Happy 21st birthday for UK's independent ATMs? Not exactly

It's time to wish a happy 21st birthday to the ATM installation that changed the face of cash provision in the U.K.

Yes, that's right. It has been exactly 21 years since the first independent ATM was installed in the country — and that same ATM was also the very first pay-to-use ATM to be installed in Europe.

I was there at a SPAR store in Stone Cross in Birmingham on the first full day of operation of the ATM.

Of course, I wasn't the only one there. Also in attendance were the BBC and Which?, working together to do interviews with the public. The media and consumer organizations were eager to report the outrage of those in the local community now being asked to pay £1 to access cash at a neighborhood ATM.

How disappointed the media were when they discovered the public were delighted with their new convenient cash access.

What the media heard from the public was that, prior to the arrival of that ATM, people living in this bustling Birmingham suburb had to travel three miles to the nearest bank branch with an ATM when they wanted to get cash. That meant an hour's walk or the price of a bus journey or — for those with cars — a drive plus the cost of parking.

No wonder the local residents were delighted to see the first ATM on their doorstep. They felt that £1 was a reasonable price to pay to avoid all the hassle they had endured previously.

So the BBC and Which? had to hastily revise their storyline. Instead of outrage, they had to report delight — and ask the obvious question: Why hadn't this been done before?

The answer to that was simple. Though retailers, such as SPAR, had been clamoring for years to get ATMs in their shops to service the cash needs of their customers, U.K. banks had largely been refusing to support this innovation.

In 1998, of the 25,000 ATMs in the U.K., around 19,000 were at bank branches and only 6,000 were located in areas where the public really needed them.

By 2015, the revolution in cash provision kick started by that one ATM in Birmingham meant there were around 56,000 ATMs located away from bank branches. This increase of 50,000 ATMs — an almost incredible half a dozen ATMs per day added over the intervening years — meant that the majority of the U.K. public were finally getting the convenient access to cash they wanted and deserved.

ATMs under threat

Alas, whilst cash meets many of the payment needs of the public, it does not suit some of major financial services players. Those players' profits will greatly swell if cash is pushed off the payment choice menu — and that is what some of them are trying to do.

So ATMs are under threat, risking that convenient access to cash could soon be a thing of the past. Many consider this completely unacceptable.

Twenty-one years ago, I was at the birth of something truly wonderful for everyone who lives on this small Island. It was an important key to start the unlocking of true financial inclusion for every citizen.

Why would we allow that key to be taken away at an age (21) when individuals are  traditionally given more freedom? Back in December 1998, the sparkling new ATM was a wonderful early Christmas present for one community in Birmingham. Yet, today, as we approach Christmas 2019, many communities are threatened with the loss of their ATMs.

There are some clear signs, however, that a number of banks are actually increasing their investment in ATMs, with Royal Bank of Scotland Group, Sainsbury's Bank and Tesco Bank among the leading examples of this trend. They know that cash is not going away and understand the benefits of providing their customers with the cash they want and need.

At some banks, it is clear that a desire to provide excellent customer service — including payment choice — is alive and well.

Investment is not just about money, of course. It also includes the creation of top-notch management teams, with the vision to devise a clear strategy, along with the skills and dedication to implement it. Those banks with such teams already in situ are clearly well placed to deliver first-class cash services.

So there is genuine hope.

Working together

Ideally, banks and independent ATM operators need to work together to find solutions to the genuine economic issues the industry faces.

For example, the cost of running Link, the U.K. ATM network, needs to be kept firmly under control. That does not necessarily mean lower payments per transaction, but it does mean a transparent review of what transactions are being paid for, how they are coming about, and the benefits those transactions are delivering to bank customers.

New operating methods also need to be considered, especially where they may be able to deliver lower overall costs and higher service standards. Cash deposit and recycling ATMs are a prime example of this.

Post Offices, when appropriately equipped with ATMs to deliver automated as well as counter cash services, can also be part of the solution to guaranteeing community access to cash.

Equally, some charges at pay-to-use ATMs may well be too high currently. Operators need to exercise restraint. For example, in some circumstances, a 95p fee for a cash withdrawal may well be considered reasonable by the public — after all, a £1 charge was viewed as reasonable 21 years ago in Birmingham. However, if higher fees are imposed, there is a real danger that in many locations the public will stop using the ATMs — and simply use cash less. That would be detrimental to the future of cash and is not an outcome anyone with the public interest in mind should be prepared to contemplate.

In any event, if the financial services industry cannot find a long-term solution to maintaining the U.K. public's local and convenient access to cash, then the government and regulators, including the Bank of England and Payment Systems Regulator, will need to act.

Time is running out. Thousands of free-to-use ATMs have already been lost. That trend needs to be halted, then reversed.

By Christmas next year, the U.K. public need to have 20/20 vision of an agreed and transparent strategy focused on securing the long-term future of cash access in every local community around our country.

If that is achieved, the 22nd anniversary of the first Independent ATM being installed in the U.K. will be much happier than the 21st.

A version of this post originally appeared on Ron's "Cash is Cool" blog. 

(Read ATM Marketplace's recent interview with Ron Delnevo on the importance of payment choice.)