Don’t Touch the ATM

We have smartphones, and we have ATMs. Why can’t these two essential technologies get along?

It’s a question we’ve asked on this blog before, and with good reason. While every other aspect of financial services has been revolutionized with blizzards of mobile applications, ye olde automated teller machines have remained immovable, like those phone booths no one uses any more. If anything, they’ve proliferated: We see them everywhere, from mega-malls to corner delis, and they still do pretty much what they’ve always done.

Woman Holding Phone 2Of course, that’s not true, and it’s about to become even less so. According to a new report released this week by the ATM Industry Association (ATMIA), the global trade group with 1,300 members in 50 countries, it could be the next market to watch for real innovation. There’s one area in particular that should be really interesting: mobile.

There have been innovations, of course. As we noted earlier, banks in Greece have added elements of social media, with personalized greetings and reminders of other people’s birthdays, enabling instant gifts. Some machines tout their use of solar power.  But fundamentally, it’s still about walking up to that hunk of hardware, pulling out that otherwise-useless debit card, and making a transaction.

For the record, we’ve been hearing for some time now about ‘contactless’ access, which builds on the promise of mobile technologies. Well, it’s here—kind of.

Diebold Federal Credit Union (DFCU) is pioneering what it calls “the world’s first ATM without a card reader or PIN pad that relies solely on mobile authentication.” In a nutshell, here’s how it works. The consumer scans a unique QR code at the ATM using a smartphone, and the ATM authenticates the user via cloud-hosted services to enable secure, cardless transactions. There’s no need for a card or a PIN required, eliminating the fear of card-skimming and shoulder-surfing at the ATM. (Diebold and white-label mobile wallet provider Paydiant developed the cross-channel solutions and hold complementary patents on the technologies.)

An ATM with no card reader sounds basic, but it’s a big deal. Transactions via smartphones and without cards removes a step that is basically very inconvenient and eases theft or fraud. We only accept it because we’re so used to it.

There are other benefits too. For a start, there’s heightened security: While the pho ne could be stolen or lost just as easily, there are new methods of authentication in this arrangement. Bank customers can verify their identity at the ATM by taking a photo of a QR code on the machines screen (yes, despite the frequent criticism, QR codes have some value).

Convenience arrives in other ways, too. By integrating the ATM with Diebold’s Mobile Cash Access (MCA) solution, consumers can actually pre-stage cash withdrawals via their smartphones, even to third parties. Just pick the person you want to send cash to from your contact list, and the app will send a text message to that recipient with a six-digit code. When that person goes to an ATM and enters this code, they’ll get the money. And for those who are environmentally minded, the new arrangement, we should remember, is paperless, delivering receipts via the mobile wallet.

Of course, the real action will be down the road. This is the mobile generation, which the new solution pays tribute to with flick and drag capabilities on the interface. Like most other advances in this all-digital era, the real innovation will come from users. As with Facebook, Twitter and a host of other ground-breaking services, we will routinely use the smartphone-ATM combo to do things we never thought we needed to do. So far, it’s just one bank in one market. Tomorrow, who knows?

All we needed was the technology to get here. Now it has, and it’s about time.