Where ATMs are finding relevance as cash fades

Credit: Ty Wright/BloombergATMs are on the decline in the U.S., but there are signs of life for manufacturers that sell cash machines.NCR Atleos in early August struck a deal with digital banking app Chime to place more than 4,000 ATMs in Walgreens and other retailers, the latest in a series of new deployments for the ATM firm. And NCR Atleos rival Diebold Nixdorf raised its earnings outlook a year after emerging from bankruptcy, citing improvements in business conditions. Diebold Nixdorf has a 32% share of the global ATM market, while NCR Atleos has a 27% share, according to IBIS World.These firms are chasing a shrinking market, at least in the U.S. The number of ATMs in the U.S. in June 2024 fell below 450,000, according to the Capital One Shopping Research Report, ATM numbers in the U.S. have fallen about 4% in the past five years, according to Capital One, which also notes the number of American consumers that use only cash fell 30% from 2022 to 2024 and 58% from 2016 to 2022.In this environment, promoting cash is not profitable for banks, according to ProfitResources, a consultancy.But the cash decline is not absolute, leaving a need for cash access, according to Alyson Clarke, a principal analyst at Forrester. "Also, what banks want to do with branches is changing, there are more interactive tellers on remote screens, and that creates a need for more advanced ATM technology," Clarke said.Since the level of ATM installations has stopped growing on its own, ATM sellers have been forced to get creative. By pairing with Chime, NCR Atleos can reach consumers who may need access to cash outside a bank branch."The digital customer doesn't mean cashless, it means branchless," said Benjamin Bregman, senior vice president for global financial institution strategy and development for NCR Atleos. "Chime cardholders are provided fee-free ATMs in every state and many of the ATMs will now carry the Chime brand, connecting cardholders with the brand before engaging with Chime." Chime did not return a request for comment by deadline.NCR Atleos in August also signed a distribution deal with Credit Union of America to deploy NCR's Allpoint network ATMs. That follows other recent Allpoint deals with Black Hills FCU, Palmetto Citizens FCU, Arizona Financial Credit Union and VyStar Credit Union, adding to a network of "several hundred" credit unions, Bregman said. "Credit unions operate within a defined field of memberships that can constrain them from serving their millions of members," Bregman said. NCR, a long-standing manufacturer of point of sale systems and ATMs, split into two companies in 2023.NCR Atleos focused on ATMs, while NCR Voyix sells digital commerce technology. That division is designed for faster double-digit growth, while the ATM side carries less debt but slower single-digit growth. NCR Atleos' net revenue grew 4% to $1.08 billion in the most recent quarter while affirming its yearly outlook.There are additional options to expand ATMs outside of the U.S. NCR Atleos in the past year boosted its physical reach by extending its partnership with Kiwibank in New Zealand and entering the Portuguese market, where 30% of payments are still in cash. It additionally added to its network in Greece, another cash-heavy country.ATMs deployments are increasing outside the U.S., particularly in developing countries that are cash-dominant, said Robert Meara, a senior analyst with Celent's banking practice, adding that reaching emerging markets is a more likely opportunity for ATM makers than stacking digital payments technology onto existing machines in mature markets. "Over the years ATM markers have done yeoman's work in designing capabilities into these machines that would promote more broad use. But that has never really resonated with consumers," Meara said. "So the primary use is still cash deposits and withdrawals."Diebold Nixdorf is also relying on non-U.S. markets to boost its ATM network. The firm has entered several recent ATM distribution partnerships in the U.K. to take advantage of a new U.K. regulation that requires banks to provide an alternative to access cash before closing a branch."There are strict regulations there that provide an opportunity for us to serve that need, to support banks as they minimize their branch footprints," said Joe Myers, executive vice president of global banking for Diebold Nixdorf. European markets are also more advanced than the U.S. in pooling ATMs among banks to create networks, Myers said.Diebold Nixdorf, which has focused on expanding its ATM fleet's digital services and financial inclusion features as part of its post-bankruptcy plan, recently reported net revenue of $940 million, up 2% over the prior year. It also raised its expectation for full year earnings before interest, taxes and amortization from $435 million to $450 million, citing improvements in the market outlook. The decline in cash and bank branches, while often blamed for ATM decline, actually creates space for ATMs, according to Myers."As banks become more conscious of reducing their branch costs, ATMs are a way to reduce that expense," Myers said.