By : Colin Gordon
June 13, 2017 08:00 AM
The deployment of new technologies is expected to be a key factor in revenue growth across the ATM industry over the coming years.
That's according to recent research from Global Market Insights, which predicted compound annual growth of 9.8 percent up to 2023 as financial institutions look to modernize their self-service estates.
The report provided an insight into just how important it will be for financial institutions to focus on innovation and development in their self-service network.
Replacement and reinvention
Reinvention of the ATM network was one of the key themes explored in the Global Market Insights report. Developments in technology and self-service functionality are leading to a new understanding of what customers are able to do at the ATM, particularly in developed markets like North America, where replacements of existing aging ATMs is gathering pace.
The market research firm noted: "US ATM market share is responsible for a dominant North American revenue base. Replacement of aging machines by financial institutions such as banks, fleet expansion and machine integration capabilities such as video conferencing, biometrics and remote assistance will drive the revenues for the next seven years."
Innovations like video banking via the ATM can deliver a number of valuable benefits for banks and their customers. For financial institutions, this technology provides an efficient way of expanding banking services into rural or remote areas. It also boosts efficiency and revenue generation potential in-branch, by moving transactions away from the counter. For customers, it delivers valuable flexibility and choice. Users can opt for the speed and convenience of self-service banking, or connect to a remote teller for assistance with more complicated transactions.
"With growing technological advancements, banks are creating awareness for self-service ATMs for tasks such as cash deposit and withdrawal, passbook printing and enquiries," Global Market Insights said. "By adopting these techniques, banks are now employing their personnel for more value-added tasks."
It's not just in well-established markets like North America where expansion and innovation in the ATM channel is impacting how banks operate and how customers manage their money. In emerging economies such as the BRICS nations (Brazil, Russia, India, China and South Africa), a combination of low ATM market penetration and continued rising demand for cash means there is great potential for self-service growth.
A diverse financial ecosystem
One of the most interesting trends in the financial services industry right now - particularly in payments - is growth in diversity and choice. Rather than one process or channel eclipsing all others, what we can expect to see is a complex, multifaceted ecosystem where customers have the freedom to choose the method that best suits their needs. Cash use alongside ePayments, card and online banking is likely to be what most consumers adopt as freedom to choose remains of importance.
The contactless payments market is becoming increasingly diverse and digital wallets are attracting a lot of attention, but cash demand isn't suffering as a result. According to recent figures from Retail Banking Research (RBR), ATM withdrawals in 2015 increased at the fastest rate for four years, rising by ten percent to 99 billion per year.
Financial inclusion efforts and bank drives to migrate transactions to self-service were two key contributors to this growth.
As RBR's Rowan Berridge, who led the research, noted: "Global usage data points clearly to the enduring importance of the ATM channel, both in mature and developing markets. Despite rapid growth in cashless payments, demand for ATMs remains robust."
In summary, as the ATM celebrates its 50th year in June 2017 it is still likely to be as relevant in years to come as a trusted, secure and convenient self-service channel for consumers. Other payment methods will continue to gain popularity and indeed we may see “less cash” in some markets. Most importantly though financial inclusion and the right to choose how you pay for goods or services will mean the ATM and cash in general will remain popular for decades to come.