Future Forum | Bank of England

Redesigning the role of ATMs

by
Sabrina Rochemont
Sabrina Rochemont | 3 months ago | in Money, Money, Money

ATMs seem to have reached a crossroad in the UK, as we observe:

-       The number of ATMs is too high, in the context of reducing use of cash, leading to market pressure to close the excess (Ref LINK),

-       Closure of bank branches and ATMs (as well as post offices?) cause issues in rural areas, leaving customers and small businesses without local access to cash services,

-       Customers are assumed to prefer or have access to digital services to manage their accounts, despite patchy mobile signal and broadband services in rural areas,

-       ATMs are power hungry, even when idle, adding to general environmental concerns.

 

It would appear we have a mismatch between current cash services, customer needs and business interests.

 

Is it time to reshape ATM services, potentially adding more functions to increase their productivity, as well as meeting changing needs?

 

In rural areas, community ATMs booths, potentially located within existing facilities, could enable locals who are underserved to access digital services to access their bank and other financial services, manage their utility bills and other facilities inaccessible for lack of access to the infrastructure. This may increase the productivity of some ATMs, and restore their viability.

 

Funding would be pooled from banks, ATM networks, utility companies and subscribing digital businesses that thrive to reach rural communities.

Shelley (BoE Moderator) 3 months ago

Thank you for your post! Interesting ideas! I'd be interested in others views on this subject?

Elizabeth D 3 months ago

when I lived in Belgium in the 2000s, you could perform most of the internet banking activities via ATMs in-branch. That sort of functionality in ATMs located in libraries, or coffee shops etc would be a boon to those who do not have internet access in this country, I imagine.

Shelley (BoE Moderator) 3 months ago

Wow that's interesting to know - Thank you for sharing Elizabeth! I know certain banks in the UK do have the functalitality at ATMS inside there branches, but that doesn't help those who do not have a local branch. I think what Brussels does would help more people.

Elizabeth D 3 months ago

in Belgium they were in-branch too, but I should have thought they don't need to be.

Sabrina Rochemont 3 months ago

I understand this also exists in Singapore, though most are bank/ brand specific.
The idea here is to look beyond this, and enable machines to serve across bank networks, and enable access top utilities and other services too.
The use of public buildings to locate these sounds good!

Shelley (BoE Moderator) 3 months ago

Great to hear it is elsewhere in the world. What with PSD2 / open banking now days this should be something easily adopted in the UK?

Sabrina Rochemont 3 months ago

Agreed. We really need to maximise resources, for the public good and the environment too. In rural areas in particular, this would open markets to businesses that cannot reach rural areas, and access to competitive offers to potential customers who don't have access to the infrastructure (mobile or broadband)

Shelley (BoE Moderator) 3 months ago

Exactly my thinking too! :)

Frances Bedding 3 months ago

Agree that this would be a good idea for rural areas. Need to be careful with inside machines as these are only accessible when the branch/shop is open. When rural events are held (often Sun/Bank Hols) people can no longer access money - and broadband/mobile is still not good enough to go cashless so viability of these events is damaged.

Sabrina Rochemont 3 months ago

Agreed- choice of locations would be a critical success factor..

View all replies (9)

Sabrina Rochemont 3 months ago

If you like the idea, please remember to vote for it

Believing CBDC 2 months ago

True. With the on going trend of physical branch closures, ATM may have to become a public utility - operated by the BoE maybe? Putting one at every market place or police stations?

Brits will hate me keep bringing up Riksbank.. But their e-krona (CBDC) design may also permit offline transaction capability. So other than will still need electric power of some form (battery or etc.), the usage scenario would be almost like cash anyway. Rural or no network should be no problem, so long as electricity and electronic device are available between two parties. Still not so ultimately simple as cash, but probably as good as digitally can be.

So I'd envision future ATM sitting outside every police stations, people can get physical cash or load up their card or mobile phone with CBDC. The ATM should be totally redesigned with modern technology. It's a network to every bank - through the BoE RTGS if necessary, people can withdraw/deposit/transfer with their bank accounts - in banknotes or in CBDC. They can also exchange between physical form of cash/banknotes and electronic form of CBDC in their e-wallet on the electronic device. Most of all the new ATM design can really be more power efficient than today's machines.

Shelley (BoE Moderator) 2 months ago

Thank you for contributing tot he conversation!

Ramblingsofabard 2 months ago

In most branches the express machines do a bit more than just cash withdrawals. You can deposit money, make payments, update details, etc. Pretty much everything you can do with online banking. I think areas where there is a need to have ATMs (due to prevalence of cash or connectivity issues), these ATMs can be switched to the likes of express machines. In big cities, the prevalence of cash should be looked at before ATMs are removed or made less frequent.

Shelley (BoE Moderator) 2 months ago

Good point - thank you for sharing.

Sabrina Rochemont 2 months ago

Thank you, Ramblingsofabard,

We really need to think beyond bank / brand specific ATMs ... the idea extends to:
1- Brand agnostic ATMs, so users can connect to any subscribing banks. This offers the advantage of keeping the market competitive. The ATM is therefore disconnected from physical bank branches.

2- Using ATMs for non banking services. A number of options a- offering access to digitising public services (such as tax return at certain times of the year) if we can break silos (!) - b- access to utllity companies so people can manage their accounts, change suppliers... and c- access to other financial services (insurance springs to mind, but others can be added to.

3- We may end up with "super terminals" that also handle cash withdrawals, as well as cash in services for individuals and small businesses. This may keep down some of the maintenance activities.

Ramblingsofabard 2 months ago

That’s very interesting..super terminals could prove to serve the cash users and non cash as well. Linking with other activities will add an alternate to mobile banking too. But are you suggesting that these would be central bank driven / public goods? It’ll be hard to convince banks to offer such service without any branding or charges

View all replies (3)

Sabrina Rochemont 2 months ago

Some food for thought from Singapore on how ATMs are evolving there:

Video chat with bank tellers: https://www.todayonline.com/singapore/posb-la...ts-bank-tellers

Buying right shares using the ATM: https://fifthperson.com/a-step-by-step-guide-...-shares-by-atm/

Buying Singapore Govt bonds: http://www.sgs.gov.sg/savingsbonds/Your-SSB/How-to-buy.aspx

Sabrina Rochemont 2 months ago

The attached report, commissioned by the ATM Industry Association, provides some insights on "value add services" at the time of study (2015) and their trends.
It is quite clear on stating the role of the ATM in financial inclusion initiatives, and points out the "unexploited potential for cost optimisation".

This confirms the potential of the idea from industry professionals, however we go further by suggesting a strategic review for the use of these assets in the UK.

Sabrina Rochemont 2 months ago

This short video from the FT highlight some of the options, so ATMs do not need cash to survive..
https://www.ft.com/video/a4f8a070-5d55-4dcd-86ed-63fd975b3e99

Nicola Marham 2 months ago

As a community we need to address the 'paid for' Cash Machine issue
• Cash: is still the second most popular payment method, accounting for 34% of all payments last year.
• Around 2.2 million customers mainly used cash for their day-to-day shopping in 2017, although nine out of 10 of them had a debit card they could use. Cash is still an important part of the daily spend preferred by many.
• Many free ATMs are being removed
• Link ATM Network lowered the fees it charges to banks and building societies, known as the ‘interchange fee’, to use its machines by 5% in July and it plans a further reduction in January next year. Experts are warning that the move could lead to mass closures of free-to-use ATM machines across Britain if they become unprofitable to run, leaving access for millions of people in doubt.
• There are 957 areas in the UK with at least 500k customer dependant upon benefits who cash machine is more than 1km away. These Customers who use “pay for” Cash Machines, regularly incur charges of between £3.70 and £9.25 a week. These are the people who can least afford it.
I'm really pleased to be having discussions with industry and individuals on how we address these issues. It would be fantastic to work together to see how we can quickly change this so we can address the big problem of Financial Exclusion. Like a previous correspondent , I would suggest it has to be a joint venture between Government and Banks for the initial investment and then we can switch to a ''Charge the Bank per Customer use" model as is the case today for Link ATMs or Post Office Counter services, as opposed to charging the Customer.

Sabrina Rochemont 2 months ago

The debate is really uplifting, thank you

Sabrina Rochemont 2 months ago

Well, I see 2 parts to this: the first programme investment could be central bank initiated; then the ongoing model would need to be commercial as a sustainable entity, possibly in a consortium or other structure, as Nicola suggested.
If the objective (or one of) is to renew access to banking services in rural areas, then banks that have knowingly been closing branches could be encouraged to contribute most in the first phase.

I can imagine a system whereby dumb terminals are effectively the interface to services through APIs. Users could select “banking” services, select their bank network and log in as per usual security processes, or inserting their bank card etc. If these terminals have VoIP or video, they could dial in to the banks service centres for assistance.
Or users could select “non banking” services to have similar access to utility companies and other providers that subscribe to the service. This may help generate a more competitive marketplace in rural areas, where providers find interest in this additional channel, and contribute on a fixed subscription + per use charge. This should increase consumer choice (wishful thinking maybe)

One of the key challenges I see is the location/ security problem: the location of current ATMs (street) would probably be inappropriate for security reasons. Enclosed private commercial premises that are open at convenient customer times would be a key requirement. A first thought would be to assess feasibility with the old types of pubs (if they still exist in quantity???): they often have multiple “rooms” in older buildings- with ailing business in that area, some may be open to reconfigure their commercial space to accommodate. As the business rates problem (ATMs within business premises) has been resolved, this might not be too much of a stretch. Other types of businesses with existing security arrangements (petrol stations?) might be worth investigating.

Sabrina Rochemont 2 months ago

Here is the latest news from down under on ATMs-
Since the speech from P.Lowe on the de-cashing progress in Australia... https://www.rba.gov.au/speeches/2018/sp-gov-2018-11-26.html

... There is a clear change on the ATM landscape in Australia:
"As the Australian population embraces the cashless economy at a rate of knots, the Reserve Bank of Australia – which oversees both payments system regulation and the production of banknotes – has firmly signaled it will not oppose moves to consolidate machines under an umbrella operator."

https://www.itnews.com.au/news/australian-ban...eet-cull-516731

Sabrina Rochemont 2 months ago

For a little more context on developments in Australia this year, please see the relevant section in the attached newsletter.


Shelley (BoE Moderator) 2 months ago

Thank you for sharing!

View all replies (2)

Sabrina Rochemont 2 months ago

Here is a recent short video from the FT on the future of ATMs: https://www.ft.com/video/a4f8a070-5d55-4dcd-86ed-63fd975b3e99

Amy Buckingham 1 month ago

This idea has been advanced to the current phase

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