70 Years of ATM Innovation

Still Struggling To Make Them Scam Proof

by Idris Mootee

It is all about the human factors.

I find that people are over-concerned with online security every time there is a piece of news about identity theft on TV. It is really not that bad and we need to accept the fact that it will not go away. Whatever security mechanism being put can fix one hole but usually create another hole. Let me take the example of the ATM, it is a very mature technology (probably about 30 years). Not many people know the first mechanical cash dispenser was developed and built by Luther George Simjian and installed in 1939 in New York City by the City Bank of New York, but removed after 6 months due to the lack of customer acceptance. No customer wanted to get money from a machine. It was a failed innovation.

I remember the one ATM card (Standard Chartered Bank) I used. Every time I used it the machine will eat the card and mail it back to me. I'm not sure what security design reason caused the behavior. So I can only use it once until they send it back in two days. It is designed to prevent fraud.

30 years later, there are still many ATM scams. Japan is still trying to figure out a way to stamp out ATM frauds. Chiba Bank has installed phone signal jammers at four unnamed ATMs at bank branches in the Tokyo region, I am not sure what exactly the criminals were able to convince people to do via mobile. I think there is too many cases criminals instruct victims to withdraw cash from the ATM through the cell phone. The often target the elderly, often telephoned by perpetrators claiming to be relatives and in need of some emergency funds. A new innovation is Aichi Bank is now ATMs will now no longer allow consumers to complete the transaction until they hang up. So you cannot be talking to your friends while getting your money.

How does it work? A metallic film around the ATM will block access if it detects mobile phone waves. Essentially ATMs will become out of range for mobiles. Not only might this prevent the criminals from relating their information, it also helps to provide a break for the consumer to think carefully about the transaction.

While others are jamming cell phones, BT Broadband is converting 2,500 ATM machines to serve as free Wi-Fi hotspots. And for some places like Tibet, people are blessed (literally) with money with their ATM withdrawals. A relatively new addition to Lhasa's old city urban infrastructure an ATM machine - including the red pasted duilian - effectively blessing every transaction that passes through this machine. It is a way to making money clean (legally). Here's another real customer unmet need.

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Idris Mootee is the CEO of idea couture, a strategic innovation and experience design firm. He is the author of four books, tens of published articles, and a frequent speaker at business conferences and executive retreats.

Is Your Innovation Drowning in Cash?

Jason Zweig writes the Intelligent Investor column for the Wall Street Journal. His recent contribution oddly echoed a query I received the prior Thursday during a speaking engagement in New York. Referencing the 'Loss of Nerve' principle in "When Growth Stalls", my questioner wanted to know if it was prudent to conserve all the cash he could during the economic downturn. My answer to him was "not necessarily," a thought reinforced by Zweig's column.

"While many financial companies are thirsting for cash," Zweig says, "there's an even bigger group of businesses drowning in the stuff - to the detriment of their shareholders." Citing Goldman Sachs research that found non-financial S&P 500 companies have over $800 billion in cash and liquid securities on hand, Zweig said, "Squirreling away cash is almost as bad a frittering it away. The returns on idle cash are lousy, and putting cash to productive use is one of management's central obligations to shareholders."

He's right. Zweig says research from the University of British Columbia shows that stocks with the biggest cash hoards have actually underperformed those with the least amount of extra cash. That is consistent with the behavior my research revealed at stalled companies - a fear-driven pullback on the reins of innovation and marketing. It's a malady that keeps many companies stuck in their funk, some of which never recover.

While hunkering down is a natural response to a tectonic event, there comes a time after the shaking stops to get up and get on with life. Whatever shape your house may be in, it won't repair itself. Somebody has to reinforce the walls and re-shingle the roof, both of which require resources.

"Many big companies are being too cautious with their cash by any measure of prudence," Zweig says. Are you?

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Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

Cashing in Online

Why do dead presidents have no value in the online world? In other words, why can I not pay cash online anywhere I want in the same way I can in the physical world?

For years now, when I am not busy serving paying clients, from time to time I bang the drum for my vision of making all online stores like brick and mortar stores where people can 'walk' in and pay cash. Now why is this so important for online retailers?

Online shopping is growing in popularity under current conditions, but it could grow even faster if the final barriers were eliminated. Enabling customers to pay cash online would eliminate barriers to online shopping posed by fears of:

1. Stolen credit card information

2. Identity theft

3. Invasion of privacy

Online merchants are missing out on shoppers who may never join the cashless society (UK statistics provided for illustration purposes) by not allowing shoppers to pay with cash:

1. 40% of the population doesn't have a credit card, yet 80% of online purchases are made with one

2. Not everyone can get a credit card - In 2000, 4 million 12-16 yr olds spent $6 billion

I saw an article in the Seattle Times about Amazon inking a deal with a partner to allow people to shop online and pay without a credit or debit card, and so I started to think "hurray!" - after four years somebody has finally realized the opportunity. I was so disappointed to find out that the 'solution' of serving people who do not want to pay with debit or credit card, was to allow people to pay directly from their bank account (ala PayPal) via a partner called BillMeLater.

As an entrepreneur and professional adviser, you would think I would be excited to hear that my vision still has not been widely implemented. I am excited, but at the same time I know that the true 'solution' is not workable for a new entrant.

What do you think?

@innovate