Exclusive: ‘The post-COVID ATM’ – Jeni Bloomfield, RBR in “The Paytech Magazine”
Across the world, operators are moving to touch-free and biometric-enabled ATMs – and not just because of the pandemic. Jeni Bloomfield, Research Analyst with strategic research and consulting firm RBR, explores the trend
Amid ongoing concerns about the COVID-19 pandemic, many industries have been forced to rethink their daily operations. Banking is no exception to this, where we have seen increased interest in contactless technology accelerating developments that were already underway.
Most people are familiar with contactless payments, but this technology can also be found at ATMs, allowing certain transactions to be made without inserting a payment card and, in some cases, without even having a payment card to hand.
According to RBR’s Global ATM Market And Forecasts To 2025, the year prior to the pandemic was an important one for contactless ATM technology. Cardless, near-field communication (NFC) and QR code readers were adopted in several major markets for the first time.
Much like contactless retail payments, customers can tap a card or even their mobile phone to transact at an ATM with a NFC reader, while ATMs with QR code readers scan a code displayed on a mobile phone. This technology was already common in countries like Turkey and Spain, but, in 2019, several new markets began to adopt it, too. In Canada, two major banks, Royal Bank of Canada and Scotiabank, began a rollout of NFC-equipped ATMs. Though yet to offer cardless point-of-sale transactions, these banks are the first in the country to do so at an ATM. Meanwhile, in China, ICBC (Industrial and Commercial Bank of China) introduced QR code readers at ATMs.
2019 also saw the first use of biometric withdrawals, as CaixaBank launched a biometric ATM pilot in Spain. These ATMs allow withdrawals via facial recognition and soon proved to be popular. In fact, by October 2019, 80 per cent of the bank’s customers who were offered facial recognition as an alternative to typing a PIN, had chosen to use it.
Overall, RBR’s report found that the number of ATMs able to offer cardless withdrawals had increased by 26 per cent in 2019. This includes ATMs offering cardless withdrawals via NFC or QR code readers, as well as those that require the customer to scan an on-screen QR code with their mobile phone or use a one time PIN. Other cardless transactions, such as deposits and bill payments, can be made at ATMs, but cardless withdrawals are the most common.
Security is a key driver behind the growth of ATMs offering cardless withdrawals. Cardless withdrawals improve ATM security in a number of markets by eliminating the risk of card skimming and even the risk of carrying a card itself. In the USA – where the number of ATMs offering cardless withdrawals tripled in 2019 – cardless technology is considered by some ATM deployers to be a secure alternative to the costly migration to Europay, Mastercard and Visa (EMV) compliance.
Customer convenience is also driving the adoption of cardless ATMs. Cardless withdrawals are typically faster than traditional ones. This reduces the time spent at the ATM, benefitting not only the customer making the withdrawal but also anyone waiting to use the ATM. Cardless withdrawals via mobile phone are considered especially convenient in markets where mobile payments have gained in popularity, such as in the USA.
COVID-19 spurs innovation
These developments were all happening before the pandemic. COVID-19 has only served to heighten the relevance of cardless withdrawals at ATMs. In Spain, Caixabank has continued to roll out biometric ATMs as facial recognition limits customers’ physical contact with the ATM. Meanwhile, in India, AGS Transact. Technologies, which manages around 72,000 ATMs on behalf of banks, has developed and tested a ‘touchless’ ATM solution. This solution uses on-screen QR codes to allow the customer to withdraw cash without touching the machine’s screen or keypad.
Looking forward, the number of ATMs that offer cardless transactions is likely to increase, spurred on by the COVID-19 pandemic and by the long-term drivers of increasing ATM security and convenience. The rollout of ATMs equipped with NFC readers in Canada, points to interest in contactless ATM technology even in a market not yet offering cardless transactions at the point of sale.