A Cardless Streak Coming (Maybe)

The roots of Oklahoma Fidelity Bank go back more than a century—the institution originated with Fidelity Investment Co., which launched in Wichita, Kansas, as a mortgage lender back in 1905. And that long history of service just got a new boost in innovation: As of May 24, 2016, the bank enables customers to withdraw cash from ATMs via only a mobile app. That’s right, the card is gone.

We’ve been talking about cardless transactions for a while now, and with good reason. In this digital universe the mobile device and the ATM should be able to communicate without another physical object getting involved. The disconnect is almost surreal: ATMs have remained essentially the dame hunk of hardware they’ve always been, while technological advances have been adopted with almost blinding speed. As documented on this blog recently, the machines can be found just about everywhere, from the South Pole to Nagqu in Tibet, 14,300 feet above sea level. And yet the idea of a mobile app replacing the card—the ultimate anachronism—is so unusual?

That said, as the Oklahoma institution proves, changes are coming, and they’re not only from smaller and more nimble competitors. Coincidentally at around the same time as the Oklahoma launch, mega-conglomerate Bank of America—which entered the cardless ATM fray just a few months ago—announced that customers will be able to perform the same tasks with Android Pay, the Google offering that hit the market in September of last year. While it didn’t get much attention at the time, Android Pay is quite innovative in that it’s embedded in the operating system, simplifying use and enhancing security. Not is BofA alone in this area—Wells Fargo and JP Morgan Chase are among the financial services corporations rolling out their own offerings.

Nor are those the only methods. For example, back in February, FIS and Paypal announced Cardless Cash, a capability specifically designed to help consumers withdraw money from virtually any ATM with just a mobile app. It couldn’t be any easier.

In fact, the real question is not what kind of innovation we’re seeing now, but why it’s taking so long. To be clear, despite the glut of options, there are still plenty of obstacles.

First, while just about every debit card works with every ATM, it’s not as if every app will do the same. Indeed, many providers are still experimenting with alternatives, from all-purpose digital wallets to proprietary tools specific to each institution. Some require network connectivity, some don’t. Some require separate access codes, some don’t. Some (may) enable other functions, such as deposits, some don’t.

And of course, as with several mobile advances, some Asian regions are far ahead in such practices. Indeed, while NFC-enabled ATM technology is in its infancy in the U.S., Samsung has widely implemented cardless transactions in South Korea, mostly through the combination of Samsung Pay and the company’s own mobile devices. The convenience is even enhanced with physical proximity—a customer can start the transaction before even reaching the ATM, then tap on the NFC pad to get the money.

It’s easy enough to identify outliers, whether they be in Oklahoma or South Korea. The undeniable reality is that this is an area that’s ripe for broad-scale adoption. Every company that issues a debit or credit card can put its own offering (or multiple options) in the market. And for those seeking a competitive differentiator, this might just be the ticket.

Written by Jack Dougal

Jack Dougal

Jack Dougal is Banking.com's resident news reporter. He writes regular blogs covering the latest stories and key developments in the global financial services industry.

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