Scholars of innovation often debate the relative importance of technology-push and demand-pull in the development of new products and services. The history of ATMs, as told by Bernardo Bátiz-Lazo, is mainly a history of demand-pull: urbanization, the rise of the service economy, labor scarcity, international travel, regulation, and bank competition transformed ATMs from offline cash machines into interconnected nodes in a global network.
The first cash machines were invented in the 1960s. These machines worked offline, keeping a record of transactions until the end of the day, when a bank employee inputted the day's transactions into the bank's records. Evidence does not point unequivocally to a single person or organization as the inventor of the cash machine. Instead, cash machines were developed independently by multiple teams of engineers and bankers, in multiple countries, in response to urbanization, the rise of the service economy, labor scarcity, and the increasing power of unions.
At first, cash machines were neither deployed nor used widely. In 1973, only 25 percent of Americans knew what a cash machine was. Banks did not deploy the machines because they were expensive, unreliable, and slow to fix. Customers did not use the machines because of fears of malfunction and fraud. This first generation of cash machines reached a peak of 1,300 units deployed in the United Kingdom in 1977, but only 6 percent of Britons had a plastic card in 1981.
Usage increased in the 1980s as offline cash machines evolved into ATMs that could retrieve and update records online and in real time, were easier to fix, went out of service less frequently, allowed fewer phantom withdrawals, and became part of networks that served customers from multiple banks and multiple countries. Improvements occurred in an incremental manner, increasing usage and allowing banks to profit from scale. ATMs did not become a disruptive technology but rather an instrument to obtain cost gains from high-volume transactions.
As ATM usage grew, branches stopped being the dominant point of contact with retail clients. Together with computer terminals and automated credit scoring, ATMs induced the reallocation of employees from low-margin, repetitive tasks to high-margin tasks such as selling mortgages and investment opportunities. By 1989, branch staff numbers were already falling in the United Kingdom. The number of ATMs in developed countries reached a peak in 2011, but continues to grow in developing countries where urbanization and rapid financial inclusion are still occurring.
Business historians, organizational economists, and industrial economists might be especially interested in chapters 5 and 6, which study the evolution of shared ATM networks. Regional networks had a head start in the United States because ATMs circumvented regulatory restrictions on banking across state lines. However, early sharing agreements were bilateral, difficult to negotiate, prone to renegotiation, and cumbersome to expand to third parties. This organizational problem was solved through the establishment of joint venture companies with control over standards, procedures, membership access, and organizational structure. Nevertheless, strategic concerns would still delay the convergence of regional networks into a national network, the duality between credit and debit cards, and the integration of U.S. banks into international networks. In contrast, international networks had a head start in Europe, thanks to the flow of tourists from Scandinavia to the Mediterranean. European banks quickly joined the Visa network in order to collect fees from cash advances on credit cards, but in the end the main beneficiaries were debit card customers. More generally, regulation, consumer demand, and industrial structure shaped the evolution of shared ATM networks in each country.
ATM aficionados might also enjoy the book's debunking of multiple myths: for example, there was no single isolated inventor of the offline cash machine, there was no single isolated inventor of the ATM, and the De La Rue Automatic Cash System was not the first cash machine to be deployed.
Other topics covered in the book are the rise of independent ATM deployers, the increase in services provided by ATMs, and the rise of the cashless economy. The book would have benefited from a more detailed analysis of regulation and antitrust policy: What was the rationale for regulatory and antitrust decisions in each country? What was the political process of relevant regulations? Why did courts, regulators, and banks in different countries make different decisions regarding phantom withdrawals?
The sources used by the author for the book are patent records, industry journals, newspapers, press releases, and fifty-seven interviews of bankers, salespeople, and engineers. Bátiz-Lazo diligently cross-checks the interviews against written records, which turns out to be crucial for the internal consistency of the narrative. The sources complement one another very well because they uncover the perspectives of different actors at different points in the evolution process of the ATM. However, some details included in the book are superfluous. Sometimes I did not understand the connection between a given piece of information and the general point that the author was making.
Overall, the book is an encyclopedic source of information on the history of the ATM that contributes to the study of the coevolution of technology and society.
