Mercator Blog

Placing Bets on the Long-term Role of ATMs
Date: November 21, 2018
Sarah Grotta
Director, Debit and Alternative Products Advisory Service

After over 50 years as mainstay of transaction banking, ATMs continue to be a central element of the purposeful migration of banking transactions to self-service solutions, a migration that also includes online and mobile technology. As consumers self-serve their banking needs, banks, credit unions, and other financial institutions (FIs) experience a decline in customer visits to their banking offices. The cost of maintaining and staffing branches has institutions on a mission to “right-size” their branch presence by scaling back on branch office square footage as well as the number of branches they support. While ATMs have been partly the cause for the declining branch traffic, they are also a part of the solution. Where branches are closed, an ATM may be left behind to ease the impact of branch closure for customers who live or work in the vicinity and to help to retain them as customers.

Over the long term, however, usage of ATMs will decline as less complex transactions like check deposits, balance inquiries, account transfers, and all other banking transactions that don’t require receipt of a physical item like cash migrate to mobile and online channels. In the meantime, consumers, even those who frequently use digital products, like the option to use all transaction capabilities, so financial institutions will continue actively maintaining and updating their ATM fleets. To remain competitive, ATM owners have to adopt the features that users seek, all the while protecting transactions from ever changing fraud attacks and staying current with network rules, compliance, and systems changes. Big bets on cutting-edge technologies are unlikely to be made as the full effects that digital may have on the ATM channel are still being realized.

A new research report from Mercator Advisory Group titled 2018 U.S. ATM Benchmark Report explores bank ATM placements in comparison to branch locations, current fraud trends, the launch of various cardless cash access technologies to provide cardless cash access at the ATM, and consumer attitudes toward ATM use.