John Shepherd-Barron, who has died at the age of 84, was widely regarded as the inventor of the automated teller machine – ATM – or cash dispenser. Now used by millions worldwide, the ATM was described by Paul Volcker, former chairman of the US Federal Reserve, as the only worthwhile invention to come out of the financial services industry in years.

John Shepherd-Barron

It was in his bath one Saturday night in 1965, having reached his bank just a minute after it closed that lunchtime, that Shepherd-Barron had his eureka moment. If you could get a chocolate bar out of a machine at any time of day, why not banknotes?

Being chief executive of De La Rue Instruments, part of the London-based group which printed cheques and banknotes, he came up with a cheque coated with Carbon-14, or radiocarbon. When combined with a personal identification number – PIN – this would would allow a machine to identify a customer. When it was pointed out to him that Carbon-14 was mildly radioactive, he responded with dry Scottish humour: “I’ve worked out that you’d have to eat 136,000 cheques for it to have any effect on you.”

The Friday after his inspirational bath, he bumped into a senior executive of Barclays Bank, and asked for 90 seconds of his time. It took 85 seconds for the Barclays man to buy the idea.

Thinking of his National Service number, Shepherd-Barron considered six-digit PINs but his wife Caroline, daughter of Sir Kenneth Murray, a former chairman of the Royal Bank of Scotland, reckoned she and others would have trouble remembering more than four. And so the four-digit PIN number was born and the first cash dispenser unveiled outside Barclays Bank in Enfield, north London, on June 27, 1967 by Reg Varney, star of the British TV sitcom The Rag Trade.

Nicknamed “the robot cashier”, it gave out 10 one-pound notes, which, as Shepherd-Barron noted, “was enough for a good, wild weekend in those days.” Officially it was called a DACS – De La Rue Automatic Cash System. The term ATM would be coined later.

Years later the robot cashier became a cause for controversy. Shepherd -Barron had never patented his invention. Barclays’ lawyers had advised that a patent would mean disclosing the coding system so inviting crooks to crack the code. When Shepherd-Barron was awarded an OBE by the Queen in 2005 for “services to banking”, another Scot, James Goodfellow stepped forward. He too had played a key role in the development of cash machines and announced that he had a 1966 UK patent.

Mr Goodfellow is certainly credited with taking the ATM to another level by developing the encrypted plastic card and computerised PIN technology that are now used in close to two million ATMs. It is also true that even before the two Scots, others had thought of cash dispensers. American Luther George Simjian patented a hole-in-the-wall device which was tested by Citicorp in 1939 but it attracted little demand from customers.

The global ATM Industry Association – ATMIA – has no doubts. It credits Shepherd-Barron with the invention of the first functioning cash dispenser and describes him as “a technological visionary”. It has also compared him with Alexander Graham Bell, inventor of the telephone.

Soon after Barclays opened the first ATM, Shepherd-Barron took the idea to a conference of 2,000 US bankers in Miami, giving a sales brochure to each delegate. His speech was greeted, he said, as “a wacky European idea that wouldn’t sell in America” and 1,986 brochures were left behind on seats. One delegate who did take one, however, was from First Pennsylvania Bank, which asked for six of “these new-fangled contraptions”.

When he took his idea to Japan, he was told: thank you very much, but we are going to develop our own machines. However, we will pay royalties for your idea for seven years.

John Adrian Barron was born in 1925, in Shillong, known then as “the Scotland of the East” and now the capital of the Indian state of Meghalaya. His father Wilfrid Barron was a military marine engineer while his mother Dorothy “Dolly” Shepherd was a world-class tennis player using the surname Shepherd-Barron, which her son took on. She won the 1931 Wimbledon ladies’ doubles title.

Sent back to the UK with his nanny, young John considered himself “the last of the sons of the Raj”. Educated at Stowe school, Edinburgh University and Trinity College, Cambridge, his studies were interrupted by the second world war and he saw active service with the 6th Airborne Division in Burma and Palestine.

Joining the De La Rue group in 1950, one of his first successful ideas was to make Persil washing powder coupons look more like real money, to boost sales to housewives.

Living in Manhattan during the 1960s, Shepherd-Barron was impressed by Wells Fargo armoured vehicles transferring cash to and from banks and took the idea back to the UK. After a deal between De La Rue and Wells Fargo, he became the first chairman of a new subsidiary, Security Express, which saw sales rocket after Britain’s Great Train Robbery in 1963.

In 1985, he retired to a remote Scottish farmhouse where he enjoyed fishing, shooting and snail-farming and encouraged investment in the region as unpaid chairman of the Ross and Cromarty Enterprise. To keep predatory seals away from salmon farms, he invented a loudspeaker system that imitated the sound of a killer whale but he had to admit that it was less successful than his ATM idea and seemed to attract even more of the scoundrelly seals.

He is survived by his wife, whom he married in 1954, three sons and six grandchildren.

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