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Overreliance on Smart ATMs could backfire for banks

6 MIN READ

ATMs have come a long way since the 1960s, when the first was installed in the British bank Barclays. The initial concept, mostly for convenient cash withdrawals, is a main-staple of the banking landscape and has remained largely unchanged for decades. 

In more recent years, however, Smart ATMs driven by advances in technology are allowing banking customers to do much more. With Smart ATMs, customers can open an account, transfer funds, and deposit cash – all without actually entering the branch.

The capabilities are growing every year. More recent iterations empower customers to even take out preapproved loans or other banking products. In fact, this is what fintech giant Revolut is banking on being their next big thing. The idea is to begin the rollout of these “ultra” smart ATMs – with Spain as the first trial country – that can identify the customer based on facial biometric authentication and offer credit cards or loans. There are even plans to allow customers to take out mortgages via ATMs. 

Smart ATMs do a lot well 

It’s not difficult to extol the virtues of Smart ATMs and even proclaim them as the next big thing. The tech giant Intel takes this view, claiming that: “In branches, technologies such as dynamic digital signage and self-service kiosks use cloud-based analytics and AI technologies to streamline customer visits and deliver more personalized experiences.”

There’s little to doubt here with regard to the technology. It is already impressive and will soon be able to carry out any type of transaction desired. They can also play a part in reversing the trend of branch closures (if not on their own). 

There are a few caveats to remember, however, when it comes to Smart ATMs.

Are the security claims too good to be true? 

The first point of doubt is security. Does it offer enough layers of protection? Companies like Revolut are quick to talk about their facial biometrics or other security features, and yet they are more liable to attack than traditional financial institutions.

The BBC even found that Revolut was named in more fraud reports in 2023 than any major bank. In general, ATM screens are one of the most vulnerable to attacks and require a substantial improvement in monitoring and security to be beyond reproach. 

Trust is uniquely human 

When someone says they don’t trust a machine, generally they mean they don’t trust the people who designed it or that they can get access to support if it fails. Trust always has a human element. 

This becomes painfully stark when we are confronted with a crisis situation. One particularly good example of this was the collapse of Silicon Valley Bank in 2023, where the executives announced the need to raise  $2.25 billion to ensure ongoing financial health. Predictably, this had a knock-on effect on customer trust, leading to $42 billion in deposits being withdrawn and impacting the entire world.

The Japanese, South Korean, and Hong Kong stock markets fell by a reported 2.67%, 3.91%, and 2.81% respectively just two days after the crisis, with the banking industry in Europe losing 120 billion euros.

Gripped by panic, did customers run to their Smart ATMs to find reassurance? Of course not. One study showed the exact opposite, that the financial institutions with strong branch networks fared much better than those without during the crisis.

It doesn’t take a crisis

This somewhat extreme example is lived out every day on much smaller scales. Say for example a customer sees a charge on their account that they don’t recognize. If they decide to leave their house to get support, they are not hoping to find a Smart ATM beside a closed branch with no agents. 

It’s often the same for large decisions. Revolut is confident that mortgages can be approved on digital channels – but there will always be people who would like to talk to a human before making such a life-altering decision. 

Smart ATMs should augment, not replace

Technology has already changed the way we bank. There is no doubt or argument here. Likewise, Smart ATM technology is a genuine move forward that will empower many customers. 

But we shouldn’t throw the baby out with the bathwater. Smart ATMs should not be used exclusively or as an excuse to reduce bank hours. It should be used as part of a strategy to deliver in-person support to those who need it. 

And the technology can help with this. As Intel says, “banks can use IP cameras and AI-enabled vision technology to measure teller wait times at different times of the day. This information can help branch managers make more informed staffing decisions.”

Smart ATMs and digital receptions

That’s not to say that branches must have staff onsite at all times. Digital receptions, which provide remote access to human support via video link in physical branches, are the strategic key to balancing tech with customer trust. They can actually provide more access to human support.

While Smart ATMs can provide added service benefits and reduce costs, digital receptions can do the same – while also enhancing the customer experience.

There are multiple ways that banks (or other customer service institutions) can incorporate digital receptions into their strategy, with or without Smart ATMs.

The Valiant Bank branch approach

Valiant Bank, which has its headquarters in Switzerland, undertook a bold strategy to rejuvenate its branch network. By integrating digital reception features with a modular branch-building approach, the bank drastically reduced setup and operational costs. 

This innovative methodology not only extended their operating hours but also upheld high levels of customer contentment throughout the transformation process.

You can read more about the Valiant’s approach here.

A new banking experience: Smart, secure, and human

Smart ATMs do represent the future of banking. Far from being there to deposit checks or make cash withdrawals with your debit card, this new technology will allow for a range of services and access to financial products that will enhance the customer experience.

It is technology that banks should lean into. But the financial landscape isn’t only defined by convenience. Whether for larger credit products or to provide financial advice or many aspects of corporate banking, customers need that extra layer of reassurance that truly represents advanced banking.

Digital receptions offer the essential elements that allow for complex banking needs, making them more central to a banking strategy that values honest and authentic financial service delivery.

Interested in finding out more?