The term “Internet of Things,” also known as “IoT”, was first coined in 1999 by Kevin Ashton, MIT’s executive director of Auto-ID Labs. But the first IoT device was actually developed in the early 1980s at Carnegie Mellon University. Programmers installed sensors in the facility’s soda vending machine and connected the sensors to ARPANET — the precursor to the modern internet. Then they could check to see if soda bottles had been replaced and were cold enough before they made the trek to the very popular machine.Even though digital payments are on the rise, community financial institutions (CFIs) still need to maintain cash on hand at their branches and in their ATMs. Indeed, 30% of small business owners said the branch was their preferred channel, mainly because they need cash to operate their business, according to BAI’s 2024 Outlook: Small Business Banking Trends.It is a delicate balancing act, though, writes ESQ Data Solutions: “The challenge lies not in choosing between cash and digital but in optimizing cash management to align with modern payment behaviors. This requires a shift towards smart, AI-driven strategies that ensure ATMs remain efficient, cost-effective, and future-ready.”By the NumbersEven though digital payments are on the rise, consumers are actually using cash quite a lot, according to the Federal Reserve. A full 83% of adult consumers made a purchase with cash within the prior 30-day period during an October 2024 survey. Though it’s still small- and medium-sized business (SMB) owners that deal with cash the most, as 70% of cash coming into banks comes from SMBs, says Jodi Neiding, a vice president with Diebold Nixdorf. A majority of SMBs (75%) don’t mind going to the ATM to get cash. Smart ATMs, IoT, and Cash Recycling TechnologyCFIs can make sure they have enough cash on hand in their ATMs — without having so much that it hurts their liquidity — with the aid of IoT sensors and cash recycling capabilities in smart ATMs. Here’s how it works:Embedded sensors connected to the internet can automatically inform CFIs when cash levels are low or if cash is not being dispensed because something is wrong with the hardware — including if thieves tamper with it. Sensors can also let CFIs know when it’s time to service the ATM before anything breaks down.Sensors, in conjunction with predictive analytics software, can also ascertain peak cash demand patterns. This helps so the CFI won’t have any downtimes by employing cash recycling — using the same cassette within an ATM to both accept deposits and dispense cash withdrawals, thereby reducing the need for manual cash replenishment. The combination of these technologies can reduce ATM operation costs by up to 20% and costs to manually replenish cash by 75%, Neiding says.CFIs Leading the Way with Smart ATMs and Teller Cash RecyclingSeveral CFIs are already leveraging smart ATMs and teller cash recycling technologies to enhance their services and improve operational efficiency. Here are a few examples:
- Bank of Tennessee. Through their innovative DRIVE THRU Plus service, Bank of Tennessee offers Interactive Teller Machines (ITMs) that allow customers to perform over 70 different transactions, including cash withdrawals, deposits, and loan payments, with extended hours for added convenience.
- BAC Community Bank. Partnering with NextBranch, BAC Community Bank has deployed Hyosung ITMs and teller cash recyclers to streamline operations and provide remote video teller assistance. This partnership has improved service levels while reducing costs and staff workloads.
Looking ForwardATM management can become even more efficient, accurate, and secure as AI continues to evolve — particularly as AI-powered technology is paired with IoT, blockchain, and biometrics. This will enable CFIs to increase ATM uptime to new levels while mitigating potential risks in real time.As digital payments continue to grow, the role of cash remains vital, especially for SMBs that rely on it for daily operations. CFIs face the challenge of balancing cash availability with operational efficiency, but advancements in technology offer a promising solution. By leveraging smart ATMs equipped with IoT sensors, predictive analytics, and cash recycling capabilities, CFIs can optimize cash management, reduce costs, and enhance customer satisfaction.The future of cash management isn’t about choosing between cash and digital but about integrating innovative, AI-driven strategies to meet the evolving needs of businesses and consumers alike. With the right tools and technologies, CFIs can ensure they remain relevant, efficient, and ready for whatever the future holds.
