Why ATMs Are Thriving: The Surprising Role of Cash for Young Consumers

Why ATMs are Thriving Despite Digital Predictions

Surprisingly, while many industry experts have forecasted the demise of traditional banking methods, ATMs are proving remarkably resilient, particularly among millennial users. In a world where digital transactions dominate, cash still holds an important place in our financial landscape, especially for credit union members.

The Importance of Physical Banking Touchpoints

A recent report by PYMNTS Intelligence and Velera found that a significant portion of credit union members, specifically 51%, prefer in-person interactions for their banking needs. This isn’t merely nostalgia for old habits; it's a crucial part of relationship banking and trust building. Interestingly, baby boomers lead in this preference, as around 65% still favor engaging face-to-face for their banking.

These findings highlight a duality in banking preferences: while the rise of digital banking continues to attract younger generations, mature customers show a strong inclination towards traditional banking methods. Consequently, the banking sector faces a pivotal choice—should they abandon branches and ATMs altogether in favor of a fully digital ecosystem? The answer seems to lie in the balance between the two.

ATMs as Essential Banking Tools

Data from the same report shows that a solid 26% of credit union members utilize ATMs multiple times per week, primarily for cash withdrawals. Notably, older millennials are increasingly turning to ATMs for both deposits and withdrawals. This signals that cash access remains a vital component of their financial dealings.

The implication for credit unions is clear: Rather than succumbing to a fully digitized landscape, they must leverage their ATMs and physical branches as complimentary assets to their digital platforms. Banks should reinvent their infrastructures to create harmony between virtual and real-life banking experiences.

A Case Study: Navy Federal Credit Union

One institution that exemplifies this matured strategy is Navy Federal Credit Union. In spite of the general trend of bank closures, they opened a new branch at Fort Irwin, California, aimed at serving over 10,000 members, many of whom are linked to the local military base. Its expansion signals a commitment to provide physical services while recognizing the need for basic financial access in communities where traditional entities have retreated.

Reimagining the Branch Experience

If credit unions and banks approach their branches as hubs for higher-value interactions—like complex financial discussions, personal advice sessions, and financial literacy programs—they could greatly enhance their relevance to all age groups, including millennials and Gen Z. As technology advances, in-person banking may be reshaped into exciting experiences that cater to a youthful clientele, all while upholding traditional, trusted methods.

What’s Next for Banking?

As 2025 approaches, it’s clear that banking preferences are evolving. Millennial and Gen Z customers, who comprise a substantial portion of the financial market, are redefining what banking looks like. While 92% of Gen Z members prefer mobile banking applications, 81% of millennials still prioritize high-quality customer service—a blend of expectations that poses new challenges and opportunities for banks.

In addition to technological integrations like fintech solutions and crypto inclusion, financial institutions must remain grounded in the principles of trust, transparency, and human interaction. By creating a seamless blend of digital convenience and human touchpoints, banks can forge long-term relationships with their clients while evolving with their changing needs.

A Call to Action

For business owners in the $2M-10M annual revenue range, understanding the significance of both physical and digital banking tools is vital as you scale your operations. Invest in technologies that enhance engagement and explore strategies to harmonize branches with online banking to create a cohesive experience that resonates with both current and prospective clients.