The culture surrounding ATMs in the Latin American and Caribbean (LAC) region today is unlike those found in other markets, especially in comparison with Europe and the US, where ATMs are mostly used as cash machines for withdrawals, deposits and the occasional mobile top-up.
There are lessons that can be learnt from the LAC region’s reimagination of the ATM, writes Carlos Seer, associate VP and business development director, LAC at Compass Plus Technologies, a company passionate about payments technology and architecting it properly for the needs of today and tomorrow.
In LAC, ATMs are positioned as extensions of bank cashiers, with many forward-thinking FIs having transformed their networks into full-functional self-service banking channels that conveniently enable customers to conduct all their day-to-day financial activities at a single location, without assistance.
As a result of the sophistication of LAC’s approach to the ATM, these self-service power-houses are visited more frequently than in other parts of the world, making this such a lucrative business for FIs in the region that RBR are forecasting that the number of cash recycling ATMs in Latin America will treble by 2024, an increase of 250 per cent.
From under-utilised cash machines to secure and efficient self-service channels, how did FIs in LAC redefine the ATM to become such an effective customer relationship tool? And what lessons can the rest of the world take onboard?
Scope the tech
Before embarking on their self-service banking transformation journey, FIs in LAC thoroughly investigated and evaluated the technology available and what it could deliver them in terms of value. Value was not only placed on the features, products and services the FI was able to offer via the ATM, but also the cost efficiencies offered to the FI in terms of operation, administration and day-to-day management.
In bank branches in the LAC region, it is not uncommon see ATMs lining the walls, far outnumbering the bank cashiers. FIs in the region have chosen to utilise their ATM networks as part of their branch transformation strategies to not only cut queues, but also reduce the cost of servicing customers. As such, one of the key requirements in terms of technological capability, is the ability to offer as many relevant services as possible via the self-service channels to optimise resources and cut costs.
By selecting technology that enables FIs to introduce services such as paying utility bills and applying for micro-loans at ATMs, they are not only improving customer experience, but creating additional upselling and cross-selling opportunities via these touchpoints.
Another example of technology offering advantages for both FIs and customers is cash recycling, which is increasing in popularity in the region. Not only convenient for customers, who appreciate quicker account crediting, recycling also reduces the cost of ATM cash replenishment for FIs, while simultaneously increasing security as CIT visits decrease, a consideration that is particularly pertinent in more remote locations across the region.
Understand market requirements
In conjunction with using technology to maximise the operational efficiency of their estates, FIs also scoped the market to ensure the provision of much needed banking services via the channel, extending beyond cash-in/cash-out initiatives. From dispensing alternative media, such as tickets and vouchers in Antigua, to financial inclusion efforts in Brazil, every country has specific requirements that have been met by ATMs.
An example of a market requirement that spans the region and is often essential for many consumers is remittances. Remittances are an important source of income for families in the region, with $68billion in remittances received in the first half of 2022 in Latin America and the Caribbean, according to IDB. FIs in the region understand the vital role that ATMs can play in the delivery and receipt of funds.
As a result, many FIs have implemented services such as cash by code, which offers a convenient way for customers to transfer money to friends and family members by sending them a code to input at ATMs that enables them to withdraw cash. A knock-on effect of these requirements has led to an appetite for multi-currency ATMs.
For example, in Peru, regulations allow FIs to offer accounts in either Peruvian Nuevos Soles or US dollars, as such, FIs in the country have adapted their ATM strategies to ensure that customers can deposit and withdraw cash in both currencies.
Consult your customers
By utilising the ATM itself to measure customer satisfaction, by using it as a touchpoint to ask customers about new services they would like introduced, FIs in LAC are actively engaging and creating meaningful interactions with their customers.
By launching polls via the self-service channel, FIs have been able to collect data and subsequently measure customer demand for different services, with the end game of determining where they should focus their product development efforts in order to increase customer satisfaction, drive loyalty and gain a competitive advantage.
It goes without saying that market and customer requirements differ enormously from region to region, let alone country to country, and as a result, there can be no one-size-fits-all approach to ATMs strategy.
Whether FIs want to utilise ATMs to provide low and no-touch banking experiences through cardless transactions, dispense multiple currencies and alternative media (tickets, vouchers, etc.), offer cash recycling and deposits, reward specific behaviours, or provide a myriad of services akin to those found only via internet or mobile banking, such as issuing virtual prepaid cards – there are lessons that can be learnt from the LAC region’s reimagination of the ATM.
Not only is it imperative to understand market requirements and engage your customers, the only way to turn a fleet of cash machines into a lucrative customer relationship tool is to ensure the underlying technology used to run your ATM network delivers the value you require.
