Self-Service Banking Conference
Titled ‘Debating the Future of the ATM’, the latest EFMA Self-Service Banking conference held in Istanbul, 25-26 November 2008, focused on what the ATM needs to do to remain a viable and successful banking channel. With the recent financial turmoil at the back of everyone’s minds, cost optimisation, efficiency and effectiveness were certainly perceived as more important than ever. New ways of generating revenue, new technologies and applications were discussed as different ways to increase transaction volumes and profitability.
Rather than simply being a cash transaction tool, the ATM was viewed by many of the speakers as a core banking channel, which should be more fully integrated into the infrastructure of the retail banking system. A multi-channel strategy, incorporating internet, call centre, mobile and advanced ATMs, was advocated and showcased as the best way to build customer confidence and deliver the best customer service. Mike Liebherr, from LBBW, Germany, talked about the synergy potentials between the different channels, and how this could enable banks to break out of the central dependency on the branch outlet, while contacting customers through their preferred channel. Antonino Gitto of McKinsey & Company explained how they expect to see the self-service channel taking over from the branch, not only as a transactional tool but as a sales channel and a method of customer acquisition. He outlined the possible future development of virtual banking, where virtual interaction and webcams fulfil and replace the roles carried out in the traditional branch.
The need for cash handling processes to be streamlined through the addition of cash recycling at ATMs, achieved, in part, through the addition of automated cash deposit alongside the traditional cash withdrawal function, was another key topic of the conference. As Guillaume Lepecq, chairman of the conference, commented at its close, “Cash continues to be the raison d’être of ATMs.” And, despite the current financial situation, Armin Greif from the European central bank reported that number of euro banknotes in circulation grew by 13 % in October 2008. Cash recycling – the reissuance of banknotes – improves the efficiency of the cash cycle by shortening it, reducing cash replenishment cycles and reducing some cash handling, as well as having cost savings and achieving better security levels. Automated deposit would also speed up account crediting, which would be a very persuasive argument for customer adoption. Japan and Korea are rather ahead of most of Europe in this, as many of their banks already deploy mostly recycling ATMs.
As well as facilitating the development of these technologies, the increasing dominance of the euro currency across Europe certainly makes other things, like foreign currency availability at ATMs, more viable. Joe Doyle of the Bank of Ireland gave a talk about how foreign currency availability at ATMs could increase transaction volumes and provide a new and desirable service for customers, offering foreign currency at more competitive rates than the classic bureau de change. Travelex, the largest operator of foreign currency ATMs in the UK, was represented by James Kershaw, who talked about how dynamic currency conversion at ATMs can enable acquirers to earn the revenue which would otherwise flow to the issuer.
Adrian Roberts, of Nationwide Building Society, gave a very interesting talk about the generation of revenue through the integration of advertising on their ATMs (see page 10 for more information). Third party advertising was demonstrated as a very powerful tool for marketers, as well as a very good way for Nationwide to create another peripheral, but significant, revenue stream.
The conference as a whole comprised of a series of very interesting business cases, from an incredible range of countries across Europe, including Germany, Italy, UK, Turkey, France, Portugal, Greece, Finland and Ireland, with each country highlighting its own financial requirements, demands and solutions within their respective market. The Turkish market, with speakers from Garanti Bank and BKM, gained particular attention for having the market with the most rapid growth and some of the most innovative self-service solutions in terms of new functionalities.
As well as the enhancement of existing features and processes, the addition of more advanced and innovative features is being enabled by technological advances. The so-called ‘advanced ATM’ seems to be becoming more and more popular, as ATMs can now perform complicated processes including loan requests, credit checks, insurance transactions, event ticketing, utility bill payments, institution payments, lottery, remittance transfer and cardless cash withdrawal or transfer. There is a long-standing tension between the advantages of the speed and simplicity of the classic ATM and the advanced but more complicated processes on an advanced ATM. However, now that people are becoming more familiar with self-service terminals and solutions, it seems that they are comfortable with helping themselves to more. Internet kiosks in branches are still proving a good way to convert people from branch-based banking to the internet, and remain a familiar feature in branches across Europe. Traditionally, self-service has learnt from ATMs, but it certainly seems that, with enhanced functionalities and a greater emphasis on self-service channels in retail banking, ATMs are now starting to learn from self-service.