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Where is the ATM marketplace headed?

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As the old saying goes, you don’t know where someone is going without understanding where they’ve been. The same holds true for specific products, or in this case ATMs and the ATM marketplace.

Perhaps the best predictor of future performance is past behavior, and when it comes to ATM sales, they’ve been on a slow and steady rise. In 2010, for example, ATMs’ global footprint was 2 million, according to data compiled by Accenture. Four years later, the number was 3.2 million, for a growth rate of 3.2%.

Since then, business has picked up even more for the ATM marketplace, with an installed ATM network base of 3.4 million globally in 2015, which has since reached around 4.1 million, the report found. Come 2020, if the ATM sales trend continues, the total may hit an impressive 4.3 million among financial institutions.

Cash represented 30% of all transactions in 2018 and 55% of purchases below $10.

Yes, cash is still king
Of course, the main reason for strong sales growth throughout the ATM marketplace is consumer demand; Americans use ATMs on a weekly – if not daily – basis, showing that cash remains the undisputed king of all currencies. It represented 30% of all transactions in 2018 and 55% of purchases below $10, according to the Federal Reserve Bank of San Francisco.

“After nearly 50 years of existence, the ATM channel is still proving to have retained its central role as a core banking touchpoint with the consumer,” Accenture said in its report. “While initially this role was held on an exclusive basis, at least for all ‘vanilla’ operations that were moved away from a counter to a self-service channel, nowadays the ATM has become one of the core channels, complementing internet and mobile banking.”

Thanks to timestamp technology, advanced ATMs can identify down to the split second when people stop by ATMs to deposit, withdraw or participate in the array of other financial services options many ATMs come equipped with nowadays. Indeed, 35% of ATMs have cash forecasting capabilities, based on a report from ATM Marketplace. This allows financial institutions to identify when certain denominations may be dispensed at a higher rate than others. As the Federal Reserve Bank of San Francisco study found, cash is primarily used for small transactions ($20 or less), while the common credit card and debit card is typically turned to for larger purchases.

But it isn’t just cash usage propelling the ATM industry forward. It’s also their level of innovation. As a report from ATM Marketplace shows, more and more ATMs feature applications in addition to cash dispensing in multiple denominations. These include bill pay, cardless transactions, mobile phone top-up and application monitoring. Roughly 70% of installed ATMs have remote action functionality and 65% include electronic journal retrieval, which help banking professionals identify what their customers want most when they stop by lobby or drive-thru ATMs. 

“Security risks to ATMs have banks redoubling their efforts.”

What is the state of ATM security?
Something else customers, as well as financial institutions, want from their ATM networks is enhanced vigilance, as 43% of installed ATMs are optimized with security event monitoring, the ATM Marketplace study revealed. Some of these security events derive from malfunctions. As reported by KHOU-TV at the time, a Houston-area ATM in November 2018 began spitting out $100 bills randomly when customers requested $10. This caused a bit of a scene as word quickly spread of the costly ATM glitch. The ATM in question did not have security event monitoring, but if it did, the dispensing dilemma could have been resolved sooner.    

Windows 10 is near
FI’s overarching goal with respect to ATMs is for them to be better today than they were yesterday. But a few months from now ATMs will enter the Windows 10 generation. After several years of ATMs running Windows 7 operating systems, Microsoft is closing up shop on this OS in favor of Windows 10, largely because of the OS security enhancements. This means FIs that continue to use the legacy software won’t receive critical performance and security updates the tech company releases periodically.

Running an entirely new OS can cause headaches, frustration and downtime for consumers as well as the banking entities who operate the machines, but fortunately, many banks have already made the shift or are in the process. Indeed, 50% of respondents in the ATM Marketplace study said they were an early Windows 10 adopter or have a clear-cut migration plan in place. This speaks to the level of attentiveness banks place on their ATMs running smoothly.

One of the hallmarks of Windows 10, aside from a clear interface, is its advanced security features, making it more difficult for identity thieves to steal data. But ATMs as units are also potentially exposed to malicious attacks, whether on-premise or remotely. For instance, as Positive Technologies found, nearly 70% of the machines it examined were vulnerable to so-called Black Box attacks. They also found 85% were poorly secured against network-related scams like spoofing. 

These risks have banks redoubling their efforts to ensure they have the equipment, resources and expertise to detect these breaches immediately and – better yet – before they occur. This further explains why banking organizations monitor for security events, now available thanks to ATM innovation.
 
Positive Technologies’ cybercrime expert Leigh-Anne Galloway said banking organizations must take a proactive approach to ATM security and not let up.

“To reduce the risk of attack and expedite threat response, the first step is to physically secure ATMs, as well as implement logging and monitoring of security events on the ATM and related infrastructure,” Galloway advised. “Regular security analysis of ATMs is important for timely detection and remediation of vulnerabilities.”

Here’s the bottom-line: ATMs aren’t going away any time soon. Whether you’re looking to install electronic securityphysical security or migrate to Windows 10-enabled machines, BranchServ is your HQ for ATMs. We haven’t been around as long as the ATM marketplace has, but we’re every bit as reliable and hardworking – growing stronger with each passing year. Contact us for a free demo.