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Is This the End of ATM Cards?

Despite the popularity of ATM cards to consumers, it seems that they will soon become extinct. There are actually two primary forces moving against the ATM card — one being customer convenience and security, and the other being cost efficiency for banks. 

New Technology

Several major banks, including Chase, are in the process of testing new technology that would make traditional ATM cards relics. This new technology will allow the user to approach an ATM, and instead of swiping their ATM card and entering their pin. They will open an app on their mobile phone, swipe their finger to receive a one time access code. After receiving this access code, they will enter the code into the computer and then enter their security code. These new features are designed to add extra layers of security, which is becoming increasingly necessary, as identity thieves are becoming more innovative with their methodology.
With traditional ATM cards, there are many methods in which those who wish to steal the identity or financial assets of another can access vital information that will make stealing that person's identity easier. With everything from attaching swipe reading mechanisms to ATMs to hacking into retail databases, identity thieves are finding ways to access the data that is concealed on ATM cards. This is challenging for banks who are consistently looking for ways to effectively protect their customers.
The  new system is designed to create a situation in which the frequency at which this valuable information is shared is drastically reduced.

Keeping Pace with Consumer Demands

The development of this new technology should also be viewed as a bid to keep up with consumer demands. In an era in which consumers automatically expect everything to be bigger, better and faster, banks are being forced to provide a quality experience in every aspect of the banking process. Not only are consumers looking for a more secure way to bank, but they are also looking for the process to be simplified and expedited.
With mobile technology advancing at such a rapid pace, consumers are always interested in technology that allows them to conduct their business through some type of mobile application. This new technology appeases this desire to be connected to all of the pertinent activities of life through one's mobile phone.

Reducing Banking Cost

In addition to meeting the demands of the customer and providing a higher level of security, this new technology also helps banks save money. The primary way that it will save them money is it will allow them to reduce teller cost. Currently, 42 percent of Chase customers still use tellers to deposit funds, while 48 percent are using ATM machines, and only 10 percent of the customers are using mobile devices to make deposits. What is important about this number is that the fastest growing group is mobile users. Deposits via mobile phones are increasing at a rate of 25 percent annually, with continued growth expected to increase in the next several years.
This is extremely important, because mobile transactions are the least expensive transactions for banks to process, only costing the bank $0.03 per transaction; however, ATM transactions cost the bank $0.08 per transaction, and teller transactions cost them $0.65 per transaction. So, it is easy to see the significant savings this new technology will provide over time. When you consider the number of transactions that are conducted on an annual basis, it is easy to see that this could millions of dollars in savings each year.
This new technology is being called the branch banking of the future. It provides customers with everything that they are looking for, speed, security and convenience, all neatly rolled into one comprehensive package. This is definitely the wave of the future. The great thing for customers is that all of this comes with no extra cost. Because it saves the bank money, it allows them to keep banking costs for their customers at a minimum.
Some may be thinking that this is only one bank, and that the actions of Chase will not eliminate the need and use of ATMs; however, the competitive nature of the banking industry dictates that all banks will eventually follow in this technology. Eventually, all banks will have to use this technology in order to remain competitive. With that being said, we are looking at the end of the ATM card.

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Yael Kent's picture

Yael Kent is a personal finance enthusiast with experience writing about credit cards, credit repair, debt, and more. In addition to being an editor at Creditnet, she has been featured on Yahoo Finance, Reuters, and other financial sites.

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