ATM-as-a-Service Model Among Emerging Trends in Self-Directed Banking
Updated: Sep 7
By Roy Urrico
ATM as a service (ATMaaS), as a means to pay underbanked workers, and as a way for credit unions and other financial institutions to extend their reach. These are among the emerging trends in cash and self-service covered by Don Layden, NCR’s executive vice president, president, ATM, network and banking, in a discussion with Finopotamus.
Rising expectations for self-service – along with credit unions and community banks looking to improve efficiencies – have created some notable trends to watch according to Atlanta-based NCR, which provides technology platforms for self-directed banking, stores and restaurants
“As more consumers want options for self-directed banking, community banks and credit unions are challenged with how to make the most of their physical footprints while maintaining meaningful interactions,” said Layden. “Those who embrace ecosystem trends such as shared ATM networks and ATM-as-a-service model and continue to invest in smart technology will be able to offer exceptional experiences while simultaneously operating more efficiently.”
Shared ATM Model
Layden pointed out branch traffic continues to decline as customers and members treat the branch to confer on high-value topics instead of a location for routine transactions. For simple transactions consumers increasingly want the ability to self-serve at their own convenience.
“There's been an interesting phenomenon taken place in the U.S. and globally. Lots of folks talk about cash going away, the number of ATMs going away, they are decreasing, et cetera. But when you are in the heartland of America, that is not true. People still use cash and they want ATMs,” said Layden.
Layden emphasized credit unions very much understand this. “So, while large banks have reduced their ATM footprint by about 4 or 5% over the last five years, credit unions have increased their ATM footprint by over 20%. Because they recognize that access, convenience, and cost are some the key things that drive consumers to have relationships.”
Layden pointed out while ATM endpoints remain a crucial component of a successful banking service strategy, the traditional ATM deployment model – with its capital requirements, multiple vendor relationships, upgrade cycles and always-evolving experiences – makes it more challenging for financial institutions. Especially when it comes to the capability to quickly innovate and react to changing market forces.
As a result, more credit unions and banks now embrace a shared ATM network. By plugging into an existing network with ATMs located in trusted retail locations such as grocery, convenience/fuel and big box stores, institutions can provide a way to withdraw cash when a branch is not nearby. Some are even starting to embrace machines that enable cash deposit capabilities, incorporating even more branch functionality into the places customers and members live and shop.
The ATM-as-a-service model offers a more consistent cost structure and centralized security and compliance support, noted Layden. “Even more importantly, we will transition ownership of an ATM and all the headaches that go along with that, the regulatory compliance, the security, the fraud risks, and the capital expense. We will convert that to an operating cost.” He added, “We can drive availability, uptime, servicing at a higher level.”
NCR’s shared utility, the Allpoint interbank network, which the company acquired as part of the Cardtronics agreement in January 2021, provides surcharge-free ATMs at over 55,000 locations, including Walgreens and CVS.
Banking Account Ownership
According to the Federal Reserve, 6% of adults were "unbanked" in 2022, meaning neither they nor their spouse or partner had a checking, savings, or money market account. Unbanked rates were particularly high among adults with low income. Seventeen percent of adults with income below $25,000 were unbanked.
This underlines the need for those who depend on — or prefer cash — to be able to participate in the digital economy, from paying bills to receiving funds suggested Layden. NCR is trying to bridge this gap, by introducing NCR Pay360, a new technology that allows businesses to send payments to their customers, and for consumers to access their accounts, by using a simple code number at over 25,000 ATMs across the U.S.
NCR Pay360 also works to better reach banking’s underserved. Layden said, “A number of digital only banks, use our ATM network as a way to bridge the physical/digital divide.” Such as MoCaFi a financial services platform for 110 million Americans dealing with economic hardship. Layden said MoCaFi’s user base has historically been either denied or had limited access to financial products. “Our shared utility, the Allpoint network, is table stakes for them to do their business.”
Layden suggested other use cases for NCR Pay360 such as an Uber drivers or fast-food workers who workers who want to get paid immediately. “Through partnerships that we have using our NCR Pay360 product, that Uber driver can go to “Get a code from Uber, put the code into the ATM (and) they immediately get cash out of the machine. It does not matter if they do not have an account. The money's not trapped on a card.”
Layden mentioned that NCR is also working on involving shift workers, (and) employees at fast food or quick service restaurants. “It is sort of the same thing. If they have a hard time waiting two weeks to get a paycheck, they are going to be able to go to an ATM, put in the code, get paid for that day's wage.”
Layden said, “Increasingly we see a large percentage of the population that needs and wants to use cash. Those are folks who typically are living oftentimes on the edge of society.” Another example he gave is allowing Florida utility customers to use through NCR Pay360 to pay bills by using the ATM deposit cash feature to get a code to turn that utility back on.
Layden pointed out the NCR does not charge the consumer for the service. The issuer, the financial institution or the merchant covers that charge.
The Allpoint network, has about 70 million cardholders that can access the network from credit unions to community financial institutions to some of the largest banks in the country, said Layden. “Ultimately, we will probably extend this technology all the way to the point of sale. There are some specific regulatory hurdles we have to overcome that are a little different than the point of sale rules.”
How it NCR Pay360 works:
1. Consumer requests cash from provider app, website, or other means.
2. Consumer receives a text with an NCR Pay360 cash code and a link to an NCR Pay360 ATM locator.
3. Consumer visits an NCR Pay360 enabled ATM, enters their cash code, and completes their transaction.
Making Interactive Tellers Smart
Another way to optimize an institution’s physical footprint and reduce costs is to implement smarter branch technology through Interactive Teller Machines (ITMs) that enable greater automation in branches, according to Layden. ITMs handle a variety of tasks including cash withdrawals, transfers, check deposits, statement generation, balance inquiries, ID scans and more complex teller-assisted transactions, such as account openings and loan initiations.
Layden maintained ITM use cases are extensive. They can be deployed in locations where a larger physical footprint is not necessary or use them to extend branch hours. According to Forrester’s ITM Sentiment Study conducted with NCR, since introducing ITMs (in 2012), 41% of financial institutions have improved efficiency between 10-20%. And over half have seen a decrease in session wait times.
“What has really become attractive for a lot of credit unions, they wanna really push high value transactions in the teller interaction. So, we have taken our ATM and made it a smart ATM,” said Layden. If a member goes to that ITM and the transaction becomes more complicated, or they need to talk to a teller about some aspect of the transaction, they can simply hit a button. “A teller pops up in a video dialogue with the consumer, and they now using interactive teller machine. They can engage in all kinds of transactions similar to the transactions they would engage in if the teller was standing right in front of them.”
Added Layden, “What we hear back from credit unions is that they can have one teller for as many as 5, 10, 20 locations. “The teller sits in a remote location, but answers the video chat just like they were in the building next door or at a drive through.”
Overall NCR sees ATMs evolving into “more than just that place where you access your account, but really can engage in financial commerce in a different way,” said Layden.