15 June 2017
ATM & Cash Innovation - Day 2
We’ve found our way back for Day 2 of the ATM & Cash Innovation conference. We had an early start to fuel up, make our way round some more of the exhibitors and find our seats for the first session of the day to kick us off. A stellar line up of presenters from all over the world and across the breadth of the industry made this an interesting day. So stick with us, to go where we went and hear what we heard.
Michael Lambert of the US Board of Governors of the Federal Reserve System is up first to give another view on the future of cash. Even with non-cash payments taking an increasing share the stats show that physical currency in circulation is growing year on year. Cash is indeed still King in North America and if other payment mechanisms want to replace it they need to match all the attributes of cash. In reality it seems that the payments market is growing and cash is a smaller segment than it was, but the amount of cash in circulation is growing and the amount of cash held by customers has increased.
Mastercard’s Dan Goodman took to the stage to provide an industry overview and the impact on the ATM. Dan outlined Mastercard’s vision for the next generation interactions at the ATM with 3 critical success factors for the vision:
1) improved customer experience
2) how to scale the solution
3) how can we leverage existing infrastructure
Using this as a base there will be lots of possibilities to digitise, but the concept of the industry working together to move the ATM to apersonal device is a refreshing idea, it will allow the user to be in control of their own user experience. A very clear message coming from Mastercard was that ifeveryone races to deliver bespoke solutions, it will lead to fragmentation in a market that’s battled to deliver acceptance. Consistency and interoperability is what consumers are looking for.
I looked forward to seeing the crowds reactions to Javier Zornoza speaking next about the current challenges facing the ATM, and wanted to see if he hit home with the audience. The ATM remains the preferred channel for the consumer, but it’s reduction appears unavoidable with the growth of other payment types, but the impact hasn’t been felt yet. Like all banks, branch transformation is a hot topic and ATMs will be a key feature of that new look branch. CaixaBank has installed over 4,000 new ATMs following a consultation project with customers, made the ATM more accessible and increased self-service capabilities for more customers. It’s clear that CaixaBank has really thought about the ATM as more than just a cash delivery system. Over 80% of available interactions have been developed to work on the ATM.
Carl Hynes, Head of Strategic Planning and Development, Barclays Bank discussed “The Power of being human in a digital world”. It’s clear customers want personalisation and choice, and thinking about this concept, customers’ expectations are set by their experiences in other markets - Uber anyone!? – digital advances, and how they can be combined with ATMs, must be monitored in order to provide the customer their unique experience.
Mark Trevor of Vaultex was up next. Retail cash management and the challenge that branch closures is creating for business - a subject close to our hearts. What is apparent from Mark’s presentation is there is a clear gap in the market for the provision of cash to SMEs, as the current models for accessing and depositing cash are inconvenient for the modern world. How can we fill the gap? Vaultex believes convenience and security are key and were keen to promote ideas from their banking services collaboration with Vocalink. The next session focused on software innovation. Auriga and UBI Banca spoke about cash automation and the new branch experience. Customers are ready for digital innovation and want the experience to be more like a store than a bank branch. The presentation highlighted the Auriga software as the way forward, however irrespective of the software that sits behind the ATM, a bank must ensure any enhancements at the ATM provide a frictionless user experience – just putting a “smart ATM” in a standard branch will not provide the answer.
ATM in a mobile world is now the topic with Payment Services Austria and Salzburger Banken Software. Nothing radically new here, obviously ”new” technologies such as smartphones and NFC are here to stay (or at least iterations of them) and the speakers discussed the take up. However, I could not help but think that there are too many solutions for the same perceived problem of speeding up the ATM transaction process. Surely a way to look at this would be to ask the customer if this actually is something that causes them pain.
After lunch, Stream 2 provided us with insight into how to manage evolving consumer payment preferences. Useful, as it is always interesting to see what customers are starting to embrace in other areas
Up first James Lowman, CEO of the Association of Convenience Stores. The proliferation of ATMs in convenience stores is well known as store owners have seen the revenue generating opportunities but there is now a real take up of alternative payment methods. As above stores are seeing multiple solutions for the same problem, namely NFC and cardless. It will be interesting to see if any of these take a significant market share and compete with Apple Pay and Android Pay.
James also touched on the point of whether convenience stores could fill the void that branch closures leave behind. Interesting point and one that surely, if the Association could come up with a compelling proposition, could be an opportunity for the big banks.
Next, we heard from John Howells from LINK discuss adapting an ATM network in a changing world. The UK has been through a great deal of regulatory change. Interestingly the first article to announce that ‘cash is dead’ was published by the FT in 1966, a year before the first cash machine was deployed by Barclays in Enfield.
As the processer for LINK it was interesting to hear that LINK disagrees with PaymentsUK on the rate of decline in cash, although both agree that it will decline. Another statement was that the entire cost of the UK ATM network is around £1bn. 33% of ATMS are located in convenience stores and almost 80% of transactions per month occur at those stores. John provided a brief overview on the financial inclusion initiative LINK has introduced since 2007, which sees ATM deployers rewarded with higher interchange for supporting social inclusion areas. Finally, John introduced the LINK branch concept to address the trend in branch closures, this would be an interesting new development and we look forward to seeing how that will impact the high street.
Probably an unsurprising statement to make now we are at the end of the conference but “Cash is still King”. It may be an ageing relative but it is still the best known.
Over the past 2 days we have heard many people tell us how they are innovating. One thing is obvious, those who engage with customers and have buy in from staff are far more likely to succeed than those who are innovating for the sake of it.
We’ve said it before and I’m afraid we’re saying it again, in a time of massive change and evolution there are some things that cannot and must not change. RELIABILITY … SECURITY … TRUST and please don’t forget the customer.