Itautec sets sights on U.S. for ATM expansion

 
March 18, 2010 | by
How many additional ATM manufacturers can the U.S. market support? It's the question industry analysts and journalists ponder, but it's one ATM manufacturers like Brazil's Itautec are quick to answer.
 
Mauricio Guizelli, global commercial director from Itautec, says the answer is easy: As many as the United States' bankers and retailers want to buy from them.
 
Simply put, the size of the U.S. market makes it attractive, and it remains the world's No. 1 financial force, despite bank mergers and acquisitions.
 
"The answer is ‘quantity,'" Guizelli said. "Before the economic problem, the U.S. market was growing, and we are already right now starting to feel the market turn around again."
 
The U.S. market continues to show room for growth, Guizelli says. And his view is not an unpopular one. ATM manufacturers from all corners of the globe are trying to penetrate the United States. China's GRG Banking Equipment Co. Ltd., Korea's Nautilus Hyosung and Germany-based Wincor Nixdorf AG are just three that claim to have already made inroads in the U.S. market. Wincor, whose strength being the most evident, has made a name for itself among U.S. bankers via deposit automation technology — technology that over the last five years Wincor has worked closely with California-based Wells Fargo ($1.2 trillion in assets) to develop.
 
Nautilus Hyosung also has made strides. Once focused solely on the U.S. retail market — a niche the company targeted through its distributorship with Tranax Technologies Inc. — Nautilus in 2007 secured an ATM deal with Citibank and reportedly has been testing its ATMs with another large U.S. FI.
 
As for GRG, though the company has not announced any definitive FI deals in the U.S., it holds a strong position in China with some of the country's top FIs, and GRG says it expects its expertise in advanced ATM functions to help it win over new customers in the United States.
 
Itautec expects its company story to be better. The $1 billion technology and electronics-equipment manufacturer employs 6,000 people in Brazil, Latin America, Portugal, Spain, and the United States. Beyond ATMs, Itautec manufactures network servers, laptops, and a range of banking and retail automation equipment, and also touts distributor label for IBM and Apple in select markets. Itautec sells its products in other parts of Europe, such as Italy, and has recently seen double-digit sales growth in Africa.
 
Owned by Itaúsa, a holding company with interests in markets crossing financial, real estate, wood panels, pottery, metal, health, chemicals and electronics, Itautec was created in 1979 as the electronics arm of Banco Itaú, which in 2008 became part of Itaú Unibanco Holding S.A, the 10th largest bank in the world (based on market value).
 
Brazil's late '70s political structure offered Itautec some advantages, says Marcio Weltman Dvorkin, business development manager for Itautec America in Miami. As a closed-off market, Brazil developed its own technology, and advances in the financial space exploded.
 
"In the Brazilian market, we do not have ‘off-the-shelf' machines," Weltman Dvorkin said. "Everything is custom made. We design and make all of the machines, and can build those machines according to a customer's requests. So if the ATM needs to be a certain size, I can make a machine wider, thinner. I think that is our main advantage."
 
While competitors Diebold Inc. and NCR Corp. produce ATMs on a large, off-the-shelf scale, Weltman Dvorkin says Itautec is building ATMs and banking equipment that adapts to customers' needs.
 
Windows, deposits and a changing market
 
The advent of Windows and advanced ATM functions, such as automated deposits, could give players like Itautec opportunity, says Ian Kerr, CEO of United Kingdom-based ATM-testing-software provider Level Four.
 
"I have not seen a great deal of deployment of Itautec machines to date in the United States, but I think they could make some waves in the market," he said. "I see more FIs interested in having true multivendor (ATM) networks, and we're doing testing on all kinds of hardware, including testing with one bank on Nautilus Hyosung equipment."
 
In Brazil, Level Four works with TecBan, which specializes in bank self-service networks, for ATM testing with 35 Brazilian FIs. In that market, Kerr says he has seen how advanced many of Itautec's solutions are.
 
"TecBan did some interesting stuff with ATM marketing, and with BRIDGE:test we did some testing on (TecBan's) Itautec machines," Kerr said. "Our perspective is that the Itautec equipment is high-performing, advanced and XFS-compliant. It is truly open."
 
But Itautec faces tough competition, even in Brazil.
 
According to London-based Retail Banking Research Ltd., Diebold remains Brazil's No. 1 ATM supplier. Itautec, with 29 percent of the Brazilian market share, is No. 2. NCR is No. 4, behind Perto, which holds the No. 3 position. In November 2009, NCR opened its own manufacturing base in Manaus, Brazil, to try to up its position in the market.   
 
Coming to America — the U.S., that is
 
Itautec has had a presence in the United States for several years through ATM contracts with U.S. Air Force bases and casinos — deals signed and overseen by Itautec's Germany-based distributor, CountR Cash Systems. But the company has not made significant inroads with financial institutions or retailers in North America.
 
Some of that focused growth has been by design, Guizelli says.
 
"Five years ago, we discussed a niche market in the States that would be for ATMs in casinos," Guizelli said. "We started to develop a unique product to serve this market and we had to work with all of the unique regulations for the machines in those markets."
 
Now the company is ready to take what it has learned about the U.S. market and branch out to some of the country's larger FIs. Guizelli says the U.S. market offers more room for growth.
 
"I think that in the next few years the banks and everybody that uses ATMs will return to the level they were before the economic crisis," he said. "There is no question that the U.S. is still the largest economy. If you want to be a worldwide competitor, you've got to be in the U.S. market. No question about it."

Topics: ATM Innovation , Bank / Credit Union , Deposits / Check 21 , Latin America , Manufacturers , North America , Public Companies , Trends / Statistics

Companies: NCR Financial Solutions , Tranax Technologies, Inc. , Diebold, Incorporated , Itautec , Clear2Pay , Nautilus Hyosung America, Inc. , GRG Banking Equipment (HK) Co., Ltd , Wincor Nixdorf International


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