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When Did That Happen?

The Bank That Will Not Close

by Dan Wohlbruck

Generic image illustrating the article
  Dan takes us back in time again, to the birth of the ATM. That was in this month in 1969.  

“On September 3, 1969,” Chemical Bank advertised at the time, “our branch will open its doors at 9:00 and we will never close again!” On that day, the Automatic Teller Machine was born. Although there were earlier attempts, the ATM with its ubiquitous magnetic strip was made available to the public forty-two years ago this month.

Hoodlums and Prostitutes

Technically, the Chemical Bank ATM was an electronic off-line cash dispensing machine, manufactured by the DocuTel Corporation. You inserted your card into the slot and the machine read the card’s magnetic strip containing your account information, and dispensed the cash. How the first ATM came into being and the way it evolved makes for an interesting story about technology and its adoption.

The idea for a mechanical device to perform financial transactions really dates back another 30 years, and was the inspiration of Luther George Simjian. Simjian was an inventor par excellence. His inventions included, according to the MIT website, the self-focusing camera, a flight speed indicator for airplanes, an automatic postage metering machine, teleprompter, Range Estimation Trainer, and “...contributions to the evolution of the Bankmatic automatic teller machine (ATM).” In 1939, Simjian received multiple patents for his machine and convinced a New York bank to give it a try.

It was a flop. The machine was discontinued after six months because of lack of use. Simjian recalled that it was accessed primarily after hours by a few hoodlums and prostitutes. An ignominious beginning.

The next early adopter was the Barclays Bank in 1967, and their machine was the inspiration of inventor John Shepherd-Barron. In an interview with ATM Industry Association Chief Executive Mike Lee published on the association’s website, Barron recalled “being infuriated that I could not always get access to my money when I needed it, especially over weekends when banks were closed.... I started thinking of a way of getting money around the clock.”

Shepherd-Barron’s machine was more successful. Barclays ordered six of the machines, and upon their successful installation, they ordered fifty more. But this machine was mechanical, not electronic, so it was not going to be able to lead to what we today think of when we say ATM. Despite its earlier introduction and the insistence by the British press that Shepherd-Barrons’s machine was the first ATM, this DACS (De La Rue Automatic Cash System), as it was called, was really just another precursor to the machine that can fairly be called the first ATM.

That first ATM, though, had to wait for DocuTel, and DocuTel didn’t even exist yet.

The First ATM

It wasn’t until 1967 that DocuTel was created as a spinoff of Recognition Equipment Inc., which produced baggage handling equipment for airline terminals. An ATM Marketplace article reports:

“Legend has it that REI employee Don Wetzel had seen similar cash dispensing machines in Europe and believed a version of them would work in the U.S. Wire magazine reported in 1993 that Wetzel was waiting in a long line at a Texas bank when he got the inspiration to develop an electronic banking machine.

“Whatever the case, DocuTel researched the possibilities and found that, despite bankers’ beliefs to the contrary, people preferred speed, convenience and confidentiality over personal, face-to-face service.

“Therefore, Wetzel, along with engineers Tom Barnes and George Chastain, set about creating such a machine—which cost more than $4 million to develop.”

As well as the electronics, the Docuteller’s components were a MICR printer to record the transaction in such a way that it could be understood by the bank’s other equipment, and the magnetic strip to hold the appropriate account number to store the amount that the customer had received, the routing and transit number of the bank, and the date.

The capabilities of the ATM advanced rapidly. DocuTel’s Total Teller machine also accepted deposits and made cash transfers from one account to another. It was unveiled in 1971. In four years since the company had come into existence, DocuTel owned the American market for ATMs. But this success was not to last. Before the decade was out, competition and complacency doomed the company. Before the end of the 1980s, DocuTel, the innovator of the electronic ATM, was no more. The company from Irving, Texas, was overtaken and undone by their better-known competitors IBM, NCR, and Diebold.

Today there are almost 2 million ATMs worldwide installed from McMurdo Sound in Antarctica to North of the Artic Circle in Norway.

It began over 40 years ago in New York—and that’s when it happened.

Dan Wohlbruck has over 30 years of experience with computers, with over 25 years of business and project management experience in the life and health insurance industry. He has written articles for a variety of trade magazines and websites. He is currently hard at work on a book on the history of data processing.

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