Why banks need to rethink their approach to ATMs and the cloud

By Mark Aldred | 22 March 2018

Over the past few years it has been difficult to escape the cloud conversation in the technology space. Efficiency, cost savings and an open, flexible infrastructure are the primary reasons for investment into the cloud and banks have been driving much of this innovation. Not to mention challenger competitors using the cloud to rapidly build a technologically advanced architecture and a culture of innovation from scratch which has forced many banks to respond.

However, traditional banks have been somewhat slow, reluctant or unsure of how to embrace the cloud right across their technology portfolio. This isn’t to say they haven’t applied the value of digital technologies. The customer experience has been very much brought into the digital era, through services like internet banking and mobile banking that increasingly rely on the cloud. Except perhaps for the humble ATM, which has been left relatively untouched by cloud technologies and therefore locked away from the potential benefits.

Why bother with the cloud for the ATM?

Banks have been caught between a “Fat Client” approach, with the ATM software relying entirely on the ATM to run processes, and the “Thin Client” which has a lightweight hardware approach but a complete reliance on the network to be the brains of the operation.

It’s time for a new approach given the potential advantages of cloud-based technologies for enhancing ATM services, operations and above all customer experience.

In the face of increasing competition from banks and a fragmenting ATM infrastructure in the UK a cloud-based architecture makes managing the ATM networks that customers demand significantly more cost effective and productive.

A cloud-based omnichannel infrastructure manages the ATM stock in a more efficient way, and can be setup to integrate core systems that would typically be too complex for banks to substitute. This enhances the customer experience, enabling rapid deployment of new products and services, and dramatically reducing the total cost of ownership.

From a business strategy perspective, this is a simple concept. A seamless experience for customers and transactional integration that boosts opportunities for customers to use services – for example, a cash withdrawal could be started on a phone and completed on an ATM. A cloud-based ATM architecture recognises that the logic for a transaction (e.g. a bill payment) needs the same resources and process, irrespective of whether the transaction is initiated in a branch, on a mobile device, or from a mobile internet-enabled device.

The only differences lie in how the customer is identified and in the customer interface. If this logic is centralised through the cloud and the authentication is tokenised, then transactions can be re-used and delivered through a range of customer service channels. This is already the case across many European countries.

Finding the middle ground

So, what strategy should banks be adopting to power a new type of cloud network? Vendor independence offers more choice for the banks and increases the longevity of the fleet. Smart ATMs offer more opportunity to expand the variety of the services that can be offered, and powered by a cloud-architecture offers an ample range of advantages in terms of integration, security challenges, costs and time-to-market.

As banks compete against challenger services or target new demographics, cloud-based ATM fleets offer the opportunity to be much more flexible and rapidly deploy new software and services to customers, without the need for manual installation or a reliance on unreliable network communications infrastructures. Banks could transform standard ATMs into platforms which offer a much wider set of services, including selling tickets, making bill payments or charity donations, and even allowing international money transfers.

Banks need to base their infrastructure on the principle that self-service banking provides a better experience through the cloud, a concept which the industry is now acknowledging more broadly. Intense and dramatic innovation in payments and financial services is leading to the emergence of new business models. By embracing, not just adopting, the cloud on their ATM fleet, the banking industry can rapidly meet customer demands and challenge the challenger banks at their own infrastructure game.

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