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AUTOMATED TELLER MACHINES.
Term Paper ID:25625
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Essay Subject:
History & evolution of ATMs, impact on banks & customers, future.... More...
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6 Pages / 1350 Words
6 sources, 9 Citations,
MLA Format
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Paper Abstract:
History & evolution of ATMs, impact on banks & customers, future.
Paper Introduction:
Introduction
The automated teller machine (ATM) has become an integral part of banking throughout the world. Originally perceived as "cash machines" which would dispense cash to depositors, today's ATMs can accept deposits, sell postage stamps, print statements, and be used at institutions where the depositor does not have an account. Due to recent legislation, in fact, it is no longer necessary for ATMs to be affiliated with any financial institution, and many are now privately owned. This research examines the history of the ATM, considers the reasons behind its widespread use, and evaluates the future of the ATM and related banking services.
Text of the Paper:
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As computers are becoming morecommonplace in society, however, there is less reluctance based on thesefactors (Morisi 3 ). Since 1996, financial institutions are not theonly ones who can own and operate an ATM. Branches wouldoften stay open an hour later on Fridays, but lines were often long ascustomers tried to deposit or cash their paychecks before banks closed.Lunch hours were often particularly crowded (Dods 11). Thesemachines which transformed the banking industry are likely to be able toconduct even more banking transactions in the future, and will remain animportant part of banking in coming years. This eliminates some of the demand associated with the ATM, butcash must still be obtained at the ATM. Owners ofthese machines then charge a per-transaction fee ranging as high as $12.Since the transaction is cleared with a federal clearinghouse before anycash is dispensed, there is a minimum amount of transaction risk to theoperator. Olderconsumers in particular have been slow to adopt the technology, preferringthe personal interaction of the human teller and also having greater faithin the human interaction rather than the remoteness of inserting a depositor payment (for example) into a machine. Fees were assessed for using ATMs atnon-member networks, and supermarkets began operating ATM networks andmaking them available to financial institutions for a fee. It is likely that ATMs will continue to increase in popularity asAmericans become more comfortable with conducting business via computer.Being able to receive cash while well removed from a bank, even to do thisin a foreign country, offers many benefits which most consumers are nowunwilling to forego. "No-Surcharge ATM Movement Gathering Steam in California." Knight-Ridder/Tribune Business News (Mar 27, 1997): 327B1271.Morisi, Teresa. Conclusion ATMs changed the way Americans and others conduct their bankingbusiness, and did so over the course of decades. The advantage to these initial machinesis that they eliminated long lines for tellers at branches when customersonly needed to cash their paychecks (Searle 21). By the mid-199 s, it was estimated that nearly half of all bankingtransactions take place at ATMs, in large part because the machines areconveniently located, available 24 hours a day, and transactions can becompleted more quickly than if customers go to a traditional bank.However, a number of consumers are still reluctant to use ATMs. Many banks charge their owncustomers a fee when the customer uses another bank's machine;increasingly, institutions are also charging for noncustomers to use thosemachines (resulting in double fees). As individuals becomemore comfortable with banking services being offered through personalcomputers and on the Internet, ATM use may decline, but the need for cashdispensers is likely to remain with us for some time to come. That shift occurred during the 1975 to 199 period when ATMs were installed not only at local bank branches (where theywere initially perceived as simply "tellers" and where they did not replacetraditional banking services), but also in supermarkets, airports, andother locations where cash was needed but often not available. "ABMs." Canadian Banker (Nov-Dec 1992): 2 -24. Today, anyone can purchase orrent an ATM, stock it with cash, and have it "open" for business. Due to recent legislation, infact, it is no longer necessary for ATMs to be affiliated with anyfinancial institution, and many are now privately owned. While some companies and individuals have suffered as a result of theintroduction of ATMs, still others have taken advantage of the machines asinvestment opportunities. History ATMs were initially introduced in Europe in the mid-196 s: the UnitedKingdom, Austria and Scandinavia were among the first regions to offerprimitive machines which dispensed cash to bank customers. As debit cards become more popularforms of payment for point of purchase transactions, demand for ATMs maywell decline even further, but since a "cashless" society still has notarrived despite the ATMs presence for more than 3 years, ATMs are likelyto remain popular in the near-term. "Monthly Labor Review." Commercial Banking Transformed by Computer Technology (Aug 1996: 3 -36.Searle, Gregg A. Recent advances in ATM technology have also led to customers havingmore options as to which transactions can be conducted at the ATM. Effects Because many transactions are now completed through ATMs and othermeans removed from branches, it is important to recall the bankingenvironment of the 196 s and 197 s into which ATMs were placed. "The Check is Not in the Mail." U. This has given rise to a newmarketing strategy wherein institutions offer no-surcharge ATM services inorder to gain market share and offer better value to their customers.Although this movement has yet to gain popularity among large institutions,credit unions and smaller banks are finding it a highly successful approach(McAuliffe 327B1271). "ATMs: A Solution, Not the Problem." ABA Banking Journal (Aug 1997): 11.Finnegan, Lisa. This turn of events, coupledwith the high use of direct deposit by the government and social welfaregroups, has led to a decline in the number of check cashing companiesoperating in the United States (Brindley and Vogelstein 66). Security and fraud also causesome consumers to refrain from using ATMs. Originally perceived as "cash machines"which would dispense cash to depositors, today's ATMs can accept deposits,sell postage stamps, print statements, and be used at institutions wherethe depositor does not have an account. Inaddition, banks began promoting ATM use as a way to increase the hoursduring which consumers could conduct their bank business, an importantconsideration during a period of time when many women entered the workforceand it became more difficult to go to bank branches during traditionalbanking hours. The machines proved popular with some consumers, but others were slowto adopt their use, and banks were also slow to implement ATMs on awidespread basis. Remotetransactions, such as those conducted at ATMs or through personalcomputers, did not exist. "ATMs: For Risk-Averse Owners, They're Cash Machines." Baltimore Business Journal (Jun 6, 1997): 19-2 .McAuliffe, Don. In 1969, Diebold International introduced a prototype of a machine whichcould accomplish these tasks; this prototype became the forerunner oftoday's highly complex ATMs (Searle 21). Oncelimited to dispensing cash, today's ATMs are used for on-line loanapplications, printing statements, dispensing foreign currency, issuingtraveler's checks, and selling postage stamps. In other words, the cash dispensing function was viewedby both banks and their customers as only the first transaction which could(and should) be automated in order to reduce the reliance on human tellers. Works CitedBrindley, David and Fred Vogelstein. As a result, these independent machines are now found in casinos(operated by the casino itself), gas stations, and even within companiesfor the convenience of their employees (Finnegan 19). Machines can typically be rented for $15 per month. With the widespread use of ATMs, however, banks have found that they canoffer accounts to those with low income and charge minimum fees byrestricting the number of transactions the customer can conduct each monthand limiting those transactions to the ATMs. Outlook This issue of ATM fees has caused considerable consternation amongconsumers and consumer advocacy groups. ATMs were eventually installed inside many financialinstitutions to provide alternatives to human tellers (and to free thetellers for more demanding tasks). In 1968, thefirst cash dispenser was installed in the United States at FirstPennsylvania Bank in Philadelphia. This researchexamines the history of the ATM, considers the reasons behind itswidespread use, and evaluates the future of the ATM and related bankingservices. Infact, ATM fees are seen as an important source of revenue within thebanking industry (Morisi 31). During the 198 s, banks began to view ATMs as critical to their long-term success. By the end of 1975, there were more than 4, ATMs inuse in the United States, but while this was double the number of machinesoperating in 1973, it was still well below the number needed to change thebanking industry (Searle 21). These people traditionally cash their paychecks at checkcashers, which charged two to three percent of the face value of the check. Although an ATM transactioncosts banks on the average 27 cents, and teller transactions costs morethan one dollar, most banks charge some type of fee for using the ATM. The popularity of the cash dispensers led both banks and customers todemand machines which offered more capabilities, such as being able toaccept deposits and payments, perform account inquiries, and transfer fundsbetween accounts. S News & World Report (Apr 14, 1997): 66.Dods, Jr., Walter A. By the end of1991, more than 83, ATMs were available within the United States, andmany bank customers used the ATM as their preferred mode of banking (Searle22). There is a threat to ATMs in the form of the Internet since many banktransactions (such as transferring funds) can now be done from the home oroffice. Machinesdesigned to be used indoors cost approximately $8, ; outdoor models aremore. In addition, ATMs now found in supermarkets and otherwell-lit and populated areas eliminate many of the security concerns whichhave caused some hesitation among consumers. Most branches had limited operating hours, opening at9am and closing at three or four o'clock in the afternoon. Introduction The automated teller machine (ATM) has become an integral part ofbanking throughout the world. Direct deposit from employers to bank accountswas also unavailable on a widespread basis (although it was often availableto bank employees), and banks maintained branch offices in order to meetthe high demand for services, particularly on Fridays (traditional paydaysfor many employers). For years, many people in lower income brackets have refrained fromhaving bank accounts because their low balances make them subject to banksurcharges.
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