ATMs first appeared on street corners more than four decades ago and their basic function has remained relatively the same since.
“It’s like a bank that never closes,” a commercial for United California Bank announced in the 1980s, when ATMs were growing more common. “It makes your life a little easier, because anytime, any day of the year, it takes deposits and gives you cash.”
But to save on cost and attract a younger, plugged-in generation of customers, banks are finding new uses for the ATM that will change how we get our money.
There’s a drive-thru ATM in the University area of Charlotte. Put in your card, enter your PIN number, and it works just like any other ATM. Another button on the bottom says “Speak with teller.” Once pushed, the face of a woman wearing a headset, sitting in front of a plain blue background, flashes onto the ATM screen. She video chats from either Florida or Delaware and remotely controls the ATM.
Bank of America has installed these ATMs in Charlotte, New York, Boston, and a couple other cities in the past six months, with plans to expand further. Bank of America executive Rob Aulebach says a virtual teller does almost anything an in-person teller can, and they are on-duty past banker’s hours.
“Adding functionality, that’s really what it comes down to,” Aulebach says. “What additional things can they do for our consumer? So, this is probably the next big quantum step in that.”
The top five U.S. banks are all attempting to redesign the ATM. Over the past two years, PNC Bank and Chase have both introduced machines that dispense $1 and $5 bills, getting a step closer to an actual “automated teller.” Wells Fargo ATMs now show a custom display for each user, based on their most common choices—a function common for websites and browsers. Several banks are launching mobile apps, so customers can pre-order their money on the phone like a sandwich. Banks are pushing to attract a new type of customer, says Nancy Bush, a bank analyst.
“More and more banks are dealing with a younger generation who don’t wish to go into a branch, who are very technology savvy and who prefer to access banking products through technology,” says Bush.
Banks have already brought in customers by meeting them on their own technological terms. Pew Research Center reports more than a third of adults use mobile banking, double the number from 2011. More than half do at least some banking online. But that has also had a funny side effect.
“I never have to be at a bank. Like, there’s no physical reason for me to be there,” says 25-year old Jeremy Lurie.
When Lurie needs cash, he can get it at the gas station or the supermarket. He can deposit checks with his smartphone.
“You take the check out, you log into your banking details, and you click the button that says deposit check. You lay out the check flat, you take the picture, and it’s done. And, it’s deposited,” says Lurie.
While online and mobile banking have grown, in-person transactions have dropped by half from twenty years ago, according to financial software firm FMSI. The firm SNL Financial, which tracks bank branches, reports about three percent of U.S. branches have closed in the past four years.
“Now as more and more people are turning to technology to do their banking, there just isn’t the need for as many bank branches, and perhaps there were too many to begin with,” says Elizabeth Rouse, a product manager at SNL.
By closing, banks can save money on real estate, security and staffing, but it sacrifices convenience. The new ATMs could help banks solve that problem, by mimicking the teller at less than half the cost. That leaves one problem for banks, analyst Nancy Bush says. They still want you inside.
“They want you to be able to access services through technology, but they still see the branch as their biggest revenue generator,” says Bush.
The branch is where you set up accounts and apply for loans. As a possible solution, Wells Fargo, Chase, and Bank of America are testing out smaller, boutique branches—imagine the Apple Store for banking. In fact, Citibank hired the Apple Store’s architects for their “Smart Banking” branches.
In most of these new branches, the new ATMs replace traditional tellers. Attendants walk around with tablets, where they can call up your bank account information and move money. In the back, account and loan specialists sit at desks, like at a traditional branch. Bank of America’s Aulebach says his industry is changing so quickly, these branches are one attempt to keep up.
“We are trying lots of different things, some will be successful, some not,” he says. “But, that will help us to guide us in the future on where we want to go.”
Bank of America opened its first of the new branches in Manhattan last week, and plans to put another in Charlotte later this year. So, ATMs will replace some tellers and these small branches some of their larger counterparts. But banking executives says traditional banks aren’t going to disappear, because some customers still prefer a real person to a video screen.