By Mary Knich, Vice President, ATM Products, First Data
ATMs remain the number-one customer touch-point for financial institutions.And even though the basic functionality of ATMs has remained relatively unchanged since their introduction almost four decades ago, recent technological progress is giving ATMs new life - and providing important opportunities for financial institutions to profoundly change the ATM's role in customer interactions.
There are four technological developments that financial institutions should leverage to help them gain an edge over the competition:
Marketing Capabilities: Until recently, the ability to modify the ATM screen or use graphics was inefficient and expensive for financial institutions. Graphics had to be installed manually at each ATM by financial institution staff or an ATM service provider. The introduction of Microsoft Windows software and TCP/IP communications (the Internet Protocol suite that includes Transmission Control Protocol and Internet Protocol) makes it markedly easier for financial institutions to distribute graphics to their ATM fleets.
Now it is relatively simple for a financial institution to remotely modify marketing messages across its ATM fleet or at individual ATMs to cross-sell banking products and services, as well as promote the financial institution's brand. Many ATM deployers integrate rotating graphics and marketing messages, or even use video to communicate with ATM users while the customers wait for their money or receipt to dispense. With this capability, and the ability to tie into the financial institution's customer relationship management (CRM) application, the ATM is suddenly transformed from a stand-alone cash dispenser into a one-to-one customer relationship and direct marketing vehicle.
Transaction Personalization: Transaction personalization gives financial institutions the opportunity to provide a more engaging and less time-consuming ATM user experience by customizing the most frequent transaction conducted at the ATM - the withdrawal. To speed up the transaction time, this service allows cardholders to create a "profile" at the ATM with the ability to choose their "fast cash" amount, as well as language and receipt preferences. ATM users simply enter their PIN and confirm the transaction, instead of inputting an average of 17 to 20 keystrokes for each transaction. These personalization enhancements not only improve the customer experience, they also shorten the transaction time, making each ATM more efficient.
First Federal Savings and Loan Association of Charleston (S.C.), a First Data customer, implemented transaction personalization in 2006 to allow account holders to customize fast cash amounts and specify defaults for receipt issuance, preferred language and other options. In the first month of availability, 15 percent of customers adopted the service, and after three months, 27 percent of customers had adopted it. The transaction personalization service has become such an immense success, that to date over half of all new cardholders enroll in it.
Deposit Automation & Check Imaging: Deposits have always been part of the standard ATM transaction offering, representing about eight percent of transactions, but picking up and processing deposits on a daily basis for each ATM can be costly for financial institutions. Today, though, advanced ATM hardware and check imaging technology for scanning checks, along with legislation passed in 2003 giving substitute checks the same legal status as original paper checks, have paved the way for check imaging at the ATM. The benefits associated with imaging check deposits include cost savings, extended deposit cut-off times, reduced check fraud and increased ATM deposit volumes. Implementation of the technology does require a significant investment, but the resulting operational savings can be substantial.
Windows-based ATM Operating Systems and TCP/IP Communications: Perhaps the most important development in ATM technology is the decision by ATM manufacturers to open up system architectures by deploying Windows-based operating systems instead of the OS/2-based proprietary systems that ATMs have been running for years. While the migration to Windows creates some security-related operational challenges, the new systems are much easier to connect to back-end applications, such as CRM software, and require less customization and integrate easily with "off-the-shelf" products for ATM enhancement. The new systems also have the potential to provide a dramatically more engaging user interface and overall customer experience.
The introduction of TCP/IP communications for ATMs provides much faster connections for processing transactions, which gives financial institutions the ability to send and receive more data, such as graphics and real-time promotional messages, without slowing down the total transaction time. This results in an increased capability for banks to use highly customized target marketing to cross-sell products to ATM users.
With increasing ATM operational costs, fewer transactions per ATM and decreasing direct ATM profitability, financial institutions are taking a new look at the role ATMs have in their strategic plans. As Windows-based ATMs become the standard, ATMs have the potential to evolve from cash dispensing machines into customer centric portals. Financial institutions may retain or gain an edge over the competition by leveraging the advanced functionality that is now available-and given the current economic environment, First Data strongly believes it is an optimum time for financial institutions to capitalize on this opportunity.