ATMs reimagined: How financial institutions can benefit from IADs

Cash is still important to consumers, in the COVID-19 era and beyond. New research reveals what's changed is how consumers want to access cash, as many are increasingly interested in performing self-service banking activities at an ATM versus in person at a bank. This shift presents an opportunity to reimagine a key industry mainstay — the ATM — as a technologically advanced, interactive teller machine.

In August 2020, MetaBank, N.A. surveyed more than 1,200 U.S. adults to examine their post-pandemic sentiments about ATM and cash usage. Then, Meta paired that with a pre-pandemic analysis of the ATM industry aggregated by Mastercard from a number of expert sources, including Federal Reserve System, ATM Industry Association, Bankers Equipment Service, RBR Global, Star Financial Services, Transaction Network Services, Wall Street Journal and more. The research identified these need-to-know trends.

Cash still has a place in consumers' wallets, even in the COVID-19 era
The research confirmed that, despite rumors circulating that cash was dirty or spread the virus, the majority of consumers (55%) still accessed cash from March to June 2020. In fact, Americans withdrew cash during this time a lot — 44% withdrew cash more than once, and 7% even did so more than 10 times. Furthermore, many consumers'(59%) positions on the use of cash have not been impacted. This is thanks in part to stay-at-home and social distancing orders in many places nationwide. What's changed is how consumers are accessing their cash. Consider this: 24% say they're less likely to visit a bank branch due to the pandemic.

Leverage the ATM to do more
In a post-COVID world, self-service will be key. More than two in five Americans (43%) are interested in completing banking activities like cashing checks, making deposits and withdrawals or video conferencing with a remote teller at an ATM instead of having to physically go into a bank branch.

In fact, one in five Americans (19.4%) would strongly prefer completing these activities at an ATM instead of going into a bank. At the same time, thanks to the ongoing 'branch transformation' trend, bank branches are shuttering at a record rate, as nearly 2,000 closed in 2018 — and this trend is expected to continue. The convergence of these two issues helps to underscore a need for conveniently located, self-service-focused interactive teller machines.

IADs can help ATM fleet management
These factors present a key window of opportunity for financial institutions and the way they work together. Managing a fleet of ATMs is very expensive, and few financial institutions are running their ATM businesses profitably. Those costs are likely to increase exponentially as the industry moves toward an interactive, self-service focus that allows consumers to perform tasks at ATMs that previously required the in-person presence of a teller.

For financial institutions, branding agreements with IADs can offer a win-win scenario that allows them to service customers across a number of convenient locations, without the resources needed to operate their own growing fleet of ATMs. While financial institutions traditionally operate within the footprint of their branch locations, consumers who no longer have a bank branch near them still need access to cash — and, via an IAD partnership, a bank can still provide that access. Furthermore, thanks to economies of scale, IADs are able to operate ATMs at a lower price point than financial institutions.

Despite the COVID-19 era and the growing trend of branch closures, there's an opportunity to reimagine ATM fleets in a way that responds to consumers' needs while saving valuable time and resources. And the key to that opportunity lies with IADs.