The world’s first “hole in the wall” ATM machine was installed on June 27, 1967; 50 years ago today. It was unveiled in Enfield, London by a popular TV comedian, Reg Varney, who made the first withdrawal.
It might just be the best idea to come to a man in the bathtub since Archimedes' time. While taking a soak, inventor John Shepherd-Barron devised what is hailed as the world's first automatic teller machine, although his claim to the title is a matter of dispute. He pitched the device to the British bank Barclays. It accepted immediately, and the first model was built and installed in London in 1967.
That first machine would more properly be called a “cash dispenser” as it only allowed the fixed amount of ten £1 notes to be taken out each time. This was because of the technology used to identify the customer.
Though the machine used PIN (personal identification number) codes, a concept Shepherd-Barron also claims to have invented, it was dependent on checks impregnated with the (slightly) radioactive isotope carbon 14 to initiate a withdrawal, as the magnetic coding for ATM cards had not yet been developed.
Magnetic stripes on cards and data links to the customer’s computer held accounts had still not been developed so customers had to order a voucher or check and £10 was deducted from their account when it was sent to them. Once it had been used, it was retained by the machine. The customer received a new voucher by post once the initial check was returned to central processing. This from 1969 in Australia shows the check and return system.
It was at the end of 1969 that tbe BBC’s “Tomorrow’s World” showed how magnetic cards and telephone links would work in a brave new world of computer-run banking. You may note that the logo on the modem is Barclays Bank’s eagle.
While Tomorrow’s World prediction of the end of cash may be premature, by 2015 in the UK, less than half of consumer payments were in cash.
The ATM card has evolved into the debit card. Radioactive dots and magnetic stripes have been replaced by embedded chips with near field communications capabilities to make “tap and pay” possible. Instead of relying on a PIN, the newest cards have a fingerprint reader. The NFC data can also be transferred to a phone to act as a debit/credit card, using either a PIN or biometric information like fingerprints or iris recognition depending on the cellphone’s capability. “Dumb” card readers can be used to provide extra layers of security by enabling a customer to decrypt a six-digit encrypted code — you enter the numbers the bank’s computer generates and use it to convert to a different set of numbers. The bank’s computer replicates the function of the chip in the card to verify transactions in on-line banking.
More importantly, the spread of computer connected ATMs mean that there can be enormous flexibility for customers. They can be used for virtually all banking purposes and additional features like topping up “pay as you go” cellphones. Banking networks like Visa and Mastercard mean that a customer can withdraw cash worldwide at any ATM on the network.
Perhaps the one thing that Tomorrow’s World was all too accurate on was the reduction in jobs in the “back room” functions of banks. Banks now operate with far fewer, if any, branches. (Confession here; in the 40+ years I have been with my current bank, I have visited the branch on a handful of occasions.) The latest bank outlets have no tellers, just ATMs with staff on hand at desks to help out or sell services like mortgages or insurance. What’s perhaps certain is that even those bank branches are going to get fewer and further apart.