Md. banks say that ATMs are changing, not dying

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As the U.S. continues to move toward a more cashless society, experts have predicted the slow death of ATM machines.

A study by RBR, a London-based research banking consultancy firm, found the number of ATMs dropped in four of the five largest markets in 2018. The study noted that the decline was attributed to branch closings and the rise in mobile payments and digital usage.

However, regional banks and credit unions are seeing a rise in the use of ATMs and mobile transactions.

John Bratsakis, president and CEO of the Maryland & D.C. Credit Union Association, said his member organizations are seeing more of a shift in the use of mobile applications. Whether ATMs are dying a slow death, however, Bratsakis is not so sure.

“I started this business in 1988, and I was told that by the year 2000, checks will be obsolete. Checks are still around. Teller lines are still around. ATMs will continue to exist — they will just morph and evolve, more than be eliminated altogether,” he said.

In fact, some institutions have or are developing technologies within their mobile apps that allow consumers to use their mobile device to make cash requests. Instead of inserting a card at an ATM, authentication is done through the mobile device, so consumers never have to take out their cards.

Bratsakis also noted that his organization’s members are seeing a rise in person-to-person payments.

“We are seeing a shift in person-to-person payments with mobile payment apps like Venmo, Zelle and PayPal and the rate of that is definitely moving more quickly than anything else,” he said. “It’s not just for consumers to pay someone, these apps are also being used to borrow.”

Dealing with technology

Bratsakis said that credit unions have worked closely with major mobile wallet developers, such as Apple and Google, to ensure those companies’ technologies are available for their members.

Kevin Kesecker, vice president and chief lending officer at SECU, Maryland’s largest credit union, said while the raw number of debit cards issued to members has increased, ATM and debit card activity has declined 3% to 4%, year over year. In contrast, he said, activity within their mobile channels has increased in the 8% to 8.5% range year over year.

“It’s just a matter of convenience. Consumers don’t have to worry about carrying cash. Checks, on the other hand, are becoming more and more antiquated,” Kesecker said.

SECU is seeing more of a decline in check usage, with a 4% decline year over year as members are relying more on digital options and automated debit payments. Kesecker does not see checks disappearing altogether but noted that demographics are shifting behavior.

“My 22-year old daughter, for example, has never written a check in her entire life,” he said.

With access to nearly 50,000 ATMs statewide, SECU members are using ATMs for bank functions that typically were done inside a branch.

“SECU members use ATMs for cash withdrawals, balance or account inquiries, transferring money between accounts and check or cash deposits. More members are conducting these transactions — which historically have taken place inside of our financial centers — at ATMs,” he said. “We have seen individual transactions down slightly year over year, but overall activity and use at the ATMs has increased due in part to our membership growth.”

Some report increases

Sandy Spring Bank has also seen an increase in mobile wallet and ATM transactions over the past year.

“Year to date, we have seen the largest increase in our mobile wallet transactions, followed by an increase in ATM transactions and debit card transactions. We believe mobile wallets will continue to grow as clients become more familiar with the process and if the speed of the transaction improves,” said Samantha Price, a spokesperson for Sandy Spring.

Sandy Spring regularly assesses customer behavior and product data in order to best serve them. Patterns have indicated that customers have shifted to digital and self-service channels to complete transactions. Sandy Spring has implemented Image Enabled ATMs that verify deposits instantly. These machines also help eliminate deposit fraud.

No matter where consumers bank, faster transactions are in high demand. Technologies have allowed for immediate settlement of transactions, yet some financial institutions and ATMs lag in immediacy. This is where Bratsakis said there is a major legislative push so that financial institutions can keep up with the consumer demand for “faster payments.”

In 2017, according to RBR, automated note deposit — or intelligent deposit — was available at 1.2 million ATMs worldwide, up 10% compared to the previous year. Intelligent deposit ATMs reduce costs for financial institutions as the self-service terminals replace in-person banking. The ATMs also allow for immediate account crediting of deposits beyond traditional banking hours.

As banking moves more digital, Kesecker said that mobile banking, digital applications and digital wallets are no longer unique offerings.

“We view these as table stakes today. They are no longer differentiators – they are what consumers expect from a financial institution,” Kesecker said.