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The History and Future of Cash - Part 1

December 18, 2019

Why ATM’s Are Becoming a Thing of the Past

ATM’s have always been a go-to method for brick-and-mortar store owners to both help increase foot traffic as well as benefit from some extra profits. The evolution of the economy and increasing technology spend has led to a completely new landscape for these systems - one that does not favor traditional ATM and cash management tools. Rather, the times are shifting and favoring more efficient, personalized systems.

Let’s take a look at the history of ATM’s and how they ushered in a new era of independent cash management.

The Rise of ATM’s

The first ATM machine was introduced in London in June of 1967. It was a miracle invention that ushered in a new era of consumer freedom and personal management of cash. As the story goes, the inventor was inspired by a chocolate vending machine and wondered why a similar machine didn’t exist for money.

Sometimes it really is the simplest ideas that end up changing the world.

It wasn’t until 1977 when ATM use began to really take off. During this time, Citibank invested more than $100 million in ATMs to help master and globally scale the technology. Businesses loved the foot traffic these machines would bring in, and the transaction fees were helping both small businesses and banks add some extra cash to their pockets.

This is why ATM’s became so widespread - they were convenient and helpful to the economy initially. Back then, debit cards and credit cards were just being introduced and cash use was still soaring. Statistics have shown that people spend over 20 percent more money in stores with an ATM, so why wouldn’t small businesses want one?

Small businesses were more of a priority in the old days so these ATMs paid themselves off rather quickly. Both consumers and businesses alike benefited.

The Age of Innovation

As soon as it was discovered that ATM’s were a hit and were in high demand, the next problem was usability. How could the developers help make these machines more usable for banks and small businesses? These ideas led to some extreme innovation - and it was the trend of technological innovation that initiated what no one knew would be the beginning of the end.

New functions such as color displays, automatic cash deposits, signatures, and audio input were being developed across all ATM machines. Things were progressing rapidly.

But, so were costs.

As the technology and software associated with ATM’s continued to grow exponentially, the world around them was changing as well. The digital age began to revolutionize banking and consumer cash use was steadily declining. As these trends were unfolding, transaction fees and maintenance costs steadily began to rise. Additionally, the consumer attitude towards cash and banks was slowly changing as well.

Then, the early 2000s came and brought the financial crisis. Small businesses became strapped for cash, consumer cash use was declining, and investing in an ATM machine required a much longer-term vision to achieve profitability.

In the past, ATM’s were a place where consumers could easily withdraw cash to keep on hand and interface with their bank account. Small businesses and banks alike profited. They were a simple machine that acted as a simple conduit and was the beginning of a new age of consumer freedom over their cash management.

Little did they know, these machines would be the harbinger of their own downfall.

In the next instalment, we will dive deeper into the current climate and discover why ATMs are beginning to fail and not justify investment any longer.

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