50 years ago, in June 1967 while The Beatles' Sgt. Pepper album was revolutionising the music industry, a quieter revolution began in the high street when the world's first Automated Teller Machine (ATM) dispensing cash was unveiled at the Enfield branch of Barclays Bank.
TV personality Reg Varney became the first person to withdraw
cash. The convoluted process which resulted in the machine
swallowing a cheque containing radioactive carbon-14 and then
dispensing a tenner, had started with a trip into the bank
beforehand. Reg entered a six-digit PIN which the cash machine
matched against data in the carbon-14.
There is much debate over who the actual inventor of the cash
machine was, but the idea of a personal identification number (PIN)
was thought up by the designer, John Shepherd-Barron, and refined
by his wife Caroline who changed his six-digit number to four as it
was easier to remember.
However, I would argue that the anniversary to really celebrate
didn't happen until five years later, when a technological
transformation profoundly changed our interaction with cash and
credit.
The first ATM as we know it today was finally introduced in 1972 at
the request of Lloyds Bank, after IBM engineer Forrest Parry, aided
by his wife and her iron, attached a strip of magnetic tape to a
card allowing a small, portable method of data storage, customers
could access their money at any time without talking to a cashier.
It is that move from paper to plastic which transformed the way we
interact with banks.
For many people, the ATM was their first experience with a computer
and before mobile phones, they were probably the single most
influential piece of technology for the public. I wonder how they
influenced the designers of the smart phones and computers of the
1990s and 2000s? I was told a story about an incident in the late
seventies when a woman who had never used an ATM – or any
other computer – inserted her card for the first time. She
read on the screen: "Enter the amount to withdraw – the
sum must be in multiples of five." Wanting to take out
£40, but not entirely sure how to proceed, she cautiously
entered £55,555,555 and wondered why her card was
swallowed.
The modern ATM experience is clear and well-tested, and every point
of the interaction is carefully considered. For example, in the UK,
the ATM returns your card before dispensing the money. Tests showed
that, as soon as people got their cash, they would consider the
transaction complete and walk off forgetting their card.
By the time TV personality Cheryl Baker opened the first drive-thru
cash machine in 1998 (at Hatton Cross near Heathrow) the card had
become ubiquitous and its uses manifold. Today, an ATM is installed
somewhere in the world every three minutes. They are helicoptered
in to refugee camps as part of disaster responses, and they are
found on the tops of mountains and in Antarctica. Yet it's only
because its users carry cards that this is possible.
Jersey was already welcoming a number of international banking
groups and finance houses from as far afield as Canada and South
Africa during the sixties. By 1967, Jersey was already an
established finance centre, although nowhere near the scale of
today. Bank deposits, other than those from the UK clearing banks,
stood at £71.3 million. I wonder if anyone in the sixties
would have been far sighted enough to forecast that 50 years later,
the level of deposits attracted to Jersey would be in the billions,
rather than the millions.
The precise date and location of Jersey's first ATM has been
lost, but I like to think that the local equivalent of Reg or
Cheryl was on hand to withdraw the first cash.
The ATM is an illustration of the steady evolution in banking
services. Cards are being replaced by finger prints and mobile
phones as means of customer identification, and whilst our cards
morph with our phones as some global banks are now offering Apple
Pay and Android Pay solutions for ATMs. These machines
fundamentally remain the method of obtaining that oldest of means
of transaction – cash.
Innovation aside, global banking has been shrinking since the 2008
crisis as financial organisations re-structure their operations,
seek to reduce costs and cope with increasing regulation, while
finding ways to remain profitable. The future of banking in Jersey
will depend on our ability to react and adapt to change. The
ATM's influence has been profound not because of the machine
which was installed 50 years ago, but because of its marriage with
the card which appeared 45 years ago. Similarly, future changes may
be the result of new technologies amalgamating and changing one
another.
A new type of ATM is also emerging for bitcoin, the digital
currency which can be bought and sold electronically. Jersey has
one such machine in place already. 50 years on, does it perhaps
serve as a symbol of an ongoing banking revolution between digital
and financial services and the opportunities which we are only just
beginning to explore?
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