What does the future hold for ATMs, branches post COVID?

No matter how well you plan for setbacks, there are always going to be external events beyond your control. For many companies, the coronavirus was the most recent example.

When setback occur, consumers need to have access to their money. Many banks learned during the pandemic that it is important to provide people fast, easy access to their funds.

For Banco Popular in Puerto Rico, which faced the additional setback of a 2020 earthquake, digital channels and ATMs both proved critical to meeting customer needs as 40% of the bank's branches closed, according to Moises Pena, the bank's head of retail digital channels.

"We saw a decline in transactions but the amount of money that has been withdrawn increased," Pena said, speaking on a panel, "Moving Beyond the Pandemic and Implications for Self Service and Cash" during the Diebold Nixdorf Intersect Las Vegas Fintech Conference in Las Vegas.

Joining Pena on the panel were Julie Ask, principal analyst, Forrester Research, Octavio Marquez, CEO of Diebold Nixdorf Inc., and moderator Scott Anderson, Diebold Nixdorf's vice president, banking software and product management and small and medium enterprises.

Pena compared the experience of meeting customer needs during this period to being in a shaking airplane.

Future: hybrid experiences

"This is how you will do business going forward," responded Ask of Forrester Research. "Consumers prefer hybrid experiences."

Online is efficient and sometimes very easy, but there always times when customers need personal help. "That need for local knowledge…is still so important," she said. "I think having someone there to show them how to do it…is really important."

Pena agreed, adding that Banco Popular is experimenting with hybrid spaces with an ATM and some employees. Online customer activity remains strong, he said, as does ATM use.

Ask said she expects to see the number of bank branches in general to decline, but the companies that perform best will have a hybrid approach.

While the pandemic pushed adoption of digital channels, Marquez said cash has remained strong, even in Nordic countries, which were expected to go completely cashless. There are now projects in Nordic countries to reintroduce cash.

"Because they figured out that the experience that their customer needs depending on the journey that they're going through requires touchpoints where they require cash," he said.

Focus on the customer journey

Looking to the future, "Let's think of what we're trying to solve for those customers and then build the experience around them that will help them be successful," Marquez said.

Allowing customers to withdraw larger amounts of cash in larger denominations is an example of thinking about the consumer, he said.

"It's not technology, it's not the service, it's us focusing on the customer and focusing on how to better serve them," Marquez said.

Cash recycling to grow

Cash recyclers, which allow machines to recycle incoming cash to withdrawals, will also play an important role in ATMs and bank branches.

Recycling is not new, Marquez said, but the U.S. has been late compared to Europe, Asia and Latin America.

Recycling will play an especially important role in serving the small and medium size businesses, Marquez said.

"Recycling truly creates that opportunity for this big population of a very profitable part of your portfolio," he said.

"If I'm a small (or) medium business and at the end of the day I can't go to the ATM and process all the cash and all the checks that I received, but I can go at the beginning of the day to get one-dollar bills, 50-dollar bills, 20-dollar bills and do that in an automated way…it really allows me to rethink what the branch needs to look like…and really use technology to bring a better experience where they don't have to stand in line, they can go up before the store opens [and] after the store closes," he said.

"That's where cash recycling really becomes a very powerful tool for us going forward."

In some cases, banks might choose to outsource ATMs to third party operators. There are markets where ATMs are pooled, Marquez said, such as in the Netherlands, where all banks share the ATM network.

"Is there a more efficient way to run the ATM? It's clear that it's there for the long run…so in some cases, it might be better to outsource them," Marquez said. "Should I do everything on my own, or should I start outsourcing parts of my business model to experts?"

Predictive technology to expand

Predictive technology is another tool that will play a big role in bank branches, the panelists agreed.

Pena said 60% of his company's ATM operations group will be eligible for retirement in the next two years. Fortunately, technology allows them to predict when a machine needs replenishment and the amount of cash needed.

Marquez pointed out that the cash handling machines have sensors and microprocessors to automate processes and reduce operational costs.

"The more data we have, the more predictive, the more proactive we can be," he said. "We build it so we can actually build more intelligence in every module…so that we can actually predict: is the motor recycling at 3,000 RPMs instead of 3,500 RPMs? Because we know when that happens that device is going to fail in the near future."

An audience poll found the highest priorities for improvement are:

• Enhancing consumer experience, 59%.
• Increasing availability of the ATM network, 22%.
• Adding digital functionality, 18%.