Internet ATMs Not Yet in the Money

Banks are keen to offer their customers Internet type services at ATM machines, but analysts are unsure when, or if, the vision will become a reality.

The idea of making a range of transactions — including ticket purchasing and bill payment — at an ATM machine has appeal for time-strapped consumers. However, such financial giants as Bank of America (NYSE: BAC) and Wells Fargo (NYSE: WFC) still are figuring out how they can make these types of add-on services work.

Giga Information Group analyst Penny Gillespie told the E-Commerce Times that she expected to see banks trying out Internet-enabled ATM applications last year, but she has not included that prediction in her outlook for 2002.

“The branch outlet is now being revisited by banks, because they know now that Internet banking will not take over,” Gillespie said.

“How it works will depend on a lot of things. The type of transaction and where the ATM is placed … [are] important, because the banks will want to avoid long queues. If the banks find a suitable application and decide which market to go after, it could work,” she allowed.

How Will It Work?

However, what that application will be is not yet clear. Gillespie suggested that banks could take the lead from Internet kiosks — terminals placed in public spaces that allows users do perform very specific functions, such as paying their electricity bill or buying movie tickets.

“Some Internet kiosks have become very sophisticated. What the banks need to do is solve a physical problem, like queues, and make the online experience better. Otherwise, it won’t work,” Gillespie added. “I’ve not seen any compelling applications yet.”

According to Gillespie, most new ATM machines are Internet-enabled, but a new ATM costs about US$50,000, she estimated, and it would cost anywhere between $2,000 and $10,000 to upgrade a legacy ATM. Before a bank decides to outlay that much money — thousands of times over — it would make sense to have a strong business case.

Show Me the Money

“All the banks are looking at it, but the level of commitment is uncertain,” Forrester analyst James Punishill told theE-Commerce Times.

“Wells Fargo and Bank of America are still experimenting, and they don’t know yet how it will work, or what they will offer. The other banks are definitely watching how these early developers are getting on and what they are offering. This is the stage it’s at now,” he said.

“It will really depend on whether the functionality of applications will be worth the work. I don’t think we’ll see much in 2002. Banks aren’t known for their speed,” he added.