Kiosk Considerations

Could Mobile Technology Change How We Use ATMs?

Imagine connecting a debit card to a smartphone app and ‘ordering’ cash from your bank at home, then driving to an ATM machine, scanning a QR code with the phone, and receiving the cash in seconds.
That day may not be too far off. ATMs that utilize customers’ mobile devices are already commonplace in Asia, and Americans increasingly rely on their smartphones and tablets for many daily activities.
In fact, according to the U.S. Federal Reserve, in 2012, 87% of mobile-phone users used their device to check an account balance or recent transactions, while 53% used it to transfer money between accounts, and 49% have downloaded their bank’s mobile app. The percentage of mobile users who received text-message alerts from their bank, made a bill payment with their device, or used it to locate an ATM all hover above one in four, while 21% have actually deposited a check using their phone’s camera.
“The explosion of mobile device usage and the burgeoning mobile payments scene may leave some wondering if there’s a need for a simple cash-dispensing device when more transactions are shifting to the digital form,” notes Gary Wollenhaupt, a contributing writer for ATM Marketplace, in a wide-ranging report titled “Five Ways Mobile Technology Will Revolutionize ATMs.”
Shifting delivery of some services to mobile devices, he argues, could cut operational costs, and Alan Goode, an analyst with Juniper Research in England, agrees.
“Data from the U.S. is already pointing to the fact that there is a slowdown in the physical ATM market, and it won’t be changed by the deployment of intelligent mobile ATM solutions that allow mobile users to get statements [and] make payments via their mobile phones,” Goode notes in a report called “Mobile: the ATM in Your Pocket.”
Wollenhaupt notes that major ATM manufacturers have already announced technology that integrates mobile devices with ATM functionality, in an effort to both boost the convenience of ATM use and address the security concerns raised by using a card and PIN code in a public place.
“In effect, the mobile device reproduces an ATM’s keypad and monitor and its ability to authenticate users,” he explains. “Pre-staging an ATM transaction on a mobile device leverages that fact. But is it a real way to make ATMs safer or faster, or is it a technology solution ahead of the marketplace?”
Manufacturers are taking different approaches, he continues. “For instance, the device may incorporate GPS technology to ensure the physical location of the mobile device. Also, systems may trigger a transaction with a bar code or a number sequence. The goal is the same: to provide a cardless, simple-to-use way to get cash at the ATM.”

Five Benefits
But does this get-cash-quick sector of banking need a revolution? ATM Marketplace sets out five specific ways in which mobile technology will change ATMs for the better:
• Pre-staging transactions. Pre-staging an ATM transaction on a mobile device, Wollenhaupt notes, provides a simple, cardless way to get cash at the ATM. For instance, with the software developed by ATM industry giant NCR Inc., bank customers may conduct cash withdrawals without the need for an ATM card, by using an app on a mobile device that’s linked to a bank account.
Well before approaching the ATM, the customer enters a password on the mobile device to initiate the transaction and elects the account and amount of cash to be withdrawn, then completes the transaction using a QR code on the ATM screen. In short, consumers receive cash within seconds without having to use a card or PIN number at the point of the transaction, and an e-receipt for the transaction is delivered by e-mail.
Other ATM manufacturers, including Wincor Nixdorf and Diebold, have also developed mobile ATM solutions.
• Contactless transactions. The ubiquity of such technology in the North American market is still many years down the road, Wollenhaupt maintains, but ATM manufacturers and banks are preparing for that change.
“Thinking further ahead, this kind of contactless technology at both ATMs and point-of-sale terminals may mean the end of plastic cards in a decade or two,” adds Mike Lee, CEO of the ATM Industry Assoc., writing at banknews.com.
• Serving the unbanked. Nearly 60 million Americans are either unbanked or underbanked, yet smartphones allow consumers to carry a virtual financial institution (FI) in their pockets, Wollenhaupt notes.
“The result is that the unbanked have options for many financial services without the need for an FI. However, they may still need ATMs. Prepaid card providers could offer mobile-enabled ATM transactions to give unbanked prepaid card users the same access to cash available to customers with traditional FI relationships.”
• Expanded ATM services. ATMs and mobile digital commerce can leverage technology to improve the customer experience, Wollenhaupt argues.
“Mobile is changing the entire banking landscape, meaning that more transactions are being done by mobile devices, hitting deployers’ margins. The answer to the increase in mobile-device transactions may be to look beyond cash dispensing at the ATM in order to increase ATM usage.”
Some examples, he notes, include lottery tickets, loading prepaid cards, content downloads, device-charging services, and buying prepaid phone minutes or money orders. “In a number of markets outside the U.S., ATMs offer an array of expanded services that provide a revenue stream in addition to interchange and surcharge fees.”
• Expanded ATM/mobile capabilities. “Mobile devices have radically altered consumers’ expectations of what technology can deliver to them,” Wollenhaupt writes. “They expect services beyond simply dispensing cash. FIs could lead the way in providing mobile technology that offers advanced services, as well as ATMs that can do everything from dispensing cash to processing loans.”

Securing Services

A recent report by Mondato, an advisory firm on mobile financial services, notes that mobile-based services at the ATM can hold a variety of benefits, from enhancing the convenience of transactions to reducing security risks related to lost or stolen cards. Meanwhile, entering passwords and other details on a smartphone, rather than on an ATM screen, may better protect the privacy of the user’s personal information.
In addition, “in some deployments, leveraging mobile can reduce the time spent waiting in line for an ATM. For instance, customers can prepare transactions on their phone while in the queue, and then simply scan their phone at the ATM to complete the withdrawal.”
Meanwhile, Mondato notes, integrating mobile channels with ATMs offers long-term advantages for financial institutions, particularly as they increasingly face competition from mobile and online commerce.
In addition, “ATM manufacturers also have an incentive to integrate mobile into their technology, with the rise of mobile cutting into existing revenue streams. For instance, adding mobile channels can enable ATM providers to expand their service offerings and keep up with new technology.”
Richard Bernstein, marketing director of Phoenix Kiosk, writes at Kiosk Marketplace that, while almost everyone carries their mobile phone everywhere they go, making consumer activity easier requires some type of additional hardware, and by integrating banking activity with a device that is already on the person, the problem of available hardware is solved.
“This technology is here and already exists in both hardware and software form. Standardization is the current bottleneck preventing these technologies from rapidly moving forward,” Bernstein notes. “By enabling payments via smartphones, the number of payment options increases.”
The Mondato report concurs. “For mobile technology to spur increased ATM usage, machines with this modernized technology must be ubiquitous across a given network. If this does not occur, consumers may become disillusioned by the entire concept and potentially shift their payment habits to electronic channels. As ATM manufacturers face an increasingly mature market and the rise of mobile payments, it will be in their best interest to support this technology and stay ahead of the curve.”
Added Bernstein, “it will not be too long before mobile payments are the norm in kiosk solutions. Companies should always be looking toward what the future holds and be one step ahead.”

Joseph Bednar can be reached at bednar@businesswest.com

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