Diebold Federal Credit Union is piloting what it claims is the world’s first ATM that relies solely on mobile authentication and has no card reader or PIN pad.

The ATM enables consumers to withdraw cash without the need of a debit or credit card, using only their mobile phones. When a consumer scans a unique QR code at the ATM using a smartphone, the ATM authenticates the user via cloud-hosted services to enable transactions.

“[With millennials] the generational shift is going to have a huge impact on our banking clientele as they are digital natives,” said Devon Watson, vice president of new business and solution incubation at Diebold Inc., North Canton, OH. “We were trying to see if there were ways that we could change the ATM experience to be more digital native friendly.

“For the consumer, it is a convenience play as you don’t have to have a card with you,” he said. “You also get speed as one of these transactions takes 10 or 12 seconds.

“We partnered with Paydiant on this because mobile cash is a great enhancement for banks to have for now and to have in place for later on for a mobile wallet.”

In the cloud
The mobile-enabled ATM is being piloted at a single Diebold’s credit union branch location. It sits a few steps away from a traditional ATM so that Diebold can compare how customers use each.

The mobile-first ATM was developed by Diebold, which previously introduced a software solution developed in partnership with Paydiant that enables any existing ATM to support cash withdrawals made via a smartphone. Several banks have adopted the software solution, including Windtrust Financial Corp. in Illinois.

Diebold decided to focus on mobile-based ATM cash withdrawals after research into the millennial generation showed they are looking for added convenience in their banking interactions.

The interface for the ATM was designed to look like a smartphone interface with similar navigation and controls, such as flick and drag.

Consumers who approach the ATM with a smartphone that has the Diebold mobile wallet app on it can ask the ATM to show them its QR code. Consumers then scan the QR code with their smartphone, which conveys through the phone which ATM users are in front of and translates this to a cloud-based application.

Pre-staged withdrawals
Users are verified in the cloud and then asked what they want to do on the phone. For withdrawals, users are sent a one-time use PIN that can be entered via a touchscreen pad on the ATM, which then dispenses cash.

Users are also able to pre-stage withdrawals on their smartphones by preselecting the amount they want to withdraw.

The ATM is paperless, delivering receipts via the mobile wallet application.

As banks embrace mobile for remote deposits, balance inquiries and other frequently used services, being able to withdraw cash is an additional feature under consideration.

Mobile-enabled cash withdrawals can provide added convenience for consumers who are already increasingly walking around without credit or debit cards and are using their phones to pay for purchases instead.

Mobile can also streamline the process of withdrawing cash, with the average transaction length at 9 seconds on mobile compared to 20 seconds for traditional ATM interactions, per Paydiant.

There are also security benefits when a card is not used as this prevents card-skimming.

“Pretty much every bank has the ability to remotely deposit checks from a mobile phone now,” said Chris Gardner, co-founder of Paydiant, Wellesley, MA.

“If you think about all the things a mobile banking app can do, getting cash is one of them,” he said. “As an additional feature and part of what mobile banking should do, it is one of them.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York