Wells Fargo says it will allow customers to use their smartphones to conduct automated teller machine transactions starting next year. The move comes as banks everywhere are under pressure to enhance their mobile offerings as more customers are doing their banking on smartphones. Patrick T. Fallon
Wells Fargo says it will allow customers to use their smartphones to conduct automated teller machine transactions starting next year. The move comes as banks everywhere are under pressure to enhance their mobile offerings as more customers are doing their banking on smartphones. Patrick T. Fallon

Bank Watch

News and notes on Charlotte's banks and the financial industry

Bank Watch

Getting ATM cash without a card? It’s on the way

December 09, 2015 2:28 PM

Your ATM card isn’t yet obsolete, but it may be getting there.

As more consumers rely on their smartphones for banking, lenders are introducing technology that will allow you to conduct an ATM transaction with your phone – eliminating the need to swipe plastic.

On Wednesday, San Francisco-based Wells Fargo became the latest bank to announce plans for such technology. Customers will be able to start a transaction, such as withdrawing cash, on their phone before heading to an automated teller machine. Customers will complete their transaction at the ATM, where they will enter their PIN and a one-time code generated by the smartphone app.

Wells Fargo said its “virtual card” service will be available in the late third quarter or early fourth quarter of 2016. Wells Fargo customers will still have the option of using plastic cards at the ATMs.

Really what we’re trying to do is provide our customers choice.

Jonathan Velline, head of Wells Fargo’s ATM and branch strategy

“Really what we’re trying to do is provide our customers choice,” said Jonathan Velline, head of Wells Fargo’s ATM and branch strategy.

Charlotte-based Bank of America is also testing cardless-ATM capabilities, spokeswoman Betty Riess said Wednesday. The bank plans to start piloting the service with customers in the first half of next year, Riess said, declining to provide specifics on the technology.

“Our customers expect innovation and convenience,” she said.

Experts note that cardless technology, which other banks elsewhere in the U.S. have introduced in recent years, might go a long way in helping cut down on “skimming crimes” at ATMs.

In such crimes, criminals install devices on ATMs to steal customers’ card data. Criminals have made widespread use of the devices in Charlotte and elsewhere to produce counterfeit cards that are linked to customers’ bank accounts.

Ed O’Brien, a banking analyst for Maynard, Mass.-based Mercator Advisory Group, said banks are eager to crack down on skimming.

Phone transactions that rely on one-time codes might help thwart criminals, but it’s probably not a silver bullet, says Ed O’Brien, a banking analyst with Mercator Advisory Group.

Phone transactions that rely on one-time codes might help thwart criminals, but it’s probably not a silver bullet, O’Brien said.

“It’s much, much more difficult – I won’t say impossible – to get around the system,” he said.

As more customers adopt banks’ mobile apps, consumer advocates are raising other concerns about the cardless technology. “Are there additional fees that are going to be tied to it?” asked Ira Rheingold, executive director of the National Association of Consumer Advocates.

Wells Fargo spokeswoman Hilary O’Byrne said the bank will not charge its customers to use the cardless service.

The push into cardless ATM transactions also underscores the growing competition among banks to offer customers the newest mobile capabilities. The pressure is also on banks to compete with financial services startups that have become a growing threat.

In a TV interview with journalist Charlie Rose this month, Bank of America CEO Brian Moynihan said his bank has spent about $700 million in mobile technology over the past five years.

Highlighting how dependent the bank has become on mobile technology, Moynihan said Bank of America would have a major capacity problem if its customers ever stopped using mobile phones over security concerns.

Moynihan said the volume of checks being deposited on the bank’s mobile platform alone is equivalent to what would normally be handled by nearly 700 branches. The bank doesn’t have the capacity to open that many branches, he said.

No sooner do banks roll out cardless-transaction technology than they start testing their next innovation.

Even as Wells Fargo develops the cardless service it will roll out next year, the bank is looking toward a day when you can just tap your phone on the ATM.

That feature, which Wells Fargo began piloting with employees about a month ago, will work with smartphones equipped with digital wallet technology, Velline said. It’s not clear when it will be available to customers, he said.

Deon Roberts: 704-358-5248, @DeonERoberts

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