Happy 40th Birthday To the ATM

Implications: In 1967, the first cash machine (ATM) was launched at a Barclays Bank in London and in 1969 the first U.S. ATM was launched in Long Island at Chemical Bank. Today there are approximately 1.6 million ATMs deployed globally and by 2011 that number is projected to surpass two million installed ATMs. In 2006, the U.S. had the largest ATM market with over 400,000 ATMs and 66% of those ATMs are deployed off-premise at non-branch locations. Additionally, a total of 10.1 billion transactions were processed at the ATM, with average monthly transactions of 2,131. Average monthly transactions per ATM has declined sharply from 6,399 in 1996 to 2,131 in 2006. The sharp decline is attributable to the growth in ATM deployments in the U.S. Branch locations have also steadily declined since 1998 from 73% to 53% and will continue to be overshadowed by off-premises sites. ATMs costs between $7,000-$50,000 and owners spend $12,000-$15,000 annually on maintenance costs (servicing, rent, telephony, etc).

Analysis: Comments/Perspective:

The father of the ATM, John Shepherd-Barron probably had no idea how far his original cash machine would grow after its initial launch back in 1967, from one machine to over 1.6 million ATMs deployed globally. This week marks the 40th Anniversary of the ATM and we'll take a look at the global growth of the ATM, the off-premises market, how surcharging changed the "off-premises" space, the U.S. market, average transactions volumes, why  transactions are declining at the ATM, how did ISOs Independent Sales Organizations) change the competitive landscape and what does the future hold for the ATM.

1.  The Top Six ATM Owners in the U.S. is Bank of America, Cardtronics, Chase, U.S. Bancorp and Wells Fargo. These owners have also been instrumental in being "first to market" with new technologies such as Check Imaging, No-Envelope Deposit, migrating from the OS/2 Operating System to Windows based ATMs, Talking ATMs, personalization of account information at the ATM, dispensing of coupons at ATMs in C-stores (Convenience stores) and the ability to cross-sell and upsell products and services at the ATM

2.  We can't talk about the AM without mentioning "surcharging" at the ATM. The fee that we may all loathe when we don't use our "bank branded" ATM. After MasterCard & Visa lifted their surcharge ban in 1996, the off-premises market exploded in the U.S., because before "surcharging" the ATM market was driven by financial institutions and this dynamic changed once ISOs (Independent Sales Organizations) entered the off-premises market

The ATM has bought the convenience and 24/7 access consumers sought when they began using the ATM back in the 60's. The "Father of the ATM" had a bright idea and assembled a team of experts to assist him in bringing the product to market. The ATM has had its share of raim raids, theft, regulatory changes and technological growth and will continue to grow globally over the next 10 years. Despite declining transactions volumes at the ATM, deployments are outpacing transactions volumes as ISOs look for prime locations to deploy ATMs and surcharging probably won't go away any time soon and ISOs have played a pivotal role in deploying off-premises ATMs and giving consumers even more convenience and access to their money away from their bank branches.