Digital Banking

Development of Smart ATMs in Retail Banking


ATMs continue to be an essential part of banking all over the world to date. Considering the trends like self-service and the need to deploy services more cost-effectively gains momentum, it will be more relevant than ever.  Therefore banks have modified ATMs in a way that meets the evolving customer expectations.

What is Smart ATM?

The term “Smart ATM” would not be new to many as it has been there for some years now. However, they have been uncommon for a long due to almost negligible demand for it and also because of the fact that they demand more capable banking and ATM processing networks.

A smart ATM is just an ATM machine that is capable of doing more than just dispensing cash. They can be used by customers to deposit funds, open accounts, money transfer, and a few other things that were earlier possible only through a bank branch. The smart ATM machine that provides all these services is called micro-branches.

Though not all smart ATM machines provide complete branch in a box functionality, some only offer one or two additional services besides dispensing cash. It is possible for these machines to provide all those services that a physical bank branch offers.

What are the technologies required for Smart ATMs?

An ATM requires slightly more advanced technology to perform its functions that smart ATM machines need. The hardware and the user interface on conventional keypad ATM machines are not enough to do in-depth financial transactions.

Therefore smart ATM must be equipped with the following technologies:

  • Touchscreens
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A touchscreen ATM is capable of performing much better than a conventional keypad ATM. Also, the fact people are so used to using the touchscreen on their smartphones, tablets, etc. that makes them more comfortable in using this feature of smart ATM. With a touchscreen, it is also possible to perform banking functions where a signature is required.

  • Cash Recycling

Cash recycling is another essential capability of smart ATM machines[1] as they allow users to make deposits. Cash recycling means using deposited bills for dispensing cash for ATM withdrawals. It is a common thing to do if your ATM accepts deposits. However, there is an additional benefit; the ATM owner doesn’t need to restock their machine as often.

  • Smart Deposit

A smart deposit means that customers can make cash or a cheque deposit through an ATM. Those ATM that provides smart deposit usually make digital copies of cheques, and the ATM owner doesn’t have control over when the funds are available. It is up to the bank.

  • Network Connectivity

The additional services provided by the ATM require good internet connectivity with banks. Therefore if you run a smart ATM, it means that you are required to choose your ATM processor carefully. There is a lot more data transfer involved with the bank in a box functionality, and the ATM processor must support that connectivity. 

Smart ATMs: Transforming Customer Experience

Capabilities of a smart ATM-like cash recycling and smart deposits have a significant role to play in making banks’ ATM networks more efficient and appealing to consumers. However, they are not just the only few ways in which a smart ATM can transform the customer experience. There are many other essential features to a smart ATM.

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The change from the traditional keypad to a touchscreen interface is one such solution, and it allows banks to do more with their machines than what was possible in the past. Bright and multi-touch interfaces not just give people a user experience that they will be comfortable with; it also means banks can add more complex features to their devices, thereby transforming the ATM from a transactional device to the one that allows people to manage all aspects of their finances.

Will smart ATMs be the future of banking?

Since being introduced in the 1960s, ATMs has undergone many upgrades over the decades. This is because they had to keep up with the pace of digital transformation.

Now with the use of innovative technologies, customers have been provided better service while using ATM. As banks continue on the path of digital transformation, some essential factors must be covered by banks. One of the key concerns going forward is synthetic identity fraud, where criminals can fabricate a new identity. It allows them to take out loans and withdraw money. Earlier, they had to steal the identity of the real person, but with digital tools at their disposal, they can create an identity that financial institutions believe it to be real. It may be noted that ATM can be used to prove the identity of a person for onboarding and validation against these kinds of frauds.

Due to this factor, banks conduct ID checks in person at the physical branch. The utility of smart ATM can provide a more economical alternative that is using biometric authentication to know the identity of the new customers.

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With banks and financial institutions transforming constantly and adapting to the new reality and evolving customer expectation, it is safe to say that smart ATM could well be the future of banking.  A considerable amount of consumers use ATM machines as their only method of interaction, and an improved ATM might increase the number. More banks would then want smart ATM considering that these machines will enable them to make more money.    


Technological advancement has caused disruption in many sectors and industries. It includes banking as well, and in it, the ATMs has also tasted the innovative technologies. Banks have understood the relevancy of ATM, which has not gone down; therefore, they would continue with providing consumers with a wide range of features through it.

Read our article:Digital Transformation in Banking: Opportunities and Challenges

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