There are things in our lives that are so common, so ubiquitous, that we no longer think about them. We use them as the tools of daily life and, because we are so accustomed to them, any possible alternative value or use they might have escapes us. For businesses that are responsible for providing these tools, it is a cost to be minimized, and the money already spent on the existing infrastructure becomes a barrier to change. ATMs exist in a world like this. After more than thirty years, they have become an endemic part of our banking culture. For many people, the only contact they now have with their bank is through an ATM. For bankers, ATMs, along with all of the other customer service channels, may seem to be merely a necessary cost of serving their customers.
We're all familiar with the traditional ATM functions: cash withdrawal, transfers, deposits, statements and the like. These ATM functions automate branch teller activities from which they were derived and have a value in speed and convenience for customers. But to truly unlock the value of an ATM, we must look closer at the user experience and the type of services that could be delivered. Some of the strategies that we should consider include: improving customer interaction; integrating ATMs with the bank's other customer channels; expanding the ATM transaction set; and taking advantage of location based services. We have the technology and the experience to transform the ATM into a customer-focused channel for value added services, greater customer retention and improved bank profits.
The experience of the web in general, and online banking specifically, has raised the expectations of consumers as to what is possible whenever they interact with a bank in any manner. For example, virtually any ATM today can read the customer name off of the ATM card giving the appearance of personalization. But what today's consumers expect is actual personalization, as they experience when shopping at Amazon or accessing aggregated banking records online.
The content that an ATM delivers today is usually the same regardless of who is standing in front of the machine. For example, the ATM that I normally use has my normal $100 "fast cash" selection three menus deep. In addition, I am always given the option to select from savings even though I have no such account. This type of non-contextual interaction leads customers to the conclusion that they are neither valued nor understood by their bank. The customer concludes that since the ATM does not remember the routine transactions that she uses often, every other function must also be generic. The result is lower customer acceptance of customer specific value added transactions even when they are offered.
In their book, The One to One Future, Don Peppers and Martha Rogers point out that the key to growing business with any specific consumer is to offer and deliver products and services specifically to that customer that are based on an increasingly precise understanding of that customer's relationships and interactions with a firm. Banks and financial services firms are in a particularly powerful position to take advantage of this learning process because of the financial account information they hold and the transactions and services that can be derived from that knowledge.
A small credit card offer experiment in the United States hints at the potential. A network of ATMs was configured to recognize specific persons who fit a credit approval and demographic profile. When one of these persons used any of the ATMs, he or she was shown an invitation to apply for the card (but only once per person). The response rate was greater than 20 percent, far greater than the two percent or less typically achieved in direct mail campaigns.
As we can see from this example, it is not the ATM that must change, but the way we think about it and the way we use it. It is an issue of open systems, software, and the interaction of customers not only with an ATM, but also, as we will see, with a bank in general. Channel Integration ATMs and kiosks are of course only one customer delivery channel for a bank. Others include call center agents, branch sales, branch teller, online (web) banking and call center IVR (Interactive Voice Response). Each channel has unique characteristics that recommend their use for particular tasks and situations. These channels have evolved independently of one another, and, as a result, banks have implemented channel specific solutions, creating "silos" of unconnected and non-usable information.
The silo nature of existing customer solution channels.
Implementation of improved customer interaction initiatives and one-to-one services delivery becomes too expensive if these changes are done on a channel-specific basis. Many banks today are implementing channel integration and Customer Relationship Management (CRM) strategies around which improved solutions for ATMs and other customer service channels can be built.
According to the IDC study "Web-Enabled ATMs: Implications for Online Banking and Multichannel Delivery," banks that are embarking on a channel integration strategy may find integrating online, kiosk and ATM solutions to be a valid first step. CRM enabling of the result would then form a basis for the bank's remaining customer service channels.
Applications included in online banking solutions can have appropriate cross links into the ATM channel. Electronic bill presentment and payment (EBPP), account aggregation and online lending services are commonly configured and utilized in an online environment. In such cases, quick checks or adjustments to the configuration of these services can then be offered at ATMs. For example, once I have my bill payment sources and schedule established, I might wish to check on the status of payments or adjust the schedule of pending payments at an ATM when I am out of town.
Increasing the number of customer connections in this manner not only increases the opportunities for recognizing and delivering revenue generating services, but it also benefits retention of high value customers. A recent Celent Communications report revealed that offering online banking solutions improved customer retention. According to that report, "banks are discovering that active users of their online banking services are much less likely to jump ship to another institution," and that such services increase the value of active customers to the bank by twenty-five percent. Integrating online and ATM services can extend that stickiness to the ATM, resulting in an even more powerful platform for customer focused services.
Integration of existing service channels, as well as potential channels such as mobile phones and PDAs, allows driving of content appropriate to each channel and the customer using that channel device in real time. Such integration leads to more opportunities for expanding the transaction set and related revenue streams.
ATMs continue to increase their transaction capabilities. There are increasing options available for automating the handling of more complex transactions, such as check cashing, bill presentment, money order issuance, ticket printing and bulk cash recycling. These capabilities expand the suite of value delivery services that ATMs can deliver.
The existence of convenience fees for non-customer use of a bank's ATMs shows that consumers are more than willing to pay for convenience. Consumers have come to recognize the benefits of having desired transaction capabilities close at hand and are willing to pay for this convenience. Thus, there is a relationship between the increasing capabilities of ATMs to fulfill convenient transactions and the revenue potential of such systems.
The fact is that the unique aspects of ATMs are under-utilized among the services and functions deployed within networks today. Functions such as statements on demand, ticket dispensing or ticket printing, check cashing and various location-based services all can be aimed at a convenience orientation and be chargeable by event.
Location Based Services
An ATM has another distinct advantage over other channels of the bank. Wherever a consumer goes, there is an ATM nearby whose location is known. When a consumer utilizes a particular ATM, the network can then know where that consumer is. A merging of location, consumer information and banking relationships opens the way to targeted commerce options at every ATM.
An example of this is an ATM whose location is near a movie theatre. Based on a selection profile, the consumer may be offered (during the transaction authorization period) a short preview of a film and the option to reserve tickets for a showing. The bank would charge a convenience fee for this service.
Or consider a businessperson traveling out of town. Based on this fact, the time of day, and the expected traffic at the ATM, a list of neighborhood restaurant recommendations may be shown. These placements may be a product sold by the bank to neighborhood businesses.
Thus, customer focused services at an ATM not only build relationships with the bank's retail customers, but also serves as a vehicle for building content and transaction relationships with the bank's commercial customers. Such a platform allows for customization of solutions that are specific to individual banks' business needs and relationships.
What is required to implement such solutions? Surprisingly, it does not require a new fleet of ATMs in most cases, but rather a change to an open solutions approach to the software and operations of existing ATMs. In addition, an evolution toward a CRM based multi-channel delivery approach allows incorporation of many of the customer focused solution characteristics that have been discussed.
To be cost effective, such solutions need to operate across all of the ATMs and kiosks on a banking network regardless of their vendor. The current generation of XFS and solutions middleware from a variety of vendors enables this.
The Open ATM, Kiosk and Branch Software Set
Historically, self-service solutions have been specific to a single vendor. Today, XFS (eXtensions for Financial Services) standard support is common among ATM manufacturers. The XFS standard combined with appropriate middleware enables a single customer oriented solution to be deployed across an entire network of multi-vendor machines. This "best-of-breed" technology approach allows financial service providers to choose kiosk functions or enhanced back-end systems that can enhance their traditional ATM capabilities. The result enables content delivery focused on the profile and location of individual customers for personalized transaction and services delivery.
With a customer focused approach, the ATM becomes the customer's machine at that instant - a set of services, some chargeable, some free, that is determined by: the customer's identity and relationships with the bank; the ATM's capabilities and location; and the bank's strategies and other relationships. The various characteristics are encompassed into profiles that, in combination, determine the content that the customer sees when interacting with such an ATM.
Bringing it all Together
Such an approach can be broadened to other channels allowing true integration of content delivery across the entire bank. The customer-focused bank - and the customer-focused ATM that is a component of it - is a concept ready for first mover adoption today.
A CRM driven customer focused solution integrates delivery channels.
Banks can generate additional fee-based revenue, improve relationships and increase retention by delivering personalized, location-based content. The ability to integrate customer activity across all of the bank's channels creates the customer knowledge in a one to one manner that results in greater opportunities to sell targeted financial services. The ATM is key to this evolution, and the technologies, products and services are here today to enable the transformation to begin.
Robert Usner is marketing director of Nexus Software, which is headquartered in Raleigh, North Carolina, USA. Nexus Software is a world-leader in standards-based, open retail banking middleware and related products and services that connect any solution to any branch or self-service device. Nexus has more than 15 years of experience in systems evolution, XFS device connectivity and enabling open standards based solutions for its OEM's, value-added resellers, distributors and financial industry-end customers around the world. Usner may be reached via e-mail at [email protected]