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Long Live the ATM: Automated Teller Machines Are Still An Important Delivery Channel for Banks

The automated teller machine may not be as hot as other banking channels, but the ATM remains a critical component of banks' multichannel delivery strategies.

Perhaps because they've been around for more than 40 years, ATMs just don't garner the excitement of newer channels, such as mobile. But the ubiquitous ATM -- used by 85 percent of consumers, according to a recent Mercator Advisory Group report — is still delivery channel royalty.

Even as banks introduce and build out new delivery channels, ATMs will remain an important part of the mix, notes Ken Patterson, VP of research operations and director, credit advisory service, for Maynard, Mass.-based Mercator Advisory Services. As such, banks need to tightly integrate ATMs with these additional delivery channels, he stresses. "How all these channels affect each other as part of the entire retail banking mix is the question," Patterson says.

Ed O'Brien, director of Mercator's banking channels advisory service, adds, "ATMs are the co-anchor of a multichannel bank delivery strategy in which consumers touch every channel, perhaps even in a single day. It's all about consumer choice."

It's also all about the customer experience, and today's ATMs, with advanced features and functionalities, can be a flagship part of a bank's multichannel strategy, the experts agree.

Old Dogs, New Tricks

Many banks were forced to upgrade their ATMs to meet the March 15, 2012, deadline for ATM accessibility in compliance with the Americans With Disabilities Act (ADA). Some banks parlayed compliance into a business case for installing intelligent deposit (ID) ATMs, according to David Albertazzi, senior analyst with Boston-based research firm Aite Group.

ID ATMs, which came on the market about five years ago, combat the biggest roadblock to widespread consumer adoption of ATM deposits: trust. For consumers it's still a leap of faith to hand over checks or cash to a machine. Unlike traditional envelope-based depository ATMs, however, ID ATMs allow consumers to verify deposits in real time and even dispense check image receipts to increase confidence.

"Consumers understand the value of intelligent deposit," explains Bob Tramontano, VP of marketing for Duluth, Ga.-based ATM manufacturer NCR. "A single slot enables customers to deposit mixed cash and checks very quickly and very safely. Usage is increasing and even driving deposit growth."

Indeed, consumers are becoming increasingly comfortable with ATM deposits. Nearly half (47 percent) of respondents to Mercator's survey reported having deposited a check at an ATM in the past year, and 22 percent made a deposit without an envelope in the preceding three months, up from 17 percent the prior year.

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