Attaining true ATM vendor independence is more critical than ever
Vendor independence and open standards provide banks with the flexibility to efficiently meet the changing market requirements and remain in control of their own ATM networks.
June 8, 2009 by
The concepts of open standards and vendor independence in the ATM channel are more important for banks today than ever before. With the current U.S. economic situation and looming new government regulations, the business environment for banks is ever changing. True vendor independence and open standards functionality provide banks with the flexibility to efficiently meet the changing market requirements and remain in control of their own ATM network — ensuring they receive the best return on investment from suppliers and software vendors in these challenging times.
The established CEN/XFS standard (formerly known as WOSA/XFS) provides support for banks looking to deploy a single ATM application across multiple vendors' hardware, without having to change application programming specific to hardware features. In the ATM context, the standard means it is much quicker and easier for a bank to enhance functionality and maintain the ATM. So what does true open-architecture ATM technology mean in today's banking environment? Open standards-based ATM software solutions offer financial institutions the ability to effectively unlock the potential of the ATM and self-service channel. Using open standards-based technology, financial institutions can select alternative suppliers for their ATM and self-service software, as long as their technology conforms to XFS specifications, and also be able to interact more easily with other third-party applications on the ATM. This approach allows banks to reduce costs through effective commoditization of the hardware, decreased software costs, and increased customer service levels through providing a consistent user interface across multiple types of ATM hardware. Embracing open standards
By removing the proprietary lock on the ATM network, hardware vendors are forced to compete with independent software vendors, and banks can truly have the ability to select the solutions that are right for their institution. While open standards is a hot topic surrounding ATM technology today, some vendors and suppliers have struggled to really embrace the true concept of openness, with frequent non-compliance issues between vendors preventing banks from extracting the full value of their technology investment. There is an increasing trend of vendors bundling their software, services and hardware together into one seemingly comprehensive package. By bundling these things together, vendors are able to not only develop a very opaque pricing structure, but also make it harder for the bank to have any checks and balances to get an unbiased picture of how the ATM network is operating. In these bundles, many vendors are claiming to be giving away "free" software and services, such ATM-monitoring applications, things that should really be done by an independent third-party vendor. Vendors who bundle their solutions together make it harder for banks to use solutions from alternative vendors. In the example of monitoring, such solutions are often preloaded into an application software delivery, making it seem like a low-risk deployment should a bank wish to use proprietary monitoring tools delivered hand-in-glove with their application software. The question remains — should banks trust those same vendors to test themselves? Auditing by a third party
Companies that are required to conduct financial audits of their own businesses do not use internal auditors. They use an independent auditing firm in order to get a true picture of how their business is doing. A bank does not use its in-house accountant to audit its financials, and software companies do not use their own software developers to test their own codes. So why would a bank use the same ATM hardware provider to test and monitor its performance and reliability? With an independent monitoring solution, banks are able to get completely unbiased statistics of ATM network performance, hardware and software performance, cost structures, system reliability and service costs. With this level of transparency, banks can make more informed business decisions in terms of hardware and software purchasing needs, ultimately saving the institution thousands of dollars in unnecessary purchases and service costs. The bundling trend is really taking the industry full -circle, back to a proprietary way of doing business, which is not beneficial to banks. The open architecture methodology is designed to empower the banks to look at the different parts of the ATM network in isolation and also provides the opportunity to have independent checks and balances throughout the network. Some banks that have implemented a multivendor ATM network have experienced problems with compatibility between vendors' software and hardware. There have been very few instances of different vendors' software not working together to such an extent that the bank has to revert back to using a single supplier for all their needs — a sad day for open standards. This scenario would not happen if a bank were able to keep control of its network with some independent checks and balances that could actually detect and show the reason the solutions are not working The average U.S. customer visits his ATM 20 times a year and his branch no more than four times a year — typically only twice. This makes the ATM the highest consumer touchpoint the bank has with its customers. ATM network reliability and uptime is crucial to maintain customer service levels and customer retention in today's competitive banking environment. Empowering the bank to operate a true vendor-independent ATM network provides it with the resources necessary to make informed and smart choices, better ensuring business success. Steven Lund is president of Charlotte, N.C.-basedLevel FourAmericas LLC, supplier of open-standards-based ATM software. To submit a comment about this commentary, pleaseemail the editor, Tracy Kitten. 
