As a professional blogger with a lengthy background in payment platforms as well as in networking, I happen to believe I am associated with a technology area that holds perhaps the greatest promise of change. And a dramatic one at that, as ATMs and the networks of ATMs we have deployed have reached the crossroads, putting all that we have done on a collision course with two powerful forces dominating much of what is blossoming within the IT industry — mobile devices and the cloud.
Readers who have followed my posts know that I believe cash will be with us for many years to come. I recognize that networks of ATMs will continue to proliferate, perhaps not evenly across all regions, and that the price of ATMs will come down dramatically. I also believe that ATMs will become less complex even as family members take on a hybrid appearance, working alongside non-traditional delivery units.
And I believe that security, manageability and to some extent, a greater reliance on automation will continue to capture the attention of CIOs and business unit managers. If my posts have had you wondering where I was heading — and perhaps my vision was not so easily recognized — I am sure you have all followed my enthusiasm about all of the above points.
So let me change gears a little and drill into some specifics. And in so doing let me just highlight a couple of posts and articles that have appeared in the media of late. In a June 16, 2012, article, titled "Cardless ATMs on the way," the Australian newspaper The Sydney Morning Herald reported that "contactless ATMs have already started to appear in Europe. People can wave their cards across the machines' reader instead of inserting them, saving queuing times.
This was stated even as the writer noted that Australian banks WestPac and NAB were following initiatives in the UK that included the support of mobile phone apps that "meant people could leave their wallets at home or withdraw cash if their cards were lost or stolen."
However, it wasn't until I read the news release from NCR that appeared on ATMmarketplace.com only a few days ago that it all started to add up: It told of how "NCR has developed software that lets bank customers set up cash withdrawal using their mobile devices — then complete the transaction at the ATM by scanning a 2-D Quick Response (QR) code with the phone. No card, no PIN (well sort of) — and voilà — cash in under 10 seconds."
Value to the consumer? Ease; the convenience that comes with getting at our cash quickly. Value to the bank? Obvious: "There's no mag stripe to skim, no PIN number to record."
So, how does this NCR solution really work? Well, you first have to download an app to your camera-equipped smartphone. No big deal here, as I don't think a camera-less phone qualifies these days as a smart phone. Once you access the installed app, you enter your PIN, select the account you want to withdraw your money from, enter the amount, and then find an ATM displaying a 2-D QR image.
The process then works opposite to what I had thought: Your smartphone snaps a photo of the 2-D QR image, which simply identifies the ATM to the network the smartphone is connected to, and once validated, the ATM dispenses the cash. Confirmation is then displayed on your smartphone.
All quite simple — and the ATM was passive throughout the whole transaction. All that happened is that it received a command to issue so much cash — it never knew the identity of who made the request. Cool.
The process potentially heralds a new way to interact with ATMs. And it's one that I can certainly identify with, as it fits well with what I believe is happening with ATM costs. An ATM capable of supporting this functionality is certainly not going to cost very much.
These ATMs aren't all that smart; they aren't loaded with an overly complex operating system and client application. At a time when our phones are getting smarter, ATMs look to be heading the other way. In fact, they may not be running anything closely resembling the type of operating systems we typically associate with an ATM, but rather something much more basic with fewer moving parts, and for me, a lot more reliability.
Now I am not suggesting that all ATMs in the network will be of this type, but certainly if the market develops the way I believe it will, there's no accounting for how big the percentage might become.
"The cloud, or rather, massive central servers that can be used to save data, are revolutionizing technology. Consumers and businesses are increasingly choosing to store their data remotely. They can then use small mobile devices, no matter where they are, to access that data," said the article "How investors can make money off the 'cloud'" that appeared in the June 17, 2012, issue of USAToday.
For the moment, it's a lot easier to develop my argument if we stick to private clouds, but the story stays the same. Phones are smarter, ATMs less so, and the processing is abstracted and moved to a resource that's less expensive, and with an elasticity of provisioning undaunted by any possible peaks that may suddenly occur. Cool!
A more recent article posted to ATMmarketplace, "The cloud: on the horizon for ATMs?" observed that "cloud technology has been a part of the ATM landscape for ten years or more in software as a service applications. And the reason is simple: economics."
For years, what effectively has been happening when it comes to how payment platforms have been established is that there's been little direct awareness of where, and with whom, most transactions originating at any given ATM have been processed. Indeed, for any given whiteboard presentation to CIOs, all that is a part of the processing of an ATM transaction can be represented in a roughly drawn cloud schematic.
But there's more going on here than simple word play. The article referenced above draws the reader's attention to work under way at Diebold as they are "taking the cloud concept a step further yet, not just putting data about the ATM in the cloud, but actually virtualizing the machine itself."
Remember the earlier reference to obtaining cash from an ATM via a smartphone and how the ATM itself has a very small role to play in the processing of the transaction? Well, these types of ATMs, as cheap as they will become, are also accelerating the acceptance of even greater processing inside the cloud.
As we continue to connect the dots with smartphones, interacting with applications in the cloud to ensure that dumb ATMs dispense our cash, it becomes very clear just how more deeply entrenched ATMs are going to become within our communities.
And perhaps even more importantly for those with an interest in how this evolves, those who build the monitoring tools that support security and manageability will need to be aware of managing not only thousands of ATMs but also tens if not hundreds of thousands of mobile devices — something that in turn may drive the deployment of such monitoring solutions into the cloud as well!
And on that note — I will finish this post, to pick up the storyline again a little later after more announcements in this marketplace.