Since ATMmarketplace.com began publishing "ATM Software Trends and Analysis" in 2007, the view of multivendor software within the industry has changed. Aided in large part by the migration of ATM software platforms to Microsoft Windows, awareness and acceptance of platform-independent ATM software has grown, as indicated in the survey results shown in this guide.
Another indication is the Retail Banking Research Ltd. "Multivendor Software 2010" study that found approximately 450,000 ATMs globally run multivendor software, a nearly 60 percent increase over the past two years. According to the report, NCR is the world's largest supplier of ATM middleware and applications.
A news release issued by NCR Corp. about the RBR findings states that the majority of financial institutions in North America rely on NCR's APTRA ATM software suite, when compared with similar software suites provided by NCR competitors Diebold Inc. and Wincor Nixdorf AG. NCR says RBR also found that NCR holds the majority of the ATM market share in Western Europe and Latin America.
The RBR study found that KAL is one of the top three vendors in the multivendor ATM software market, with 21 percent of the ATM multivendor software share. Outside of the top three companies, the other companies listed in the research each account for 7 percent or less of the total market. KAL says it is the only company among leading ATM software competitors to focus solely on ATM software.
Regionally, the report found that Western Europe, Asia-Pacific and North America accounted for 80 percent of the multivendor software installations, with Western Europe having the largest number of ATMs by region. Additionally, the number of ATMs running multivendor software in Latin America has doubled in the past two years.
It's clear that financial institutions understand the value of a hardware-independent ATM software application, regardless of whether it's provided by an ATM manufacturer or an independent software vendor such as KAL. Now, FIs are looking for more than technological efficiency from their ATM software and they want to leverage their ATM networks for a much greater competitive advantage.
"We're seeing a more mature view of it," said Joe Gallagher, general manager of financial software solutions for NCR Corp. "It's moved beyond the question of whether your application runs on other hardware."
The spread of Windows has aided the widespread use of XFS, a global software standard that enables multivendor software. Aravinda Korala, chief executive officer of KAL, compared XFS to the TCP/IP protocol that makes the Internet possible. Most current ATMs are XFS compatible. Even FIs that don't use multivendor software specify that capability in the ATMs they purchase.
"Even if the FI is not going to use multivendor software immediately, they want their ATMs to be XFS compliant for the future," Korala said.
Certainly, the repercussions of the financial crisis that swept the industry in 2009 still influence spending and marketing decisions by FIs. In the United States, as well as other countries, instability and even failures among FIs has led to new corporate entities that have resulted from merged operations.
"However, the financial crisis doesn't seem to have slowed things down or stopped people from doing the things they want to do with ATM softare," Korala said. "Cost reduction for the ATM network is even more important than it ever was."
These abrupt changes in the industry may also negatively impact customer relationships, making the ATM a vital service delivery channel for FIs.
"The extent to which an FI can improve the customer experience at the ATM, as well as other delivery channels, helps build better relationships," said Rober Usner, senior director of global markets strategy and planning for Diebold. "That's important for most FIs because deposits are increasingly important."
Cost control and efficiency
FIs consider multivendor solutions for a variety of reasons, but the most common is to reduce cost and improve efficiency for the ATM network. That's especially true if an FI operates ATMs from multiple manufacturers.
If each type of machine operates proprietary software, then software updates, security upgrades and new features must be managed for each variant of the software. On the other hand, XFS-capable machines running multivendor software across all hardware types can be managed with a single software application.
"In the past, you had different software for different ATM types, and that was just untenable for a big bank," Korala said. "There are so many things FIs need to do; they want to be able to do it all just once."
Managing a complex, perhaps international, ATM network presents myriad challenges for an FI. From a simple information technology perspective, the task is daunting and expensive.
"Just by virtue of different geographies, invariably there will be different hardware vendors, but with a multivendor ATM application they can reduce operational costs and keep a consistent consumer experience," said Gallagher.
Any way to reduce that complexity has a guaranteed return on investment.
"Having a single application for ATMs reduces effort internally within a bank from a development, testing and certification process," said Alan Walsh, executive vice president of banking for Wincor Nixdorf. "It also makes FIs more independent, which means they can buy any vendor's hardware from a cost-control perspective."
In just a few years, the multivendor concept has transformed from a technology solution to one that supports an FI's overall strategic approach. FIs look for software that supports new functions at the ATM and integrates with other channels such as online and mobile banking.
A multivendor approach makes it easier to integrate customer-facing enhancements throughout a network.
"If an FI wants to do one-to-one marketing, it becomes easier to embed that in a single software application across different hardware vendors," Gallagher said. "They can tie it into the branch system or online presence as well."
For FIs faced with rising costs, increasingly strict regulatory environments and ongoing security concerns, multivendor software gives them the opportunity to take back control of their ATM networks. Multivendor software allows FIs to manage the ATM network with fewer technology resources than using proprietary software for each ATM type.
"An FI can do what makes business sense for them to do and not yield control to vendors unless they choose to," said Steve Hensley, executive vice president of global sales for KAL. "Banks can take control of their networks and exercise as much control as they want."
With greater control provided via multivendor software, an FI can add transactions, enhance functions and conduct marketing campaigns much more efficiently.
"An FI can use the ATM channel as a competitive edge, as opposed to it being a commodity," Hensley said.
For 2010, ATMmarketplace.com has once again surveyed key individuals to update the "ATM Software Trends and Analysis" guide to highlight trends in major global markets. The purpose of the guide is to build a comprehensive, global view of ATM software and the role it plays in the financial services industry, assisting FIs in developing their own software strategies.