The future of the ATM industry: Transforming with technology

Hyosung America is no stranger to change. As the largest provider of ATMs in the U.S., the company is used to pivoting quickly when necessary. And if there was ever a time when every industry was faced with monumental changes to be made, the moment the coronavirus shut down the world was such a time.

New phrases like "shelter-in-place" and "social distancing" were being thrown around fast and furious and not just in the ATM industry but in every industry.

Banks, credit unions, ATM operators, maintenance teams and ATM owners tried to determine not just what they needed to do, but how they needed to do it and when. Timelines were revised and then revised again and what looked like a month shutdown of the country stretched nerves and finances to the six-month mark.

Now that the country, for the most part, is getting back to business, bank branches and financial institutions are trying to determine the best way to move forward.

"Banks want to know that when a customer walks into their branch, regardless of COVID-19, their needs will be met. They [the banks] don't

William Budde

want to just respond to a knee-jerk reaction to change for the sake of change," William Budde, vice president, product marketing, for Hyosung America said in an interview with ATM Marketplace. "The goal is not to base the strategy on customer panic over the pandemic, but create a strategy rooted in technology that fits the needs of the situation," said Budde.

Although branch transformation isn't a new concept, the rules and regulations regarding COVID-19 have changed the playing field. And as technology continues to advance, that changes things, often for the better.

"There's a whole host of new financial institutions who have changed or are ready to change to meet expectations of whatever type of environment is coming over the next few years. A lot of these changes have been things that have been talked about for a long time, but the current environment with COVID-19 just accelerated those changes," said Budde, who has led financial institutions in successful branch transformations. His focus now, however, is two-fold: help create an efficient and effective operation that works for customers and staff, but also keep the customer safe and healthy. And to do so, said Budde, is to put the value on ways technology can help assist the branches, streamline processes and engage the customer.

"The pandemic certainly has driven a lot of customers to be more digital, but mobile banking was immensely popular before, and it's still immensely popular now. Our focus is to look at the overall goals [of the customer] and determine how we can bring added value to the branch. How can we make the process cost-effective and extend the customer experience, but use as few touchpoints as possible in order to optimize health and safety?"

IDFC First Bank took that approach last week when it launched Safepay, a digital app that allows contactless debit card payment by waving a smartphone against a Near Field Communication-enabled POS terminal.

To activate, consumers link their IDFC debit card to the integrated mobile banking app, which Vista has tested and certified. Once activated, users may make payments at merchant locations by unlocking the phone and waving it against an NFC-enabled POS terminal.

"SafePay makes the payment experience fast and frictionless," Amit Kumar, head, retail liabilities, IDFC First Bank, said recently. "For a cardholder, it does away with the need for a physical debit card, and thereby, eliminates concerns about loss of cards. It is the easiest way to check-out of a store in seconds,"

Hawaii State Federal Credit Union goes interactive

Hawaii State Federal Credit Union is another company using tech to transform its customer experience. The credit union, which has 10 branches throughout Hawaii, including its Salt Lake branch, and the Ewa Beach location that opened in 2020, overall has grown in the past five years from 80,000 members to a little over 110,000 members.

"That growth and demand has really allowed us to expand our branch network to better serve the needs of our customers," Aaron Vallely, vice president, retail experience, for Hawaii State Federal Credit Union said in a YouTube talk on the technology effort.

The credit union first tested customers' responses to new technology, including Hyosung's interactive teller machines with biometric palm scanning, by setting it up at the credit union's Salt Lake branch.

The interactive teller machines, according to Vallely, "are like a combination of an ATM and online banking."

"We really look at our Salt Lake Branch as a test lab to try out new things," Vallely said. "While this is one of our smaller locations, you'd never be able to tell based on the design. It actually feels really airy and open. And we were really excited to introduce our first interactive teller machine there to our customers."

Hyosung provided the machine, and once installed, the Salt Lake branch became the home of the state's first interactive teller. Additionally, Hawaii also became the first location in the nation to actually use biometric technology to identify and verify a customer's identity from their palm vein.

But that's not to say Hyosung's interactive teller machines don't also perform other tasks that help streamline the banking process for customers, because they do.

"These machines give our customers access to all their accounts. They can make withdrawals in mixed denominations, make loan payments, get cash and make check deposits," said Vallely.

Once Salt Lake began to thrive, Vallely and Hyosung took the learning and used it to launch the Ewa Beach branch. What Vallely learned from Salt Lake aside from the layout and design concept, was that the new technology helped create a specialized customer experience.

"We learned how to use the [biometric and interactive teller] technology and we took that education to make things even better at the Ewa Beach branch." Vallely said. "Our members felt this technology was so intuitive that they wanted a place where they could conduct their business, using the technology, on their own."

Hyosung installed three interactive teller machines in what Vallely refers to as telepods or private areas at the Ewa Beach branch. Customers could either use the interactive teller machine themselves, or have a branch employee assist them.

"What we're finding is that 50% of our transactions are actually being conducted through the interactive teller machine. It's easy to use. They [customers] don't need an ID; they don't need their debit card, and our members are finding it very easy to conduct the transactions themselves," Vallely said.

And the digital experience continues in every branch. From the moment customers walk into any Hawaii State Federal Credit Union branch, they can engage with new technology. Instead of putting names on a clipboard and waiting to be called as they do in traditional branches, customers here check in digitally. This sends a notification to all branch staff members to let them know why the customer came into the branch, sending the right staff member to help solve the issue.

Additionally, in the Ewa Beach location, the design includes four private offices. Again, the suggestion came from customers, requesting a private place to have a deep conversation with staff employees about their finances.

The branch also has what they call a large digital touch screen, or what Vallely called a large iPad. Customers can use the digital touch screen to pull up brochures and create a journey map to determine what's the best account that will meet their needs.

It was Vallely's desire to give his customers more options and choices in how they want to do business.

Effective staff is an efficient staff

Aside from servicing the customers in a more personalized manner, Hyosung also looks to streamline efficiency and effectiveness starting with the workforce.

"Cash recyclers are an excellent product to solve this issue. They allow tellers to focus on things like speeding up transactions in the drive-thru lane and it puts less emphasis on activities that can easily be streamlined," said Budde.

In today's environment there is a tremendous emphasis on speed of transactions at the drive-thru given the rise in usage levels. Using less staff and speeding up those transactions is invaluable learning which Budde says most clients don't realize. Once staff is freed up from the repetitious or mundane tasks, they can focus on serving the client better.

Rethinking customization to customer-ization

Budde said being the only ATM and cash recycler manufacturer allows Hyosung to create a seamless integration between the customer experience at the ATMs and the cash management on the branch side.

"One of the first things the Hyosung staff does to help their client is to rethink their space and listen to the pain points. What are the tasks that could be automated? How much time does staff handle cash? Can they use a cash recycler to streamline the workflow?" he said. "Can an interactive ATM work and create that personal touch? Is the customer experience the same through all channels or is it a different experience from in-person to mobile app to drive-thru?"

For Hyosung, it's not so much customizing: it's completing the customer experience throughout all channels.

"We want to extend the experience, not just customize it. We want to ensure that the experience the customer has when using the self-service ATM is the same experience they have with the mobile device and the same quality experience on any aspect of the transaction. If they are in an airport, and they stop at an ATM, that ATM should be customized to their preferences," said Budde.

In order to do that, Budde said the company takes every aspect into consideration.

"We want to make sure the functionality and the buttons look the same so the experience is customized for whatever accounts or whatever way [the customer] chooses to access their accounts," he said.

And they also address processes.

"We talk about managed services, which is about managing all the complexities of a multipoint delivery system. We do have different elements to branch transformation, and we have a ton of people working on different aspects, focusing on making software as user-friendly and robust and transformative as possible. We have people who understand how the mobile app software works too," Budde said.

And Hyosung works with the customer to meet their goals for the facility.

"When our bank customers want to understand how to make the best use of software, we talk about the capabilities, what the competition is doing, what their ideas are, and we take all that information and collaborate and implement the strategy together. What we do is create a road map and then eat, sleep and breathe it," said Budde.

But the greatest tool Hyosung brings to its clients is its flexibility, Budde said.

"We have standard APIs that can connect to most any apps [a client] would like to use which makes us very flexible and our products easy to implement at most banks," he said.

Having this level of personalization not only benefits the user but the branch as well.

"We discuss self-service options, retrofitting ATMs, and total redesigns to implement technology in with the hardware. Just because the market isn't demanding a certain technology yet, is no reason to say it couldn't work to help a branch meet its goals," said Budde. "Our hardware is driving engineers to create a robust platform that can offer a customized experience, but built around the different modes of experience a branch wants their customers to have. What do they want in the way of identification and validation at the ATM? Do they need contactless? Do they need more than one way for customers to obtain cash at the branch?"

Inside the branches today, ATMs have tools that add a level of personalization that allows a customer to complete most transactions with the bank, without ever needing to speak with a branch employee.

The future

Hyosung's most current machines are easily upgradeable and already support a number of contactless authentication methods, including NFC, QR codes, and biometric modes such as palm vein technology.

"Technology is advancing so quickly in a lot of areas, it may be easy to put in an authenticator, but how do you take that same authenticator and just as quickly, make it safe and secure?" Budde said.

"There are still a lot of unknowns out there, but we have already developed biometric [applications] and received great reactions. I see it as an increase in convenience and increase in security," said Budde.

But that's not all Budde sees for the future.

"We also need to remember it's not just about the end-result and giving a customer a great experience. As bank priorities change, it has to drive a level of efficiency and create a value-added workflow," said Budde. "With self-service you are not stuck with traditional bank hours. A customer can bank around the clock. You can have specific tasks on your mobile app and if it requires a person to come into the branch, maybe you expand the fulfillment automation. That will make a customer more loyal. That's thinking in terms of value-added services. That's what going to keep a customer coming back, and in the end, what will generate trust with the customer. You create the experience around not what's best for the bank, but what's best for the customer."

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