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Brazilian banks look to Linux for ATMs
May 12, 2008
Ulric Rindebro is a regularly contributor to ATM Marketplace. To submit a comment about this article, please contact the editor.
Brazilian banking giant Banco do Brasil this year is preparing to start a massive migration of one of the world's biggest ATM fleets to the GNU/Linux operating system. The news is big for the ATM industry, since Brazil is the world's third-largest ATM market — trailing only Japan and the United States in its number of placed units.
And while most financial institutions of substantial proportion are moving or have moved their ATM fleets from OS/2 to Windows, Banco do Brasil and a handful of other Brazilian banks are opting for Linux — a free and open OS invented by Finland's Linus Thorvalds.
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The move a Linux OS, industry experts say, will allow banks in Brazil to have more control, since most will likely develop their own ATM software or lean on multivendor solutions, rather than having to be so proprietary-driven. An open view
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Although often overshadowed by Microsoft's Windows, Linux is no feeble competitor. It's supported by giant software players such as IBM, Oracle and Hewlett-Packard. The Linux push by Banco do Brasil, Latin America's largest bank with an ATM estate of around 40,000 machines, will likely only help the Linux cause. Banco do Brasil has about 25 million clients that use its ATMs, which see close to 450 million transactions per month. "For us, the ATM is the main channel of communication with the client, and it represents more than 50 percent of the electronic transactions made by clients," said José Luis Prola Salinas, technology and logistics vice president of Banco do Brasil. The bank in 2005 initiated its Linux-migration testing for its ATMs. This year, Banco do Brasil kicked off its pilot tests. The launch to Linux is expected to take about two years, Prola Salinas says. The bank's goal is to have around 70 percent of its ATM fleet running Linux by 2010. The remaining 30 percent is too old, the bank says, to operate with Linux. Those machines, Prola Salinas says, will gradually be replaced, and when they are, Linux will be Banco do Brasil's new OS.
Thus, the entire ATM fleet will eventually be running on Linux.
Others in Brazil also are expected to make a move toward Linux in coming years, likely the result of Banco do Brasil's new ownership of several of the country's smaller, government-controlled banks.
"The migration process of the incorporated banks will be a second phase, after the migration of Banco do Brasil's machines," Prola Salinas said. A helping hand, from the government The Brazilian federal government is Banco do Brasil's controlling, majority shareholder. And since Brazil's president, Luiz Inácio da Silva has been pushing for federally controlled companies and agencies to abandon proprietary software for open-source systems like Linux, Banco do Brasil's migration to Linux does not come as a surprise. The final decision to change to Linux was, however, made by the bank itself. "We are the first in developing a solution completely in open code," Prola Salinas said.
The bank in 2003 began migrating its servers to Linux. Today all of its 5,500 servers are running Linux. The government's push for open-source adoption is expected to reduce costs and dependence on multinational corporations, namely Microsoft, as well as foster a local software industry. In fact, Brazil's governing leaders are so committed to the effort that they have been calling upon other emerging markets to take similar measures. "Linux is advancing a lot in Brazil," said Wanderley Cavassin, technology director and founder of Mandriva Conectiva, a Linux distributor and developer in Brazil.
The Linux ATM pioneer among Brazilian banks was Banrisul. Banrisul, which initiated its Linux switch in December 2000; it completed the migration in mid 2003. Today, Banrisul's more than 2,500 ATMs all run on Linux. Banrisul executives say the move was a technical decision, and not part of a complete software change at the bank. "The machines were running on DOS and a migration to Windows would have required a very significant investment," said Cavassin, whose company worked closely with Banrisul on the migration project. "With Linux, there were cost savings." Banco do Brasil's migration is expected to cost BRL 600,000 (U.S. $324,752) annually, but that amount should be offset by cost savings of around BRL 7 million (U.S. $4 million) in 2008 and 2009. The bank then expects to realize annual savings of between BRL 12 million ($7 million) and BRL 15 million (U.S. $9 million). "The main reason is economic, keeping in mind that banks in Brazil have huge networks with thousands of ATMs and branches," Cavassin said.
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