• Ratnesh Mittal

How the ATM May Transform Banking

Updated: Aug 12

Everything about money is going digital.

The way money is stored, moved, converted, sent or received and in the case of crypto, even how it is created, is a function of electrons moving frantically.

The bank is now an app on our phones and traditional banking functions are distributed across myriad other firms and individuals.

Banks have witnessed an encroachment of their ‘territory’ on both the borrowing and lending sides by semi-banking, quasi banking and specialist institutions such as NBFCs, housing finance companies, mutual funds, AIFs, payment banks, corporates, technology companies and so on.

As banks re-think and gear up to combat the onslaught or more nimble specialists gnawing away at traditional bankers’ prerogatives, the humble ATM can be a great differentiator around which banks re-build their service model. Here’s why.

Cash may not be king, but it is still a man’s best friend

Hard currency is thriving despite the increase in digital transactions.

And so we need ‘shops that sell notes’. Someone needs to be the conduit of money from the printing press to your wallet and banks have an exclusive right over that. As long as there is cash, it needs to be distributed and collected.

The Future is Phygital

Digital is no-one’s exclusive domain. Every financial service firm will get to a similar level of digital presence. Tech giants, though unbeatable in their domination of digital reach, realise the need to have a physical presence on-ground. Banks, on the other hand, already have physical reach, they need a mechanism to combine digital and physical into an omni-channel experience. ATMs by their very nature, are well positioned for this.

Reach - ATMs are Everywhere

ATMs are like ‘kirana shops’. They are probably the least cost retail operation. Banks in India, collectively run an estimated 210,000 ATMs, another 23000 are run by White Labelled ATM (WLA) operators. If you were a financial conglomerate selling a savings account to a term loan and everything in between, then the ATM is the channel that literally takes you to the customer’s next door.

From Automated Tellers to Digital Experience Enablers

ATM technology has evolved. 2-way transactions, video banking, e-commerce transactions, physical authentication, financial advisory and much more is possible on a 15 inch screen embellished with bio-metrics, digital scanners, AR headsets etc. ATMs can help break the limits on digital experience imposed by hand held devices.

Low Cost of Operations

Branch banking is costly. By contrast, ATM hubs enabled with centralised video banking provide flexibility of size and a mix of assisted and self service. Just as the 80s and 90s were about computerising the branch, the 20s might be about automating the branch and cutting flab.

Computerisation cut down manpower and storage cost and improved speed and efficiency. Automation might do the same by in a magnitude of multiples.

What then needs to happen for this vision of a phygital financial store to become a reality? My take:

1. Regulatory reforms allowing ATMs to do more than cash dispensing and enquiry

2. Investment in higher end ATMs

3. Faster and smarter connectivity to ATMs

4. Business model and service stack innovation by banks

At Axon Networks, we work with banks and MSPs to solve the last mile piece of the equation enabling ATMs with high speed, secure, cost effective and intelligent connectivity solutions. If you wish to know more about how we do that, please do get in touch with us.

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