How the major ATM makers changed during the pandemic

The coronavirus’ impact on cash — which many people now see as infectious, while others simply use less of it in favor of e-commerce and contactless payments — has implications for ATMs, so manufacturers are jumping on emerging uses for mobile apps to keep the machines relevant.

Several months after the pandemic took hold, Diebold Nixdorf and NCR have adopted an ATM recovery strategy that stresses contactless access as well as innovations that are similar to other industries that traditionally rely on kiosks. The ATM manufacturers can't pivot fully, since there’s also pressure to preserve cash for the critical mass of consumers that still want to use paper bills.

“If you think about how you interact with retailers and restaurants now, we’re doing the same things,” said Terry Duffy, senior vice president and general manager of digital first software and services at NCR.

The pandemic response is a multi-front war for NCR. Its focus on the point of sale business has included boosting its customer interaction tools by acquiring U.K. virtualization company Zynastra and using a cloud-based strategy to support merchant upgrades to shopping and checkout to bolster self-serve and an easier route for merchants to add third party technology.

On the ATM side of the house, NCR is accelerating software that allows mobile apps to perform withdrawal requests ahead of time. “We’re trying to merge the physical with the digital," Duffy said. “You can do more things now on mobile so we’re bringing those experiences together.”

Like most businesses categories, there were existing trends they could latch onto, so the ATM makers’ response has not required a new form of ATMs to be invented on the fly. The boost of contactless and digital retail has drawn more attention to the broader potential for contactless transactions, and that can aid ATM evolution, according to Simon Powley, head of global advisory consultant services at Diebold Nixdorf.

Companies like Starbucks and 7-Eleven are relying on mobile ordering as a way to front-load the consumer experience, removing as much physical interaction as possible to speed engagement and reduce crowding. The same concept applies to ATMs — pushing part of the interaction away from the machines reduces lines at ATMs, or reduces the amount of time people spend at ATMs, which are often located in bank branches, stores or other locations that want to reduce crowding

“Giving consumers the ability to pre-stage transactions splits the interaction into an ‘initiate phase’ and a ‘finalize’ phase, enabling them to start their transactions on a mobile device in advance and finish at the ATM or branch with less waiting time and whenever they decide to complete the transaction,” said Powley.

Diebold Nixdorf, which like NCR has accelerated a long-term digital migration for merchant services, says it is gaining more interest in its DN Series ATMs. This line of ATMs can handle cash outside physical locations, with added automation that’s designed to reduce lines.

There’s also an added interest in cash recycling, which minimizes cash handling and improves cash cycle management. This addresses the need to retain cash, according to Powley. As contactless and mobile payments have jumped, the idea that cash will be abandoned entirely has become controversial. Legislators from both parties have pushed measures to protect cash use in the U.S, and U.K. banking regulators are pressuring banks and merchants to protect cash access.

“Given the need for access to cash, cash recycling becomes a relevant topic, especially when serving high-traffic locations,” said Powley, adding higher cash capacity combined with automation can serve specialty services such as cashing or depositing checks. “Those are topics we are frequently asked about when teller lines can be overrun with what are typically transaction-based functions versus value-add opportunities.”

Early in the pandemic, ATM cash withdrawals fell dramatically, with LINK reporting a 60% reduction in the U.K. in April. The pandemic has prompted to concerns that cash is contagious, though there’s no consensus that is the case, and ATM lobbyists have pushed the ATM industry to promote hygiene at ATMs.

Cash is also considered a key factor in financial inclusion, and is part of cryptocurrency ATM builders' plans since many bitcoin users rely on cash to purchase the alternative currency.

NCR’s Duffy contends the rate of cash's decline is stabilizing, calling the severe decline in the spring a “blip.” While there’s growth in contactless and digital payments, there’s still a need for withdrawals and services at ATMs that can co-exist with cash handling, such as P2P transfers and bill payments. “ATMs are becoming transaction destinations,” Duffy said.