMs which were constructed as an extension of bank branches, now have started working independently as an alternative center for day to day banking requirements.

A recent survey result shows 82% of Indian consumer want an ATM nearby compared to meagre 9% who want a Branch nearby. This undoubtedly reflects a change in customer behaviour over these years.

But this evolution is not complete yet. In coming years we might also see integration of Mobiles, Payment wallet, NFC and Bio-Metrics facilities with ATM to make banking more digital and seamless for customers.

A statement made in the chemical bank’s advertisement, which once claimed, “Our branch will open at 9:00 and never close,” pretty much sums up this metamorphosis of ATM.