Cash machines are about to become a whole lot smarter.
Manufacturers such as Diebold are leveraging technology to appeal to consumers who demand a more advanced digital experience and better on-the-go access. But as nonbank networks of automated teller machines (ATMs) sprout new features, financial institutions are responding with additional functions of their own as a way to keep you coming back.
The second most common way of interacting with a financial institution – after visiting a branch – is using an ATM, according to a 2014 Federal Reserve study. As mobile apps and online links expand the capabilities of nonbank cash machines beyond their traditional functions, pressure is increasing on banks and credit unions to develop competitive services.
Currently, more than 2.2 million ATMs provide services worldwide. Diebold, one of the premier producers of the machines, is rolling out a new model that takes its cue from mobile and online applications with expanded features. It includes a virtual video help desk, a finger-vein scanner, encryption technology and a touchless card reader for added security.
ATM evolution
ATM features have evolved marginally since the first one in the U.S. – the Docuteller – began dispensing cash in 1969 from a location in Rockville Centre, New York. By 1971, Total Teller machines could take deposits and transfer money between accounts. Until 1974, when it began producing ATMs, Diebold mostly made safes and vaults. Before long, cash machines permeated the culture of personal finance and could be found anywhere from big-name banks to standalone units in corner stores.
Now, ATMs are no longer seen as only cash-dispensing, check-depositing and money-transferring tools, but as all-in-one digital banking outposts offering multi-channel uses to customers.
Organizations such as the ATM Industry Association are recognizing the changing needs of consumers. The association created the U.S. Underbanked Forum earlier this year to develop nontraditional ways the machines can serve consumers with only basic checking accounts or who don’t have access to other mainstream financial services.
Some ATM manufacturers are already finding ways to reach tech-savvy customers by pairing ATM capabilities with smartphone apps, for instance. In 2012, NCR came up with software that works through mobile banking apps to let you order a cash withdrawal before arriving at the ATM. Customers use a mobile app to choose the amount of their transaction, then through an embedded NCR function, can scan the 2D barcode on any participating ATM screen to get the cash. The method saves time and is more secure, as it doesn’t require the use of a bank card.
Another nonbank network upping the ante for financial institutions through innovation is Cardtronics, the world’s largest retail ATM owner-operator. The company recently began providing a smartphone app, digital rewards and discount coupons consumers can scan and use immediately through a cash machine network in the Phoenix area. The technology pilot program at 17 Fresh & Easy grocery stores uses a second digital screen atop each ATM that displays in-store discounts and incentives, plus local weather.
As with bank branches that keep a ready store of cash on hand, ATMs attract thieves, and some are ingenious.
Skimming schemes
Card skimming at ATMs began to pick up steam in the early 2000s as criminals stole bank account information by using devices surreptitiously attached to the machines. The process is simple: Criminals install a skimmer on an ATM that captures the data on an inserted card’s magnetic strip, while another device may be used to record the personal identification number (PIN) needed to gain access to the account. Then a duplicate card can be made and used to rob the account.
ATMs are also vulnerable to other forms of theft, such as currency trapping and fishing, in which thieves capture bills dispensed during a transaction. They use hooks or devices attached to the machine to block the currency from coming out, then stop by later to collect it. Some hackers have installed malicious software that gives them control of the machine to copy account numbers and PINs.
Cash machine manufacturers are just beginning to change their designs to combat these types of breaches and make transactions more secure, such as Diebold’s finger-vein reader. The company’s 5500 series ATMs also provide smartphone app compatibility and come equipped with anti-skimming card readers and encryption technology. The machines can be hooked up to provide two-way video that lets consumers connect with a remote bank representative. The video link enables the machine to act as a call center where customers can ask questions, get support and process some transactions.
Banks respond
While enhanced ATMs make it easier to avoid entering a branch, banks aren’t sitting still. Bank of America, for instance, has cash machines linked to live remote tellers who can help with more transactions even when nearby branches are closed. At selected ATMs, you can get help depositing checks and getting cash back, splitting a deposit into two or more accounts and making loan or credit card payments. While there are still other banking functions – such as more complex transactions – that haven’t made it to bank ATMs, the potential is there.
At some Wells Fargo cash machines, you can get postage stamps and deposit checks and cash without using envelopes – the machine just scans in the bills and paper. Some automatically display your most-frequent transaction types as favorite buttons to help speed things up.
Whether they’re run by nonbank networks or financial institutions, ATMs are changing to keep up Americans’ preference for mobile and online banking and to stay relevant to their needs.
ATM customer photo via Shutterstock.
The post ATM Innovations Help Banks Keep Customers Coming Back appeared first on NerdWallet Credit Card Blog.
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