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Most of that change is attributed to the widespread use of Microsoft Corp.'s Windows operating system. The International Data Corp. estimates that Windows holds about 90 percent of the client operating system market.

In the ATM world, Windows' emergence has necessitated a shift in thinking, practice and implementation.

It's a high-level discussion, but one that ATM manufacturers like Dayton, Ohio-based NCR Corp. have focused a great deal of attention on in recent years.

Steve Risto, Americas director of NCR's Aptra Software Center of Expertise, says the shift to Windows has not only created a niche for multivendor software players, but opened doors for holistic banking initiatives.

"We've had to look at our business in a totally different way," Risto said. "So the transformation for any hardware vendor has been a rather significant opportunity - an opportunity that has flowed to our abilities as a vendor to sell services, hardware and software, and helped us answer questions about new opportunities."

Put simply, software advances have given birth to functional needs.

NCR, Diebold and Wincor Nixdorf  - all kings in the FI space - are approaching the ATM with software in mind.

"(ATM deployers) have challenges across the board because of software, as far as integrating their CRM, new transactions. And that has given us opportunities for business," Risto said. "The biggest differentiator (in the manufacturing space) is whether you'll be able to provide a comprehensive solution, because customers still want a complete solution. Multivendor software is just part of it." (Read articles about CRM.)

In the future, Risto said, the market will provide more opportunity for partners and niche players who can fill specific needs.

"Software distribution companies are providing a solution for the ATM, but they aren't trying to compete in the ATM space," he said. "They're just working with traditional ATM players."

Rick DuVall of Omaha, Neb.-based ACI Worldwide Inc. said ATM manufacturers that want to remain competitive have to take an interest in software and collaborative relationships.

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"If they want to keep the same share they have today, they're going to have to care about their software more than they used to," he said. "From a philosophical standpoint, I think some (manufacturing) companies are more interested in multivendor software than others, because they see it being more strategic."

The separation or, more specifically, liberation of software from ATM hardware is giving financial institutions more opportunity, and that creates a space for other players.

"It allows banks to purchase hardware from one vendor and software from a totally different vendor," DuVall said. "And it's just my perspective, but I think it's intuitive that the business is going to become much more competitive, because you have companies like KAL (Korala Associates Ltd.) and Phoenix Interactive that don't care what ATMs you want to buy. Either way, they can put their software on your machines."

While open platforms are stiffening the competition for manufacturers, they're leveling the playing field for FIs, said Aravinda Korala, chief executive of Edinburgh, Scotland-based multivendor software provider KAL. Software forces FIs to think beyond basic cash-dispense and into the arenas of customer relationship management, personalization and cross-channel integration.

"The big banks can afford to be more visionary about this stuff," he said. "They changed a long time ago."

Now multivendor software is opening doors for smaller FIs, Korala said. And though it's difficult to predict when the majority of U.S. FI ATMs will stand on level ground, change is already evident in Europe, where the migration from OS/2 to Windows is nearly complete, said Martin Macmillan, CEO of ATM software specialist Level Four Software Ltd.

In the United Kingdom, Nationwide Building Society, which operates 2,300 NCR and Wincor ATMs, installed KAL's Kalignite NDC software platform across its network in 2004. Kalignite replaced NCR's Aptra and Wincor's ProCash software.

What's Important The move to Windows is opening the ATM playing field to more diverse providers and is expected to enhance collaboration between manufacturers and software providers. Manufacturers, in order to maintain a competitive edge, are changing the way they view, service and market hardware. FIs in the U.S. have yet to realize the potential Windows offers the ATM channel. In Europe, FIs have been much more agressive.

Korala said that shift allowed the bank to launch common business functionality across all of its channels. And in Tokyo, where Shinsei Bank in January 2006 became the first Japanese FI to support the international XFS standard, Kalignite is used to provide cash-recycling, advertising, software distribution and remote ATM monitoring.

"One of the things in our industry that made us stand out was that we were able to add different functions to the ATM," said Steve Hensley, KAL's vice president of sales and marketing. "I think it's important to know, when we talk about multivendor, that we're talking about a platform that can run with about 26 vendors - NCR, Wincor, etc. Now banks can start to consider depositing checks, etc., at the ATM without completely replacing the existing ATM. You have one platform to manage all devices."

Like KAL, however, the United Kingdom's Level Four sees differing perspectives on either side of the pond.

"You've got a mixture of solutions in the ATM market," said Nigel Walsh, executive chairman at Level Four. "You've got the standard ATM solutions - proprietary solutions that are primarily in the U.S. - and then you also have a lot of banks that have built their own solutions. Both have the same problems because of the move from OS/2 to Windows."

One problem: FIs don't understand how to take full advantage of Windows.

"In the U.S., the majority of banks are making a Windows copy of what they had on OS/2 machines. In Europe, more banks are looking to deploy more advanced architecture," Walsh said. 

He added that the market needs to focus its attention on "innovations to create new solutions." And though IFX opens opportunities, it's not the whole solution. (Read articles about IFX.)

Besides, not all FIs want the same thing.

"The market really falls into two camps," Walsh said. "The multichannel camp, which has sophisticated branch networks, really wants to bring the ATM in from the cold. � The other camp is the commodity product camp that is looking to drive down the cost of cash dispensing through third parties."

For members of the latter, advanced functions, which necessitate software enhancements, aren't a priority, said Paragon Application Systems' Kathy Cameron. In fact, she estimates that only 25 percent to 30 percent of U.S. FIs have moved their ATMs from OS/2 to Windows.

"I think a lot are waiting because of fear. And many of them just want a black box that dispenses money, so investing in expensive upgrades doesn't make sense for them."

Read also, IBM bids OS/2 farewell and NCR, Diebold pursue other avenues in wake of dropping ATM profits.