Getting Cash? Phone It In: Wintrust Embraces the 'Cardless ATM'

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Wintrust Financial is rolling out technology that lets consumers authenticate ATM transactions via smartphone without inserting a plastic card, in a bid to reduce fraud, speed transactions and familiarize consumers with the idea of mobile wallets.

The holding company for 15 banks, which is approaching $20 billion in assets, has been testing cardless ATM transactions since the summer of 2013. Now, it is expanding the capability to dozens of machines — making it the first financial institution in the U.S. to take the technology, powered by the vendor FIS, into production.

The technology lets a user queue up an ATM transaction within a mobile app. Then at the ATM, the consumer taps the screen to display a quick-response code. Scanning the code with the mobile banking app will get the ATM to dispense the cash.

Among other benefits, going cardless quickens transactions by increments of 10 seconds. Still, Tom Ormseth, senior vice president of noncredit services for the Rosemont, Ill., company, is the first to admit some people's first impression is: "'Yeah, so what? I can use my card.'"

Nonetheless, Wintrust's early data indicates that people who queue up the transaction with their smartphone tend to do so again.

For one thing, it adds convenience. Ormseth said he has seen the pre-staged transaction happen in as little as seven seconds as opposed to the more than 45 seconds it can take for a traditional ATM transaction.

"You are transforming the transaction to be friendlier to customers," said Gil Luria, a managing director at Wedbush Securities. "Within a few years, this could be a customer acquisition tool for the bank," he said.

And more important, the absence of physical cards circumvents a persistent ATM threat: skimming.

"You can't skim a card because there is no card to skim," Ormseth said.

Down the road, Ormseth sees the feature as but one part of a journey to get people used to using their phones to pay for stuff.

Wintrust plans to work with Apple Pay. But Apple's mobile payment platform works only with its newest iPhones. So the banking company also plans to make a mobile wallet available with the QR-based technology.

"This builds the infrastructure," said Ormseth.

Wintrust has already introduced the feature to 41 of its ATMs. By the end of February, the holding company expects to have its entire fleet — about 198 ATMs — outfitted with the technology that lets consumers order their transactions before they arrive. The vast majority of those machines are made by Diebold, while several are manufactured by NCR.

Bob Meara, a senior analyst in Celent's banking group, says remote control for the ATM is a way for banks to try their hands at integrating disparate channels. Still, he said he doubts this will top the 2015 priority list for banks that have long to-do lists and are dedicating much of their investment dollars to mobile rather than ATMs. That could change, however, if the feature becomes just like mobile deposit capture in that it is almost prebuilt for banks, he said.

Doug Brown, senior vice president and general manager of mobile financial services at FIS, said the vendor is piloting the technology with several banks. In the FIS model, security is linked to customer information, device registration and the mobile banking authentication standard in place.

Some banks are thinking of creating express drive-through lanes that would be devoted only to those individuals using their smartphones to get cash, Brown said.

Marketing the new feature to customers will be paramount to getting them to use it.

Wintrust, for example, said it is incentivizing employees with the chance to win various electronics like Apple TVs in exchange for promoting the capability through social media — including a video tutorial the company published on YouTube.

"We want to continue to grow adoption," said Ormseth. "I'll be happy by the end of year even if we have 20% of user base using this."

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