Barclays Bank in the UK claim to have installed the first cash dispenser in the world in June 1967. This machine operated very differently from today’s devices. There were no magnetic cards; customers were issued with paper vouchers which were fed into the machine which retained the voucher, and dispensed a single £10 note. Other banks used machines which accepted thin plastic cards; these were returned to the customer through the post after processing so that they could be used again.
Within a year of Barclays’ introduction of cash dispensers, there were machines installed in France, in Sweden and in Switzerland by the world’s first "national" cash dispenser network. In 1969, both the USA and Japan installed their first machines, each designed by domestic manufacturers. However, most countries stayed aloof during the late 1960s and the first half of the 1970s. During this early period, well over half the installations were in Europe.
When the early machines worked – and they were fairly unreliable – they operated 24 hours a day, seven days a week, and gave out the cash in a matter of seconds. Customers who wanted more than £10 simply used more than one voucher or card. The first generation machines were off-line; they were not connected to the bank’s computers and so could not check whether the voucher or card had been reported as being lost or stolen.
The next major step forward occurred in 1972, when Lloyds Bank in the UK installed the first on-line "Cash-Point" machines which had been developed by IBM. These used plastic cards with a magnetic stripe which identified the customer’s account. Consequently the bank did not need to process the card physically and it could be returned to the customer at the end of the transaction. Machines were connected directly to the bank’s central computers and were not capable of working when not connected. In Japan, Fujitsu was also developing an on-line cash dispenser which came into service in the early 1970s, also based on using a card with a magnetic stripe.
These second generation machines proved to be cheaper to operate and more reliable than the old off-line machines. By the mid 1970s, virtually all new installations were of the new type and by the end of the decade, almost all first generation machines had been replaced.
Meanwhile, as early as 1973 the Japanese had developed machines where a passbook with a magnetic stripe could be used to access cash. In the mid 1970s both American and Japanese manufacturers extended the self-service machines beyond the idea of just a device that dispensed cash to one that offered a whole range of other services – the automated teller machine emerged.
However it was more than a decade after these innovations, in the mid-1980s, that cash dispensers truly became a worldwide phenomenon. It took 16 years for the first 100,000 cash dispensers to be installed, but only four years more for the next 100,000.
Today’s machines represent the progressive culmination of thirty years’ development. The customer display has evolved from none at all, through a single LCD line, to monochrome monitors and to full colour, full graphics screens. Multiple currencies and denominations can now be dispensed. Transaction speeds have been greatly improved. Many extra services have been added. The reliability of machines has been progressively improved as the note handling capabilities were refined and simplified, and as the ubiquitous PC became the core of the electronic intelligence of the machines.
Nevertheless although the cost of machines has fallen in real terms, the devices remain complex electromechanical devices and until recently typically cost US$ 15,000 - US$ 20,000. The most recent development has been the introduction of low price cash dispensers designed for use at retailers and other indoor locations. These machines sell at half the price of traditional machines and led to a surge of installations in the USA in the mid-1990s.
Since the introduction of the first cash dispenser thirty years ago, the cash dispenser and the automated teller machine (ATM) have gradually become the electronic face of banking for most customers.
The banking industry has invested over US$ 30 billion in simply buying these machines and many fold that amount in installing and running them. About one million machines have been purchased since the first installation, most of them during this decade. Yearly investment in ATMs and CDs still exceeds many fold the total investment in more recent and highly publicised delivery channels, such as the Internet.
By 1999 the cash dispenser and the automated teller machine were found in most countries, developed and less developed. Today Asia-Pacific is clearly the largest market in the world, followed by Europe, North America and, some distance behind, Central and South America. Africa is the only continent where the machines have had a modest impact – only in South Africa are numbers substantial and several African countries have no machines at all.
This information is taken from The Global ATM Market to 2004, published by Retail Banking Research Ltd.
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