It seems that global business has embraced a cashless society. In 2022, the value of digital payments is expected to reach a massive $7,860,739 Million. A 2018 survey on payment type preferences for U.S. customers reports that only 7% of respondents use cash payments when shopping at a department store. On all fronts, it appears that the amount of consumers and businesses that use physical money is on a steep decline.
Digital payments put the value of ATMs into question — without cash, there is no need for physical payment stations. Yet, the total number of ATMs has grown, last recorded in 2020 at 51.66 kiosks per 100,000 people worldwide (up from 29.76 in 2010). The payments industry has changed due to digital transformation, but ATMs remain resilient.
So, is it really a dying technology? Let’s look into the current state of payment kiosks and how the future of the ATM continues to show positive growth.
Is ATM Ownership Still a Profitable Business?
As long as there is cash, there is a need for ATMs. But those who warn about the imminent demise of the standard ATM state that consumers no longer require convenient access to cash. With digital payments, e-transfers, and smartphone wallets as the now-common money transaction method, people might no longer need a cash dispensing machine (money dispensation accounts for 95% of ATM use).
Plus, more data about the decline of physical branches within the banking industry offer no support for the continued use of ATMs. Banks closed more physical locations in the past ten years than opened: JP Morgan shuttered 334 branches, while Deutsche slipped from its high of 3083 locations in 2010 to 1891 in 2020.
With fewer brick-and-mortar stores and less consumer demand for direct cash access, those who argue against ATMs appear wise and prophetic.
But while digital transformation has altered the landscape, it poses no threat to the use of ATMs.
Digital forms of payment continue to grow, but the use of cash remains relatively stable, with close to 20% of all payments in the U.S. still made with physical fiat currency. The ATM is more than a single piece of hardware — it is an endpoint device that delivers a series of benefits to a consumer, such as convenience, brand awareness, access to service, and contactless function.
Digital payments did not delete the ATM: they just changed its purpose as a cash dispensing machine. A kiosk now functions as a multi-purpose service opportunity. Digital transformation only helped the ATM by forcing it to evolve.
The Internet of Things and ATMs
In fact, the Automated Teller Machine is one of the first hardware applications to leverage advancements in digital technology, notably with the Internet of Things (IoT).
IoT is an umbrella term that refers to the digital network that connects physical devices. Through sensors, cameras, and artificial intelligence technology, IoT connects every device to the central network. Across the information highway, any object can help exchange data that help provide better service to real-world applications.
The ATM is the perfect example of how a physical device can integrate with digital IoT properties for improved function:
- On-Demand Services: With an increase in smart touch technology, an ATM can provide a friendly and simple method for consumers to locate unified services across entire countries for heightened convenience. Ease of use and access to improved services will increase user engagement.
- Fraud Reduction: The upgrades in digital security via multi-factor authentication, better software, and physical hardware such as cameras and keypad skimmers provide enhanced safety that can reduce total fraud (Losses from ATM attacks have decreased in Europe).
- Enhanced Data: ATMs connected to the IoT network can analyze customer behavior and give bank leaders actionable insights on ATM usage and service offerings. Real-time intelligence will further increase customer retention through personalized upsell.
- Wearables: As a more direct example, ATMs can connect with customer wearables, helping notify users of payments or requested cash dispensation through personal smartwatches and another haptic tech.
An ATM is a touchpoint for consumers; it represents the perfect method for banks to interact with their modern clients when married with digital tools.
The Future of ATMs – What Is the Outlook?
ATMs will become a core component of the smart cities that IoT will help facilitate. The ATM has moved away from a simple cash kiosk and is now a branding opportunity, a means to collect service data, and a way to interact with consumers who demand more from their banks.
The new concept of ATM usage is called ATM 2.0, a reference to the switch from simple cash kiosks attached to physical branches to machines that leverage digital transformation for continued profitability.
For example, the continued integration with mobile applications will heighten customer service opportunities. You can already request cash withdrawals from your phone, all with cardless access, helping remote and unbanked locations. Some ATMs will also create an online wallet, allowing users to connect to other fintech applications and digital payments methods offered by PayPal or Square.
Of course, digital tokens and hot wallets connected to cryptocurrencies will also help change how money transfers. Case in point: Bitcoin ATM installations have exploded in growth with over 14,000 kiosks placements worldwide.
New security features such as biometrics and facial recognition will protect users, allowing banks to create smart ATMs that offer most standard branch service requests. Mckinsey even stated that the new concept kiosks could improve branch effectiveness by 60-70%.
ATMs Are Innovative and Profitable
At first glance, digital tools appeared to have rendered standard ATM kiosks obsolete. With the rapid changes in the payments industry, many skeptics declared the end of ATMs.
Yet, while the introduction of digital transformation certainly changed how consumers demanded access to their banks, it has not affected ATM usage. Instead, it has forced ATMs and banks to innovate, allowing for new IoT integrations and the creation of ATM 2.0. Kiosks now function as primary customer touchpoints that use digital tools for better service. The ATM remains a prominent and profitable technology.
Are you looking to start your business journey as an ATM entrepreneur? Get in touch with ATMMachines to discover how you can own a kiosk through our ATM placement and ownership programs.