Paul Volcker once called automated teller machines, the most advanced financial innovation ever. However, a decade later, ATM’s popularity is slowly slipping. For the first time in a decade, several banks closed many of their ATM branches and redirected their resources toward digital payments. According to a recent report from London-based RBR, four of the five largest markets in the world, including the US, China, Brazil, and Japan, saw a 1% drop in ATMs in 2018. India, the fifth country on that list, showed considerable growth in the emergence of digital payments by shutting down ATMs. Also growing in popularity is the cannabis dispensary atm.
Convenience of online banking
Millions of people depend on their mobile phones for regular financial services. From checking their bank balance to sending and receiving money, they don’t have to run to their nearest ATMs anymore. This has allowed banks to rethink their digital strategies.
JPMorgan Chase & Co., one of the biggest banks in the US, reduced 2% of its ATM branches in 2019, thus saving $10.8 billion, which they invested in digital payment systems. The bank immediately saw an increase of 5% of their customers shifting to online banking, while 11% made mobile banking their regular norm. This data shows the reliance of people on online banking and the slow shift in power from ATMs to online banking facilities.
Many people prefer to have cash whenever they go out. They carry their ATM cards wherever they go. But millions all over the globe find online banking much more convenient. It allows you to send money to a distant friend or relative within a few seconds. Similarly, you can receive money from others quickly. It eliminates the need for you to go out, find an ATM, withdraw cash, and then pay your friend.
Most importantly, ATMs can run out of cash sometimes. You may see a popup message on the machine saying there’s no cash. That doesn’t happen with online banking. As long as you have money in your bank and an internet connection, you can send and receive money, irrespective of your location or time.
Growing trend of online banking
Although the ATM count has fallen worldwide for the first time, it is not a new trend for everyone. Back in 2012, Bank of American Corp reduced its ATM branches in the country significantly. In fact, JPMorgan followed a similar trend in 2015. But the 2018-19 financial year saw a massive decline in the number of ATMs worldwide.
Experts agree that the advent of online banking has undoubtedly decreased the popularity of ATMs, but they also believe that ATMs will never go out of the market. They think that you cannot make every country go cashless. Cash will continue to reign. However, people will shift to making significant payments via online banking.
According to RBR, the number of ATMs may decline approximately by 0.6% in the 2019-20 financial year. Developing markets, such as the Middle East, Latin America, Africa, and Asia-Pacific, will have various financial inclusion initiatives that will bolster ATMs, but it is only a temporary measure before making online banking their primary transaction method.