Happy 50th Birthday, ATM
It was 50 years today — on
June 27, 1967, a few weeks after the Beatles released Sgt. Pepper’s
Lonely Hearts Club Band — an innovation came out of England that
transformed an industry and changed consumer behavior around the world. The
first automatic teller machine came into use at a
Barclays Bank branch in a London suburb. As technology historian Michael
Lamm points out, the tech was nontrivial:
It brought together innovations in photography (to recognize deposited bills),
financial security (including the invention of the PIN), vacuum-based mechanics
(for dispensing cash), magnetic coding (for ATM cards), printing (for
receipts), and industrial design (to forestall theft, the steel was tough
enough to resist an acetylene torch for eight hours). In the ensuing
half-century, the ATM has proved to be one of the most important innovations in
the history of banking — and beyond. Although it is often taken for granted
today, this device changed shopping and weekends, and was the forebearer of the on-demand economy.
Consider
its effect on banking. The ATM rapidly eliminated bankers’ hours. A customer
could grab cash on the way to the bar on Saturday night or to a church on
Sunday morning. (One of the primary inventors, an engineer named John Sheppard
Baron, was said
to have proposed his design because he failed to
get to his bank on time one day after taking a bath.) For the
first time in banking history, customers could interact directly with the
bank’s books and records, with no bank employee in between. As a side effect,
the ATM eliminated a lot of bank tellers’ jobs. It also slashed the cost of
opening a new location, paving the way for banks to proliferate. That, in turn,
meant consumers didn’t always have to switch banks if they changed jobs or
moved.
The
ATM put banks on an innovate-and-upgrade cycle, changing a staid industry into
one that steadily introduces new features and functions. Today, as banks start
to feel the heat from digital
upstarts offering mortgages and low-interest
unsecured loans, ATMs are evolving. Their user interfaces increasingly resemble
smartphone banking apps. Many customers regularly use both platforms
interchangeably, little realizing that the apps couldn’t exist without the
design principles that ATMs first displayed.
Without warning, the ATM
created a revolution in human-centered design that affected all technologies.
“Before [the ATM], service delivery was all people-to-people,” said Tim Brown,
CEO of design firm IDEO, in an interview for our book, Woo,
Wow, and Win: Service Design, Strategy, and the Art of Customer Delight (HarperCollins, 2016). “Not just in
banking, but everywhere. Technology didn’t show up in the customer experience —
it was in the back office.” Of course, jukeboxes and Automats had been around
for decades, and pump-your-own gas stations had recently been introduced. But
the field of customer-facing interface design had just begun to emerge. As the
ATM took hold, many people in services businesses realized for the first time
that providing a high-quality user experience mediated through technological
devices could give them an advantage.
The ATM was a challenge for designers. It had to be clear and
simple enough for an inexperienced person to navigate. It had to be reliable
and trustworthy, and consumers had to sense that trustworthiness. It had to be
faster than a teller. And the designer needed to translate these vague but
critically important attributes into specifications, and make it possible to
deliver consistently. As you might expect, early versions of the ATM were less
than user-friendly. Some required special tokens. Others used cards with a type
of magnetic strip that turned out to be radioactive. A few had an unfortunate
tendency to eat customers’ cards. But as banks continued to use the ATM as a
laboratory of customer experience, the design and value of this innovation
continued to improve, until it became a linchpin of everyday experience.
There are at least four lessons to be learned from the ATM about
how human-centered design can improve the value of an innovation:
• Fix your customer’s pain
points, not just yours.
The ATM solved multiple
customer problems: the inconvenience of bankers’ hours, the inability to get
cash anywhere, the feeling of helplessness when cash was not accessible. This
was at least as important as reducing the banks’ costs. Compare that to
self-checkout kiosks, whose primary effect was to cut retailers’ expenses. They
were touted for convenience but some were so frustrating that they made
consumers more likely to shoplift. The ATM might seem impersonal, but the
relief it gave consumers strengthened their bond with the institution.
• Innovate at the right
cadence.
ATMs have changed a lot
over the years, but not hastily. Don’t add new features so fast that customers
lose their feeling of familiarity.
• There’s nothing wrong
with being second to market.
Many ATM innovations —
deposits without deposit slips, for example — started with one bank. Other
banks that adopted it later didn’t suffer.
• Put a premium on your
customers’ time.
People have come to expect
instant gratification when they order a product online or use a kiosk, partly
because of their long experience with the ubiquitous ATM. Your service must be
designed to be fast, or people will get frustrated and look elsewhere.
Finally, the example of the
ATM shows that human-centered design doesn’t necessarily need person-to-person
interaction. Customers prefer the convenience of the machine to conversations
with bank tellers. Today, as banks continue to innovate, they are adding the
human touch back into the user experience, designing hybrid ATMs that include
telephone and live video links to tellers. In the end, the ATM transformed
banks into a role model of business empathy: for understanding customers’
feelings, behavior, and needs. Like Sgt. Pepper, the ATM is 50
years old this year. We will still need it and we will still feed it when it’s
64.
Thomas A.
Stewart
Patricia
O’Connell
https://www.strategy-business.com/blog/Happy-50th-Birthday-ATM?gko=d12d1&utm_source=itw&utm_medium=20170706&utm_campaign=resp
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