Article
ATM ISOs and an FI ATM boon
Nautilus Hyosung expects to put greater emphasis on financial products.
June 9, 2008 by Tracy Kitten — Editor, AMC
View a slide show from the conference.
Retail-market saturation. It's something the U.S. ATM industry has talked about for years, but independent sales organizations have been reluctant to listen.
Despite the so-called tipping point, ISOs, even during the last couple of years, have continued to see ATM growth in the retail sector, namely because of the Triple DES push, which has carried the business through upgrades and replacements.
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That push, in fact, said many ISOs at last week's Nautilus Hyosung America Inc. conference in Dallas, is what fueled Nautilus Hyosung's rapid U.S. market growth as a direct ATM supplier last year. The company claims to have directly sold more than 20,000 units in the States since February 2007.
Today, the demand for new retail products isn't the same, and though ISOs say they remain optimistic about Nautilus Hyosung's future in North America, most of the 160 or so companies at this year's conference tend to agree that 2008 will be the year of success or failure for Nautilus.
That's likely a trend Nautilus Hyosung sees as well, hence its push of products geared toward the banking sector.
"But we are still a retail-ATM company," said Carlos Siewczynski, Nautilus' vice president of retail. "We are just complementing our line with financial products. Our new products are customizable, so we can provide upgrades for Check 21, for instance. We are ahead of the technology curve, because of our banking experience in Korea."
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The MoniMax 5300 with check-imaging and billpay sidecars. |
The tried-and-true Mini-Bank 1500, introduced eight years ago, remains Nautilus Hyosung's most-popular model — a retail ATM that recently hit the 100,000th mark in North America.
But more banking deals could push the company in a new direction. In fact, Nautilus Hyosung already has an ATM deal with one top U.S. FI, unconfirmed by Nautilus Hyosung to be Citibank, and it hopes to close similar FI deals through its distribution channel, comprised primarily of ISOs.
Chan Park, president of Nautilus Hyosung America, says his company's banking experience in Asia will help it make inroads in the U.S. banking sector, as the advent of Check 21 and other advanced ATM technologies become more commonplace.
"There are many demands and issues in the market for additional functions and features, and we have developed ATMs, like the (MoniMax) 5100T and the 2100T, which we introduced a couple of years ago," to meet those demands, Park said. "But we need the help of our partners to reach the market."
Nautilus Hyosung is banking on its MoniMax line, which is offering all the features and functions FIs require, says Antonio Kim, Nautilus Hyosung's senior sales manager for FI systems.
But Kim spent most of his time during the conference explaining why ISOs should care about the FI market.
A product breakdown
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Beyond the abundant capital FIs have to work with, relative to retailers, Kim said 52 percent of the U.S. ATM market is based on FI products.
"It's a larger and stronger market than the ISO market," he said. "And Check 21 is driving the FI ATM market, because automated deposits are more secure, they cut costs, and users like being envelope-free."
The Check Clearing for the 21st Century Act, better known as simply Check 21, is setting the pace for other financial advances such as branch automation and new ATM functions like bill-payment, Kim said.
"This is a market we are watching closely, since branch ATMs have an average of 3,651 transactions per month, 11 times more transactions than retail ATMs," he added. "We have designed our MoniMax line for easy replacement of Diebold and NCR machines. And our 5100T is the most competitive through-the-wall solution for NDC (ATM communications protocol)."
In keeping pace with leading FI ATM manufacturers NCR Corp., Wincor Nixdorf International and Diebold Inc., Nautilus Hyosung also has developed bulk-note and –check acceptors that allow users to deposit up to 50 notes or checks in a single deposit, envelope-free. Unlike Wincor Nixdorf, however, the company has not developed a mixed-bundle acceptor, and doesn't have plans to do so in the near future, sources at the conference said.
Partnerships with companies like MetaBank and Palm Desert National Bank ($400 million in assets) also are expected to help Nautilus Hyosung reach more bank and credit-union clients.
Among its FI ATM line, Nautilus says it's only lacking an island drive-up unit. By 2009, the company expects to have a full range of FI-geared ATMs.
A distribution dilemma?
In the FI space, Nautilus Hyosung has a direct-sales team as well as a VAR channel. Its current plans include FI development of its ISO channel, which to date has been focused on retail sales.
Some ISOs say they have their doubts.
At the moment, sales to the FI market are expected to remain open, meaning Nautilus Hyosung does not plan to set limits or regions on ISOs selling to the market. That could lead to sales competition that, while accepted in the retail space, might not work well in the banking space.
Strategy
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Some ISOs also expressed concern about other potentially competing business practices, such as Nautilus Hyosung's willingness to work directly with other original ATM equipment manufacturers, such as Diebold. Nautilus provides hardware for Diebold's CashSpot, an entry-level, low-volume ATM introduced by Diebold last year.
Now that Nautilus strives to compete with the likes of Diebold, ISOs say they'll be interested to see how relationships with OEMs that dominate the FI space will continue to play out, if at all.
Advanced functionality: A hope for retail
TIO Networks Corp. and PDNB Electronic Banking Solutions, which manages $1 billion in vault cash for some 22,000 ATMs and kiosks, are partnering with Nautilus Hyosung, as they have with former Nautilus partner Tranax Technologies Inc., to target cash-preferred, unbanked and underbanked consumers through self-service. One offering is billpay through the TIO network.
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Designed for the FI market, the 7600D comes equipped with check-imaging capability. The 7600 is expected to hit the market later this year. |
"I think you'll continue to see self-service bill-payment catch on," said Hamed Shahbazi, TIO's chairman and chief executive. "In the past three to six months, we have seen more RFPs for kiosk from the utility market than we have since we launched, and we've collected $1 billion via self-service since our first payment in 2002."
As the economy tightens, Shahbazi expects the self-service industry to see an up-tick in expedited-payment services.
"And if you can get this service added to an existing ATM platform, it can be a new revenue stream for you."
Banking Executive SummaryTrends / StatisticsNorth AmericaIndustry OrganizationsDepositsDistributors / ISO / IADRetail / Off-PremisesManufacturersPrepaid / Stored Value / Gift CardComponentsOtherBank / Credit UnionBranch TransformationDiebold NixdorfHyosungSolvportTIO Networks Corp.Tranax Technologies, Inc.Wincor Nixdorf International
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