Big Changes on the Way for ATMs
The ATM, or hole-in-the-wall as it is affectionately known, has been a part of the high-street banking environment for around 40 years.
It has become an indispensable part of daily life and yet, over the years, the technology has remained surprisingly static. But this is about to change for a number of reasons, both technical and commercial.
The foremost driver of ATM development is one that has been forced on banking. With the end of support of IBM's OS2, the de facto operating system used by the big ATM manufacturers, banks are looking further afield for a common operating system. Microsoft Windows, it seems, is the only practical choice.
MOVE TO WINDOWSAlliance & Leicester's head of the ATM business unit Wendy Luczwyco is one of many tasked with the migration from OS2 to a Windows platform. "It's a very big project requiring a lot of resource, not only from the IT department but throughout the whole business. OS2 is a stable operating system and we've never had any significant issues with it, whereas Windows will require greater management," she said.
Luczwyco added: "In terms of getting the appropriate resource to complete the project it's actually quite difficult. There are so many other projects in the pipeline within the bank and the ATM migration has to compete with these for attention. The migration to Windows will require an upgrade to the PC core in each ATM and in some cases we will have to replace the whole machine to do this."
On top of this are plans to move to a common communication standard - XFS - which allows core banking systems to operate with any ATM machine. The practice of having to choose proprietary applications owned and maintained by the ATM hardware providers could now be replaced with a separate hardware and software strategy.
There are also business drivers for ATM development. Retail banking has undergone a period of consolidation and the difference in services between the high-street brands is almost non-existent. As a result, they are struggling to build brand differentiation.
The opportunity to build on core 'cash and dash' services at the hole-in-the-wall will allow banks to offer differentiated services. There is also the possibility of introducing individually targeted third-party advertising at the ATM to open up a new revenue stream for the bank.
Luczwyco acknowledges that to justify the cost of migration, she also needs to consider offering these sorts of services to Alliance & Leicester customers.
She said: "Windows is an enabler in so far as it opens up opportunities that we didn't have before such as running adverts on our ATMs or offering foreign currency dispensing, although again there is a resource issue here."
A SERVICES ECONOMYAccording to Martin McMillan, business development director at ATM software development company Level Four, there are a number of personalisation opportunities available to banks. It would be possible for example for a customer to set up their own ATM dashboard from home, to minimise time spent at the hole in the wall by cutting out menu options they never use.
It would be possible to continually update screen menus based on time or location - such as Wimbledon promotions on ATMs around southwest London a couple of weeks before the event takes place. Other services could be offered at the ATM, such as the latest World Cup cricket scores printed out on a customer's receipt.
One of the barriers to these changes is the testing that each bank has to go through every time they upgrade their ATM system. At one time, this was done manually at every ATM, which was clearly costly and time consuming. The rollout of cheap broadband connectivity has allowed banks to easily switch from manual to automatic downloading and testing.
For Luczwyco the migration to Windows means the bank has been able to modernise the network infrastructure to its ATMs. "Part of the migration involves switching to a new telecom platform based around broadband IP to the ATMs. This will be a significant cost-saving on our previous network and will allow us to download software remotely to the ATMs. Previously, software had to be loaded manually at every ATM," she said.
According to McMillan, ATM performance will inevitably suffer, as banks load their cashpoints with more software. It's a case of replacing something simple but limited in scope with something considerably more complex that offers a variety of sophisticated and engaging opportunities. It will take a while for the operations that support these new ATM systems to catch up.
For Luczwyco this core touchpoint is becoming a gradually higher per-unit cost, which she knows will have to earn its keep in more ways than just distributing cash. "The number of ATMs is growing faster than the number of transactions. This means the average number of transactions on each machine is falling and banks will have to look at the cost of ownership and what other services ATMs can provide, such as ticketing or pre-pay cards," she said.