By Tom Harper on

Seven years ago this month, the New York Post published an article quoting remarks by Paul Volcker at the Wall Street Journal Future of Finance Initiative in the U.K.

At the time, December 2009, the U.S. — and most of the Western World — was in the throes of the great recession.

Six months earlier, the Obama administration had sent proposed legislation to Congress that ultimately would become known as the Dodd–Frank Wall Street Reform and Consumer Protection Act.

By then, the handwriting was on the wall for banks. Profits were going to take a major hit while cost cutting was going to take a commanding role in shaping the bank of the future.

Hiding in Volcker’s address to bankers at the Future of Finance Initiative was a huge hint as to how this would be accomplished:

The most important financial innovation that I have seen the past 20 years is the automatic teller machine, that really helps people and prevents visits to the bank and it is a real convenience. How many other innovations can you tell me of that have been as important to the individual as the automatic teller machine, which is more of a mechanical innovation than a financial one?

In the seven years since Volcker asked this question, the answer hasn’t changed.

Yes, online banking has claimed the No. 1 spot as consumers’ preferred channel for day-to-day banking tasks.

As of July, nearly half of the world’s population had access to the internet and nearly one-third (29.5 percent) used the internet for online banking according to Statista.

And yes, mobile banking has shot up in popularity, thanks to its amazing rate of advancement and the avid adoption of the smartphone by literally billions of consumers around the world.

According to the Ericsson Mobility Report, the number of people on the planet with a smartphone subscription reached 2.6 billion in 2015, and will top 6 billion by 2020.

Still, when it comes to accessing services from their bank, the 61 percent of consumers name the ATM as the channel they most often choose, according to Accenture. It is surpassed only (and narrowly) by online banking at 63 percent.

Branch banking ranks a distant third at 42 percent, and mobile trails in the background at 30 percent.

It seems extraordinary that, 50 years after its introduction, the ATM remains at the forefront of the consumer banking experience. There’s one inalienable reason why:


Say what you will about the future of hard currency, the present condition of cash is robust and it shows no signs of pending collapse. I suspect it will still be going strong well after most of us are gone.

But cash dispensing is just the tip of the iceberg for the modern-day ATM, whose utility actually meets or exceeds that of digital channels.

Need to make an account transfer? Pay a bill? Repay a friend? Send cash to Timbuktu? See your statement? Buy iTunes or tickets to a show? Talk to a banker? Take out a loan? Replace a lost debit card? Top up your mobile phone account?

There’s an ATM for that.

In developing markets these machines serve populations previously excluded from the financial system, often substituting for bank branches in remote corners of the world where online or mobile service is unreliable or simply unavailable.

In more advanced markets, ATMs are filling FIs’ seemingly irreconcilable needs to achieve greater cost efficiency and deliver more personalized customer service.

They’re being deployed as video teller machines, assisted teller devices and teller cash machines — taking on tedious, time-consuming manual tasks while bankers attend to work that no device, digital or mechanical, can perform — the cultivation of customer relationships.

At the same time, cash-recycling technology is making the mechanics of cash deposit and dispensing indispensible to an expanding range of nonbank players — retailers, cash-handling and cash management firms, cash-in-transit companies and others.

And above all, this 50-year-old innovation is not contending with newer channels, but complementing them as manufacturers and software developers seek to empower consumers through ever more streamlined and synchronous financial self-service options.

Volcker was absolutely right: The ATM is most certainly the most important financial innovation we’ve seen in the past 20 years.

But you could also argue that he was entirely mistaken: He should have said 50 years … and beyond.

50 years of ATM innovation — and no end in sight