Automated Teller Machine at 50: The Hole in The World That Changed the Banking Industry


The next time you use the Automated Teller Machine or the ATM and withdraw some money from the “Hole in the Wall,” you need to know that it has been more or less 50 years after it first serviced its first customer. The ATM commemorated its half-century of providing excellent service to any customers that need to withdraw money in an instant.

Abouthalf a century ago, the first automated cash dispensing machine was installed in Barclay Bank’s Enfield branch in London. After two days, Bankomat – a known Swedish device, opened its operation in Uppsala. After a couple of weeks, another Automated Teller Machine was built and installed by Chubb and Smith Industries for Westminster Bank in London (a part of RBS Group).

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Because of these events, it started the trend that eventually became a global culture called self-serving banking – long before credit and debit cards become the standard for online banking. The success of ATMs or the cash machine, in general, enabled a lot of people to make purchases in an instant, spend money during evening leisure as well as weekends where bank institutions are close, as well as request banking services where and when clients wanted them.

The system, infrastructure and knowledge the ATM industry spawned also enables all banks to offer their clients point-of-sale or POS terminals, as well as internet and phone banking. There was significant media mileage when ATMs were launched. A lot of banks told their clients that these cash machines would release them from the shackles of single-branch banking and business hours.

But customers need to learn how to use the machines as well as remembering their Personal Identification Number to perform a transaction. Not only that, they need to make sure that the machines are trusted and not compromised, making their money safe. A lot of people today take these things for granted, but when Automated Teller Machines were first invented and used, many don’t have an idea or never seen before how these advanced electronics works.

And just like new technology, ATM encountered a lot of performance issues when it first started since the machine makers, as well as the banks, have not yet perfected the system. Despite the worldwide demand for these automated machines, only customers of the bank that have good credit history are offered the service.

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Early versions of the machines were also heavy, clunky, and dangerous to move, unreliable, seldom appropriately located and insecure. Not like today’s versions of Automated Teller Machines, the first machines could only do one thing: let people withdraw a fixed amount of money when activated by bespoke plastic card or paper token issued by the banks to their customers during business or banking hours.

Once the tokens are used, they will be kept by the ATMs so that the bank’s staff could retrieve it and subtract the withdrawn money to the proper account. Meanwhile, the plastic cards need to be sent back to the clients by post. It took technology companies as well as the banks years to agree on common online banking standards and deliver on their assurance to their customers, a 24 hour a day, seven days a week access to their money.

The Effect of Automated Teller Machines in the global market

According to RBR London, in 1970, there are more or less 1,500 ATMs around the world. They are mostly concentrated in North America, Europe and Japan. It reached 40,000 in 1980 and reached over a million machines in 2000. There are a lot of factors that made ATM become a global phenomenon.

First, location sharing made more transaction at individual Automated Teller Machines. It gave more incentives for small as well as medium-sized businesses and financial establishments to invest in this kind of technology. For example, there are at least 200 shared ATM machines in the US and more or less 80 shared networks in Japan.

ATMs also become a lot more popular once the banks digitized all their records, allowing ATMs to perform most of their tasks like bank transfers, bills payments and balance requests. Over 50 years, a lot of people have shifted away from cash into online banking. Automated TellerMachines have become vital in avoiding backing congestion at branches.

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