Banks and other ATM deployers view integration of ATMs with smartphones as key in the ongoing development of the ATM channel, said Ian Kerr, CEO of Level Four Software Ltd., a Dundee, Scotland-based software developer.

The growing use of smartphones will lead to cardless ATM cash withdrawals through the use of Near Field Communication in which the smartphone owner holds up his mobile phone to the ATM to complete a transaction without the need of a card, Kerr added.

He said the ATM industry already is experiencing the increased use of mobile phones in ATM transactions. They include First National Bank which is based in Johannesburg, South Africa.

The bank emails an SMS-text message that includes a temporary PIN to a mobile phone owner who has either lost or forgot his ATM card. The bank customer then is able to type in the temporary PIN at the ATM to make a cardless ATM withdrawal.

"Right now, we're just scratching the surface with the relationship between the mobile phone and the ATM," Kerr said.

Level Four recently released an industry survey titled, "Five Ways to Innovate at the ATM," an integration of ATMs with mobile phones was listed as a top priority for ATM deployers.

"Rather than seeing the ATM as competing with other channels, such as mobile and online, forward-thinking banks now view the channel as complementary," the survey found.

Other top priorities cited include: tailoring the ATM offering to meet the needs of the individual customer, offering new services at the ATM to boost revenue, increasing ATM security and moving forward with innovation.

Level Four surveyed ATM executives in 2009 and the top priority at the time was increasing ATM uptime. This year's results mean ATM deployers are more forward-thinking, Kerr said.  "And that is very encouraging," he added.