Fearless Forecast: The ATM industry in 2019

As has been true every year, our predictions will likely prove to be off the mark, highly questionable or just plain wrong. And yet, we will prognosticate again this year, on the off chance that we do manage to land a few correct guesses. Here is where we see the ATM industry headed in 2019.

Contactless ATM and payment transactions will gain traction

Hop on a plane to London, Sydney or Toronto and one of the stark differences in payments you will see is the rapid uptake in contactless in these markets. The ability to "tap and go," using debit or credit for purchases under $100 without PIN or signature has dramatically altered the use of cash in the U.K., Australia and Canada.

Global statistics consistently show that consumers overwhelmingly prefer cash for payments under $60 and for gifts. Following the uptake in contactless, cash transactions at locations such as pubs and coffee shops are reportedly way down. Contactless is now also finding its way into ATMs, where customers can tap and access cash, albeit while also using a PIN.

Fresh off the recent issuance of a reported 800 million cards for EMV smart chip, U.S. adoption of contactless will undoubtedly trail the rest of the world by five to 10 years. However, look for smaller issuers with their own ATM and POS networks to begin issuing contactless cards in 2019.

Bank branches will continue to shrink

The term "branch transformation" implies that there is a consensus around what the bank branch of the future should look like.

Nothing could be further from the truth as financial institutions wrestle with whether their branches should be coffee shops, employee-free, virtual, traditional or some combination of the above.

The only certainty is that branches remain one of the biggest costs for banks, even as their use continues to decline. Tens of thousands of bank branches have been shuttered in the last decade as banking has moved online, many cash deposits are now efficiently handled by retail ATMs and check imaging has become ubiquitous.

With customer banking preferences in flux and a horde of fintech challengers breathing down their necks, look for many banks to continue shrinking their branch footprints in 2019.

Diebold Nixdorf will not survive in its current form

Excessive debt, accelerating cash burn, manufacturing and supply chain woes, bloated overhead and overpriced or unintegrated acquisitions are a toxic brew for this storied company. As the turnaround runway and margin for error continue to shrink, look for creditor and customer nerves to fray.

It could be that the valuable Diebold Nixdorf installed base is purchased out of administration by private equity. Alternatively, one of the Asian ATM manufacturers might decide to purchase the company and convert DN customers to Chinese-made ATMs and other hardware.

Whatever the outcome, look for a dramatic transformation of Diebold Nixdorf in 2019.

New ATM sales will plunge even further

Now that even China has joined the list of mature ATM markets, look for worldwide ATM hardware sales to slump.

With the global use of cash flat to slightly down and an ATM seemingly on every corner, the ATM hardware business has become largely replacement only. The lone exception will be tailwinds from the replacement of FI ATMs for Windows 10 in the next 12 to 24 months.

Given a shrinking pool of ATM buyers, downward pricing pressure on all types of ATMs could easily accelerate. Compounding OEM profitability challenges, tariffs on Chinese-made ATMs will negatively impact a number of suppliers should they remain in place.

ATM casualties in 2019 could be manufacturers overly dependent on the sale of new ATMs in a saturated global market.

Pundits will continue to proclaim the death of cash

Once again in 2019, the geniuses will be out in force, proclaiming the impending death of cash. And yet, in spite of the global uptake in mobile payments, contactless and other wallet competitors, cash will once again refuse to die.

Although the use of cash varies widely by country, consumers continue to demand choice and flexibility in payments.

Despite another chorus of morbid proclamations, cash will prove stubbornly resilient again in 2019.

Happy New Year and a healthy and prosperous 2019 to all!