A Tale of Two Industries: Self-Service in Banking and Restaurants

With PaneraWendy’s, and McDonald’s alike investing heavily in kiosks and mobile ordering, the restaurant industry is on the brink of adopting self order technology on a massive scale. There, of course, has been an outcry against the practice: technology eliminates jobs and undercuts the value of face-to-face interaction! And then, there are advocates who argue that self order is a natural progression towards empowering the guest and streamlining operations.

If we look back at this moment in 50 years’ time, what will we think? How will this tension between tradition and technology be resolved? We might begin to understand by looking at the history of the ATM…


The Birth of the ATM

The British banking industry faced a handful of existential crises in the 1950s and 60s: English labor unions were mounting pressure on them to limit hours; customers were forced to wait in long lines, often in the middle of their own work days; and, in order to be profitable, banks needed to attract new customers and then hold on to them long enough to upsell them loans and credit cards.

ATMs emerged from this tangle of business needs as a perfect solution in 1967. The new technology drew in more customers, quickly served existing customers – even on weekends – and accomplished these feats without depending on (expensive) labor. The ATM began to spread through Europe, Asia, and the United States.


The Backlash Against the ATM + It's Subsequent Rise to Dominance

People outside of the banking industry were at first doubtful of the ATM’s value.

“One Detroit artist told The New York Times in 1977 that she preferred face-to-face banking and that a number of her friends had machines eat their cards: “I’m suspicious,” she said. “At least the girl behind the window doesn’t die in the middle of a transaction.” A dubious banking exec in New York City told the paper that it was great that customer[s] could bank at 3 a.m., but “Where are you going to spend it at 3 a.m.?” (in New York in the 1970s, one suspects lots of places, actually)” (Smithsonian Magazine).

Banks’ relationships with their customers had long depended on one-to-one interactions at the local level. The ATM threatened that relationship, but then ultimately, transformed it. Customers began to identify with the bank brand rather than with the local branch. Customer loyalty was successfully transferred from a human being to a value proposition: convenience.

This transformation, in fact, proved to be quite an economic boon:

“As devices spread, this convenience steadily changed patterns of consumption, enabling unplanned weekend shopping and impromptu dining[…]The nature of work in bank branches also changed as employees relocated away from teller services and into sales. High-margin services and products like car insurance, credit cards, investment funds, and mortgages owe a debt to the outsourcing of ordinary banking to ATMs” (The Atlantic).


The ATM + the Self-Order Kiosk Today

More than 420,000 ATMs dot the American landscape, processing 3.2 billion transactions annually. Of course, technology and customer habits have continued to evolve. Mobile banking is on the rise, while some customers still prefer to walk into their local branch or go through the drive thru.

Banking industry analyst Nancy Bush told Smithsonian Magazine: “My mother banks entirely different than I bank, I bank entirely different from the kids of my friends, who never want to go into a bank… The banks have a tough job right now, which is to satisfy a number of constituencies, all of which have varying degrees of technological expertise.”

How do banks handle these groups of customers with very different preferences? They accommodate them all. ATMs have become a part of an evolving banking technology mix aiming to improve the customer experience and maximize efficiency.

Restaurant Self Order Kiosks could be interpreted as the latest development of the same historical trend that spawned the ATM. As consumers push for more convenience and speedier service, automation technology arises as a neat solution. One might even argue that the prevalence of self order in the restaurant industry is inevitable.

Just as ATMs had a positive economic ripple effect after some hesitation, Self Order Kiosks are likely to transform Americans’ relationship with restaurant brands and bring about unanticipated benefits. Already, it’s clear that consumers spend 15% more at the kiosk than at the counter, and there are bound to be more gains as labor shifts and adjusts to greater efficiency.


Smithsonian Magazine
The Atlantic


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