ATM Banking Technology In Nigeria: Literature Review

ATM Banking Technology In Nigeria: Literature Review


This chapter present a theoretical framework for the entire study. A review of related literature we considered relevant to simulating a voice aided ATM system. This chapter will cover the history of the conventional ATM and a voice aided ATM. It shall also tell the benefits of ATM to banks, government, society, customers, cardholders and economy. The problems of ATM in Nigeria shall not be left out, components, internal structure of ATM and uses of ATM.

The idea of self-service in retail banking developed through independent and simultaneous efforts in Japan, Sweden, the United Kingdom and the United States. In the USA, Luther George Simjian has been credited with developing and building the first automatic teller machine (which didn’t dispense cash). There is strong evidence to suggest that Simjian worked on this device before 1939 while his 132nd patent (US3079603) was first filed on 30 June 1960 (and granted 26 February 1963). The rollout of this machine, called Bankograph, was delayed by a couple of years, due in part to Simjian’s Reflectone Electronics Inc. being acquired by Universal Match Corporation. An experimental Bankograph was installed in New York City in 1939 by the City Bank of New York, but removed after 6 months due to the lack of customer acceptance. The Bankograph was an automated envelope deposit machine (accepting coins, cash and cheques) and did not have cash dispensing features.
The first ATM was put into use in 1959 in the Kingsdale Shopping Center in Upper Arlington, Ohio as an automated deposit device. This suburb of Columbus, Ohio created a shopping center where the Galbraith Farm used to be located that also featured the world’s first The Limited Store.
In simultaneous and independent efforts, engineers in Japan, Sweden, and Britain developed their own cash machines during the early 1960s. The first of these that was put into use was by Barclays Bank in Enfield Town in North London, United Kingdom, on 27 June 1968. This machine was the first in the UK and was used by English comedy actor Reg Varney, at the time so as to ensure maximum publicity for the machines that were to become main stream in the UK. This instance of the invention has been credited to John Shepherd-Barron of printing firm De La Rue, who was awarded an OBE in the 2005 New Year Honours. His design used paper cheques issued by a teller, marked with carbon-14 for machine readability and security that were matched with a personal identification number.

The Barclays-De La Rue machine (called De La Rue Automatic Cash System or DACS) beat the Swedish saving banks’ and a company called Metior’s machine (a device called Bankomat) by a mere nine days and Westminster Bank’s-Smith Industries-Chubb system (called Chubb MD2) by a month. The collaboration of a small start-up called Speytec and Midland Bank developed a third machine which was marketed after 1969 in Europe and the USA by the Burroughs Corporation. The patent for this device (GB1329964) was filed on September 1969 (and granted in 1973) by John David Edwards, Leonard Perkins, John Henry Donald, Peter Lee Chappell, Sean Benjamin Newcombe & Malcom David Roe.
Both the DACS and MD2 accepted only a single-use token or voucher which was retained by the machine while the Speytec worked with a card with a magnetic strip at the back. They used principles including Carbon-14 and low-coercivity magnetism in order to make fraud more difficult. The idea of a PIN stored on the card was developed by a British engineer working on the MD2 named James Goodfellow in 1965 (patent GB1197183 filed on 2 May 1966 with Anthony Davies). The essence of this system was that it enabled the verification of the customer with the debited account without human intervention. This patent is also the earliest instance of a complete “currency dispenser system” in the patent record. This patent was filed on 5 March 1968 in the USA (US 3543904) and granted on 1 December 1970. It had a profound influence on the industry as a whole. Not only did future entrants into the cash dispenser market such as NCR Corporation and IBM licence Goodfellow’s PIN system, but a number of later patents reference this patent as “Prior Art Device”.

After looking first hand at the experiences in Europe, in 1968 the networked ATM was pioneered in the US, in Dallas, Texas, by Donald Wetzel, who was a department head at an automated baggage-handling company called Docutel. Recognised by the United States Patent Office for having invented the ATM network are Fred J. Gentile and Jack Wu Chang, under US Patent # 3,833,885. On September 2, 1969, Chemical Bank installed the first ATM in the U.S. at its branch in Rockville Centre, New York. The first ATMs were designed to dispense a fixed amount of cash when a user inserted a specially coded card. A Chemical Bank advertisement boasted “On Sept. 2 our bank will open at 9:00 and never close again.” Chemical’s ATM, initially known as a Docuteller was designed by Donald Wetzel and his company Docutel. Chemical executives were initially hesitant about the electronic banking transition given the high cost of the early machines. Additionally, executives were concerned that customers would resist having machines handling their money. In 1995, the Smithsonian National Museum of American History recognised Docutel and Wetzel as the inventors of the networked ATM.
The first modern ATMs came into use in December 1972 in the UK; the IBM 2984 was designed at the request of Lloyds Bank. The 2984 CIT (Cash Issuing Terminal) was the first true Cashpoint, similar in function to today’s machines; Cashpoint is still a registered trademark of Lloyds TSB in the UK. All were online and issued a variable amount which was immediately deducted from the account. A small number of 2984s were supplied to a US bank. A couple of well known historical models of ATMs include the IBM 3624 and 473x series, Diebold 10xx and TABS 9000 series, NCR 1780 and earlier NCR 770 series.

In Nigeria, the first bank to introduce ATM was the Moribund Societe Generale (SGBN) in 1990. The trade name for SGBN’s ATM was “Cash Point 24”. One of the first generation banks then, First Bank Plc came on stream with their own ATM in December 1991, a year behind SGBN. They also gave a trade name “FIRST CASH” to their ATM. While that of SGBN was the drive-in-system that of the First Bank ATM was through-the-wall.
The world’s first Voice aided or talking ATM for the blind was an NCR machine unveiled by the Royal Bank of Canada on October 22, 1997 at a bank branch on the corner of Bank Street and Queen Street in Ottawa, Ontario. The talking ATM was a result of concerns Chris and Marie Stark, two blind customers, raised with the bank beginning in 1984. Their concerns turned into a discrimination complaint with the Canadian Human Rights Commission in 1991. The machine was manufactured by NCR and adapted by Ottawa based T-Base Communications at a cost of about $500,000 Canadian dollars. (

There are five types of ATM these are:
ONSITE ATM: – Is situated either within the branch premises or in very close proximity of the branch.

OFFSITE ATM: – Is not situated within the branch premises but is located at other places, such as shopping centres, airports, railways station and petrol stations.

WORKSITE ATM: -Is located within the premises of an organisation and is generally meant only for the employees of the organisation.

CASH DISPENSER: -Allows only cash withdraws, balance enquiry and mini statement requests, cash dispenser(CD) is generally used as the ATM, however the customer cannot deposit cash or cheques in a cash dispenser , whereas, they can use ATM both for cash withdraw and for depositing cash or cheque.

MOBILE ATM: – refers to an ATM that moves in various areas for the customers. Few private banks have introduced ATM on wheels.


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