ATMs - the past, present and future
According to a latest research report 4 million ATMs will be installed worldwide by 2021.
The automated teller machine (ATM) is 50 years old. It was on June 27, 1967, when the first ATM was installed by Barclays Bank at one of its branches in north London. The Barclays' machine dispensed cash against specially made cheques that were coated with a mild radioactive material, the maximum amount dispensed per transaction was £10.
Prior to the arrival of the first ATM, in the early 60s, the First National City Bank in New York had installed bankograph - an automated envelope deposit machine - in some of its branches. This did not stay long as there were hardly any customers using them.
In 1969, special cards with magnetic strips arrived to be used in ATMs, and since then, there has been no looking back for ATMs. The magnetic strip remains the backbone of card-based banking transactions even today.
It wouldn't be an exaggeration to say that the advent of ATMs changed the global banking industry.
According to the ATM Industry Association (ATMIA), there are over 3 million ATMs worldwide, and this number is only growing. RBR, a research a consultancy firm, forecasts that 4 million ATMs will be installed worldwide by 2021. RBR reports show ATM users make in the region of 99 billion cash withdrawals each year. There were 5,119 ATMs across the UAE in 2015, according to the data made available by the UAE Central Bank.
ATMs of today do more than just dispense cash. The self-served machines now accept cash as deposits to your bank account, help you get a new cheque book, apply for loans or even issue a bank instruction order. You can transfer money from your account to another, and retrieve and print your account statements. Some of the machines can help you open a bank account and for an existing customer update their Know Your Customer (KYC) details.
An ATM machine today can do about 80 per cent of the tasks the bank branch does. This is precisely why an increasing number of banks worldwide are now investing in electronic banking units, or EBUs, than opening physical branches.
As someone working closely with many of the leading financial institutions in the region, I can vouch that the EBUs will drive banks' expansion. According to the April 2017 data issued by the UAE Central Bank, there were 65 electronic banking service units of banks in the country. This number should witness a fair increase in the coming years.
The EBUs, also referred to as bank-in-a-box, allow customers to complete transactions in a jiffy. And if required, the EBUs have the facility to talk to a bank's representative over phone for any clarification.
Some banks' kiosks now allow customers chat face-to-face with their representative sitting in a remote location. The video-tellers, as they are now called, brings back the human touch albeit through a machine but nevertheless ending the person-less attribution made to EBUs.
Over the last two decades, wireless technologies have facilitated the installation of ATMs in rural areas around the world. The same technologies have ensured that ATMs are available for use at temporary sites such as concert venues and festival arenas and other mobile locations including cruise ships.
Think of it: how many times have you visited the physical premises of your bank in the last one year? For many, the answer might be nil. Electronic banking has reduced our travels to the bank branches. By electronic, we mean all those banking channels and platforms that are accessed by electronic mean including the ATMs, internet banking, mobile banking and automated call centres. What is the future of ATMs? According to the ATMIA, mobile technology, branch transformation, focus on self-service and reduced demand for cash are among the factors that will have the greatest impact on the ATM industry in the next five years. Innovations will help launch cardless ATMs (how about the use of biometrics here?) and cash withdrawals via mobile phones will soon be a reality.
Digital disruption is the new buzzword across industries. Just about everyone in the know would point out that banking and finance industry are on top of that list to be challenged. There are already signs of fintech going for the kill. It remains to be seen how much and how soon would this impact the existing electronic banking channels.
During the first fifty years of their existence, ATMs have only grown with time to be a secure and trusted interface, and this is certainly not going to change in the coming years as well.
The writer is the founder and managing director of KeyBS. Views expressed by him are his own and do not reflect the newspaper's policy.