Cash is still king but “uneasy lies the head that wears a crown!”
Even as I am prepping for my next industry event, observations from the last conference I attended continue to permeate my thoughts. The ATMIA US Conference that was held in New Orleans only recently and yet, three items continue to have me thinking about the durability, indeed longevity, of some of the points raised. In particular, it was the future of branch offices, the impact and, yes, inroads of mobile devices, and ATMs themselves.
However, before discussing these three points any further, pulling back from all that I saw to see the bigger picture and it’s clear that cash is still king even as concerns about security continue to dominate all conversations. Not simply EMV and how it relates to ATMs, but it applies to every door opened by financial institutions to interface with consumers. As we just read this week, even central banks are not immune to fraudulent attacks (check out this story about the New York Federal Reserve and Bangladesh Bank).
As the story goes, hackers allegedly breached the Bangladesh central bank’s security system and then posed as Bangladeshi officials to submit a series of Swift messages requesting the New York Federal Reserve to transfer large sums of money from its account there. Had the wrongly transmitted funds made it all the way back to the perpetrators, it would have been the largest bank heist in history.
Cash and securing our cash to one side, when it comes to the future of branch offices financial institutions face a quandary. Following years of aggressive M&A activity – some opportunistic even as it has been more about government driven “encouragement” – branches have seen not just a change of signage but oftentimes, complete shutdowns. For many the branch still represents the simplest way to project and reinforce their brand, but to others, it’s just too human resources intensive and a cost that is difficult to manage.
From all I saw, even as there is ongoing conflict in retail between bricks and mortar versus e/commerce, the battle is spilling over into banking and I cannot see the traditional branch office surviving in the long term. And yet, our thirst for real cash shows no abating so perhaps this is all the ATM market needs to hear.
As for the convergence of mobile with traditional forms of cash delivery including ATMs, in time mobile will erode the need for many ATMs. “Omni Money” will provide more fluidity and options as it supports consumer initiated movement between cards, debit and credit, as well as between virtual and real currencies and even the creation of lines of credit and taking out loans. Branches may be today’s branded locations but to future generations, this will be supplanted as a marketing tool by the logo on the app on the smartphones.
What I saw taking place across the ATM industry is only further confirmation of what I have been witnessing for some time now. Yes, we have a vast network of devices and yes, we have tools to oversee all the infrastructure in place to support an array of applications – can these devices and networks be leveraged in another way?
One response came from Tom Harper, president and CEO, Networld Alliance, when he listed the top eight predictions for ATMs. “Redefining the user experience,” said Harper, that will include “the physical surroundings including the addition of big screens” and even the emergence of “ATM Pods – as consumers become increasingly mobile so too will ATMs”.
Harper was noting that if the branch office represented the face of the financial institution, increasingly it will be one form or another of the venerable ATM that will become the more recognisable face of the financial institution even if it’s nothing more than a secure cubicle inside a coffee shop.
During a trip back to Sydney, Australia, just a few years ago, alongside Sydney’s famous Circular Quay, the Commonwealth Bank of Australia (CBA) included a Starbucks coffee shop inside the branch. Perhaps they addressed the wrong question, coming up with a solution that was the wrong way around. Yes, future bank branch presence may be within malls, train stations, coffee shops – the gathering places for a much larger proportion of society.
Cash is still very much king and in a strange way, holding funds in cash provides a level of security unthinkable only a decade ago – electronic tentacles into every corner of the globe make holding funds electronically susceptible to all kinds of risk. What appeared to be a reworked StorageTek robotic tape silo, as displayed by Quantum Systems, capable of retrieving almost anything tangible from cash to safe to the contents of safe deposit boxes may be a foretaste of what’s install for branches but the chapter hasn’t closed on branch offices quite yet.
However, what time spent on the exhibition floor of conferences such as ATMIA US Conference teaches all of us is that there are smart minds at work rethinking how to serve our financial needs, cash or otherwise, and as long as they are doing so, there’s no end of surprises ahead for all of us. Cash may be king for yet a while, but to the next generation of consumers, it may all be as simple as being a phone call away.
By Richard Buckle, founder and CEO of Pyalla Technologies, LLC