Article
Check 21 drives ATM enhancements
Windows-based tech paves way for advanced ATM transactions.
August 4, 2008 by Tracy Kitten — Editor, AMC
*The following is an excerpt from a new ATM Marketplace report, "ATM Software: Trends and Analysis for 2007-2008." Click here to download the complete, complimentary 50-page report.
Deposit automation is driving change in ATM technology.
In the United States, check-imaging, made possible by the October 2004 passage of the Check Clearing for the 21st Century Act — Check 21 — is the driving force. In other parts of the world, cash optimization through envelope-free cash acceptance and cash-recycling is driving adoption.
Regardless, the technology is the same, and it is the same ground-level technology that will facilitate other functions, such as self-serve bill payment.
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According to Boston-based financial consultancy Celent LLC, decisions about ATM software are becoming more strategic because of advanced functions. A 2007 report from Celent, "Next-Generation ATM Software: From Multi-Vendor to Multichannel," indicates that "selecting software for ATMs or other self-service devices is becoming a more strategic decision for financial institutions, one that has significant implications for their ability to deploy new functionality and improve the user experience at the ATM."
Michel Denis of KAL Ltd., a multivendor software provider for the ATM industry, says he expects more FIs to start investing in third-party multivendor programs, because of cost reductions and trust.
"A provider that is completely separate from the hardware ensures that if banks are running complex functions across multiple pieces of hardware from different vendors, the functions will work properly and in the same way across the entire network," he said.
Brian Pilla, NCR Corp.'s director for the North American financial industry, says a move toward channel integration will ultimately be the driver of software decision-making in the United States and other established banking markets.
"So whether it's the Internet, the ATM or the emerging mobile channel, customers want to initiate a transaction on one channel and have the ability to complete or continue that transaction on another channel. That increases the sophistication of a broader channel strategy."
North America
In North America, FIs are making software decisions that are driven by functions, says Steve Risto, director of NCR's Aptra Software Center of Expertise.
"The biggest area by far is the whole deposit genre, and it's across the board, not just the big banks," Risto said. "And then it enables other things, so it's not just check and cash deposit, but it's also check cashing."
Minneapolis-based U.S. Bank ($238 billion in assets) made a few software decisions in 2007 that were not influenced by deposit automation, but the bank's ATM-software plans for 2008 are being impacted and supported by a migration to deposit automation, said Todd Kalina, U.S. Bank's ATM product manager.
U.S. Bank has a network of more than 6,000 ATMs. Nearly half of those are located on-site, with a little more than 2,600 terminals located at off-premises locations. U.S. Bank also owns and operates more than 500 ATMs for other FIs under the name Elan Financial Services.
"We are aggressively rolling out U.S. Bank Prodigy ATMs that offer personalization and messages to cardholders down to the one-to-one level," Kalina said. "This benefits our customers by allowing them to streamline their desired ATM experience. These capabilities are built upon (Phoenix Interactive Design's) VISTAatm, which allows U.S. Bank to consistently support ATMs from a variety of hardware manufacturers."
Kalina adds that "multivendor is our standard."
Like many U.S. FIs, U.S. Bank continues to operate under software decisions it made several years ago. And as long as the software meets the bank's ongoing demands, moving to a new software vendor is not likely, Kalina says.
"VISTAatm meets our current needs for personalization and message targeting, our near-term future needs for deposit automation, and our longer-term desire for integration with cross-channel CRM systems," he said. "The primary investments in 2008 for deposit automation will be in hardware. Software releases from Phoenix Interactive that we are currently certifying will support deposit automation, in coordination with internal ATM development and integration with enterprise check-imaging systems."
U.S. Bank says it does not expect its investment in ATM software to increase from 2007 to 2008.
Market variation: How do the Canadian and Mexican markets differ from those in the U.S.?
While deposit automation also is a driving force in Canada, more software decisions are being made in relation to EMV migration in other parts of the world.
The Europay, MasterCard and Visa standard, overseen by EMVCo LLC, which was created in 1999 by the three aforementioned card companies, is quickly becoming a global standard in markets beyond the Americas.
WHAT IS EMV?EMV is a standard for the interoperation of smart or chip cards and POS terminals and ATMs. EMV comes from the initial letters of Europay, MasterCard and Visa, the three companies that developed the standard. Europay International SA was absorbed into Mastercard in 2002. And JCB, formerly the Japan Credit Bureau, joined the organization in December 2004. EMV financial transactions are widely accepted within the industry as being more secure against fraud than traditional magnetic-stripe cards. EMV cards use encryption algorithms such as DES, Triple-DES, RSA and SHA to provide authentica¬tion of the card to the processing terminal and the processing center. The increased protection from fraud has allowed financial institutions and credit-card issuers to push through a "liability shift" — now making merchants liable for any fraud that results from transactions that are not EMV capable. |
In Canada, the deadline for EMV compliance is 2010, and processors and FIs are focusing much of their ATM and POS hardware and software attention on EMV standards.
"Over the course of 2007, geographically speaking, EMV took off in Canada," said Mark Elson, director of product management and architecture for self-service-software provider Phoenix Interactive Design Inc.
This year, Phoenix Interactive deployed VISTAatm across the ATM networks of BMO Bank of Montreal and TD Canada Trust. The banks invested in VISTAatm to facilitate EMV migration, Elson says.
According to Technology Surveys International Inc., Canada is expected to have 54.8 million EMV smart/chip cards by 2010 — 43.6 percent of all payment cards in the market.
In Mexico, a relatively small ATM market with just 26,000 ATMs, EMV also is a driving software force, as are advanced ATM offerings, such as bill payment and money transfers/remittance.
While most wire transfers collected at ATMs in Mexico are initiated in the United States, and therefore garnering more attention in the States, the ability to offer those services is of interest to the Mexican market.
Mexico, which began its EMV rollout in 2002, made significant EMV strides throughout 2006 and 2007. By the end of 2008, the country is expected to be near EMV-migration completion.
Though the United States has made no movement toward EMV, instead choosing to investigate more contactless/RFID solutions, some industry experts say the States will be forced to make an EMV move once neighboring Canada and Mexico complete the switch.
From a software perspective, U.S. FIs would be wise to think not only about the types of services they want to implement and launch at ATMs today, but also about functions, services and mandates — such as EMV compliance — that could come down the pike in the future.
"We see EMV in most markets," Elson said. "In the U.K., the migration to EMV has been going on for four or five years. The key difference in Canada is that Interac (the national ATM and POS network) is pushing EMV and mandating it for the country. In the U.S., you don't have anyone mandating anything, including deposit automation. What's pushing deposit automation is the business case. ATM deployers also are just coming off Triple DES compliance, and that was a huge expense. This is why the move to deposit automation has been slow, and a move to something like EMV will be even slower."
Asia, Australia & PacificLatin AmericaMiddle East & AfricaTrends / StatisticsDepositsPrepaid / Stored Value / Gift CardUnderbanked / UnbankedComponentsCheck CashingNorth AmericaBank / Credit UnionBranch TransformationSoftwareDiebold NixdorfKAL ATM Software GmbH
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