This post is guest authored by Bernardo Bátiz-Lazo, an ATM historian and researcher and Professor of Business History and Bank Management at Bangor University, Wales.
In 2017 the world will witness the 50th anniversary of the cash machine. (See how the industry is preparing for this milestone.) Popular stories of the genesis of the ATM focus on the device installed in Barclays Bank’s Enfield, London branch as the official introduction to the modern ATM.
A look at the invention and evolution of the ATM.
Modern-day media often portrays scientists and disruptive entrepreneurs as having a “eureka moment” — that singular juncture in time when their faces change, they find the answer and “history is made.” Another typical feature of these creation myths is their depiction of the entrepreneur as a young, misunderstood, college drop-out (e.g. Bill Gates or Steve Jobs).
Popular versions of the invention of the ATM paint just this kind of picture. Luther Simjian, John Sheppard-Barron, James Goodfellow and Don Witzel are all names that commonly emerge in historical research; all are men who claim and compete for the accolade of “the inventor of the ATM.”
In practice, the process of invention is more of an evolution – it’s the result of persistence and teamwork. The formula for success doesn’t typically result solely from spontaneity, but from the support of untold groups of people. During extensive research over the past decade, my colleagues and I have confirmed that there was no eureka moment for the ATM. In light of the evidence (you can explore our detailed reports here, here, here and here) it is clear that this world-changing innovation grew out of the ideas of individuals across the globe.
From the beginning, ATMs have delivered convenient cash access to an increasingly mobile, urban population that no longer wants to rely on a single bank branch location. The invention forced customers to learn about PINs and how to operate what effectively became the terminal of a larger computer network. Functionality evolved to include account balances, transfers, third party payments, ordering checkbooks and more.
By the mid-to-late 1970s, U.S. banks like Citibank were already using ATMs as part of the first self-service, fully automated branches; while in the 1980s, shared ATM networks intensified competition and the globalization of retail banking. On the back of these changes and often invisible to customers, banks were actively digitalizing consumer accounts and building the infrastructure to support a digital banking environment.
What does this history tell us about the future of the ATM?
That transformational era foreshadowed the situation retail bankers find themselves in today. Customers want to interact with their bank whenever they choose and through the channel of their choice, and financial institutions are challenged to deliver an omnichannel experience.
Even though the media and fintech start-ups are making predictions of a cashless society, we still see a place for ATMs, which provide important contributions to banking, and offer the opportunity to enable more seamless connections between physical and digital information. Any serious omnichannel proposition includes greater use of self-service technology.
What’s most interesting to me is that when you look at the creation and evolution of the ATM, it wasn’t designed to put the bank out of business or anything so provocative. Rather, it’s been used as a tool to make cost-effective gains within high-volume transactions such as cash withdrawals, balance enquiries, electronic transfers, etc. Staff at retail branches (and more recently, the real estate of retail branches themselves) are then free to engage in other, higher-value-generating activities. The ATM has been – and from my perspective, will continue to be – a necessary complement to a financial institutions other channels.
As the world continues to innovate on this 50-year-old invention, I believe it will support greater self-service solutions that are central to omnichannel experiences, solidifying its role as the back-bone of strategic customer-service initiatives in retail banking.
How has your organization’s ATM strategy evolved over the years? Talk to a Diebold Nixdorf advisor to find out how you can drive omnichannel experiences for the next 50 years of your business.
Bernardo Batiz-Lazo/ Professor of Business History and Bank Management, Bangor University, Wales. Professor Bernardo Batiz-Lazo has received funding to research ATM and payments history from the British Academy, Fundación de Estudios Financieros (Fundef-ITAM), Charles Babbage Institute and the Hagley Museum and Archives. He is active in the ATM Industry Association and is a regular contributor to ATM Marketplace and The Conversation. His views are expressed in a personal capacity. You can contact him at firstname.lastname@example.org.