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As banking channels converge, the multi-vendor ATM software market expands

'Interoperability' is the word as new banking channels and ATM functionalities expand and gain in popularity with consumers.

May 10, 2013 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

"Ten years ago, the idea of running a single software application across a variety of ATMs was considered revolutionary. In the 2007-2008 'ATM Software Trends and Analysis' guide, the concept was viewed as picking up steam. Today, multi-vendor software is the norm." — 2012 ATM Software Trends and Analysis guide.

Multi-vendor and cross-vendor software deployments now comprise a total of 740,000 ATMs representing 28 percent of the world's 2.6 million installations, according to a recent study by strategic research and consulting firm RBR.

The market has expanded by a compound annual growth rate of 20 percent since 2007, and the trend toward multi-vendor software is expected to do nothing but grow.

According to RBR, western Europe has the highest share of machines running such software today, but up-and-coming Asia-Pacific is the largest regional market for multi-vendor software, extending the promise of future growth.

Separate from ATM hardware

The better — and better-known— multi-vendor software becomes, the more it becomes a standalone purchase for FIs. Indeed, RBR found that banks are increasingly separating their ATM hardware and software purchasing.

"For some banks, the focus is now switching from ATM hardware to ATM software," said RBR senior analyst Robert Chaundry. In Europe, he said, banks are turning to a multi-vendor solution as their "next-generation" software.

Not surprisingly RBR found that banks whose ATM fleets include hardware from multiple manufacturers often look to a single multi-vendor application to unify the network and ensure a consistent customer experience.

But RBR also found that some FIs that have historically used a single hardware supplier are beginning to look at cross-vendor software deployment as the gateway to diversifying their supplier base.

A similar purchasing approach was found among ATM deployers worldwide in the 2012 software trends survey by ATM Marketplace and KAL ATM Software. In that study, roughly half of those surveyed said they typically treat hardware and software as separate purchases.

An economical upgrade

The availability of increasingly sophisticated and powerful multi-vendor software can make it a reasonably cost-effective alternative for an FI to upgrade the efficiency and customer experience of its fleet without turning over of its ATMs.

RBR found that banks are increasingly investing in the integration of ATMs with other consumer channels for improved customer service and choice — for example, many banks are introducing mobile apps that allow customers to make cardless cash withdrawals.

RBR research found that banks' desire to offer customer service and choice, together with the goal to effectively sell across channels, were the most important drivers of ATM channel integration.

Chaundry said this isn't likely to change as customer expectations continue to grow. "New technology such as contactless payments, QR codes and touch screens could all drive multi-vendor software in the future," he said.

That day may be fast-approaching, if not already arrived. The 2012 ATM Software Trends and Analysis guide found that 41 percent of FIs expected to upgrade their software to accommodate emerging technologies such as contactless cards, mobile phone integration, coin handling and cash recycling.

Who's using what

A wide range of multivendor ATM software solutions is used around the world: Suppliers include both hardware manufacturers and independent software companies, some with global presence and others with a focus on certain regions or sub-regions.

Three companies — U.S.-based NCR , Germany's Wincor Nixdorf and China's Shenzhen Zijin — account for half of all multivendor application software.

The last is present only in Asia-Pacific and is a partner of U.K. software firm KAL, the largest independent supplier of the "middleware" that enables an application to run on any vendor's hardware.

A number of banks, typically larger institutions, around the world have developed their own "proprietary" applications, sometimes with assistance from a vendor if they have limited in?house expertise or resources.

"The big challenge for providers is developing markets, where many banks have little understanding of what multivendor software is," Chaundry said.

But they'll learn fast. As banks in today's booming markets gradually shift the focus of the ATM channel from network expansion to operational efficiency, they will increasingly want to run a single ATM application on their estates.

And with the global market forecast to grow by 75 percent between 2012 and 2017, RBR said, the future looks bright for multivendor software.

This article draws on RBR's new study, "Multivendor Software 2013." Additional material was provided from the 2012 ATM Software Trends and Analysis guide. The free, downloadable 2013 edition is scheduled for publication in the next few weeks.

Read more about software.

photo: Glenn Gould

About Suzanne Cluckey

Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally.

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KAL ATM Software

KAL is a world-leading provider of multivendor ATM platform, application and management software, specializing in solutions for bank ATMs, self-service kiosks, and bank branch networks.

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