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NCR Canada targets country’s white-label ATM market

NCR Canada Ltd is planning a big push into Canada’s white-label ATM market, the largest- and fastest-growing part of the country’s ATM estate, company president Luc Villeneuve tells ATM Marketplace.com.

August 2, 2010

NCR Canada Ltd. is planning a big push into Canada’s white-label ATM market, the largest- and fastest-growing part of the country’s ATM estate, company president Luc Villeneuve tells ATM Marketplace.com.

“We recently decided to get into the white-label ATM supply market in Canada, and have signed an exclusive deal with Canadian ATM ISO Ezee ATM,” Villeneuve said.

“If any other Canadian ATM ISO wants to sell NCR ATMs into the white-label market, they will have to get them from Ezee,” Villeneuve said. Apart from Ezee, which operates an estate of around 2,000 NCR Tidel ATMs, other large ATM ISOs in Canada are Direct Cash Income Fund, Cash N Go, and Frisco ATMs.

Ezee’s network of partners and resellers are responsible for around 20,000 white-label ATMs in Canada. “Our agreement with Ezee includes NCR’s current Tidel low-end ATM brand, and our new low-end ATM lines under the NCR brand, which we will be launching at the end of 2010,” Villeneuve said.

Ezee has agreed to distribute around 1,000 NCR low-end ATMs in Canada as part of the deal. “The actual volume could be more, but around 1,000 units is our starting point,” Villeneuve said. “Our current Tidel models are end-of-life, so the sales deal will involve the remaining [Tidel] inventory plus the upgrade to EMV-compliance of the many Tidel ATMs in the field, and the new NCR-brand series coming out at yearend.”

White-label ATMs and cash machines that are not owned by a financial institution account for 62 percent of the Canadian ATM market. According to Retail Banking Research, a London-based consultancy, of the 58,217 ATMs in Canada at the end of 2009, 22,204 were owned by banks and credit unions, and 36,013 were white-label. This represents a very rapid growth rate, since white-label ATMs were first permitted in Canada in 1997.

Villeneuve said Canada has one of the highest per-capita penetration rates of ATMs worldwide. The country also is characterized by an aging estate of white-label ATMs. “Many white-label ATMs are over 10 years old,” he said.

Interac, which operates Canada’s central ATM switch, has set the end of 2012 as the deadline for all ATMs in the country to migrate to the global EMV or chip and PIN card security standard.

“Most of the large Canadian banks already have migrated their ATMs to EMV, or they will be EMV-compliant within the next 12 months,” Villeneuve said. “Canadian credit unions have made serious investments this year to make their ATMs EMV-compliant and they’re less than a year away as well. The Canadian white-label ATM operators, however, are a little behind and have issued a lot of requests for proposals to understand the upgrade options and migration path to EMV.”

But Villeneuve says he doesn’t think white-label operators are very far behind the banks in migrating to EMV. “It’s easier to replace a corner-store ATM on wheels than to re-fit larger ATMs that are built into the walls of bank branches, for example,” he said.

Overall, including financial institution-owned ATMs, NCR has around 50 percent of the Canadian ATM market, Villeneuve says. In the Canadian small bank and credit union market, NCR’s ATM sales partners are Threshold, Stanley Technologies and League Data.

“In a mature ATM market like Canada, you want to enhance the customer’s experience at the ATM and add value to what the financial institution is providing,” Villeneueve said. “In Canada, 75 percent of all banking transactions today are done at the ATM, but I don’t think the market has really understood this fact and taken advantage of it.”

At NCR’s research and development center in Waterloo, Ontario, the manufacturer has been investing heavily in the development of technologies to bring customer relationship management to the ATM.

“We’re developing personalization tools that enable banks to offer customers the facility to manage their relationship with the bank at the ATM,” Villeneueve said. “An ATM using our software will greet a customer by name, ask whether they want to withdraw the usual amount of cash, and then make suggestions.”

For example, if the customer has a lot of cash sitting in a low-interest-paying account, the NCR software will make recommendations on how to get better rates. If a deadline for a pension-plan contribution is approaching, it will offer help with how to invest the pension contribution.

An interesting tool the Waterloo facility has developed is a scheduler, which enables the client to arrange an appointment at the ATM to meet a bank expert. The client will then receive alerts via cell phone text message to remind him about the meeting.

“Banks that have tried out the ATM scheduler say it really reduces no-shows at client-staff meetings, and also, because the meeting is set up electronically, the expert is prompted to prepare properly by reading the client’s files,” Villeneuve said.

A technology specialization at Waterloo is hardware and software enabling the digital capture of information held on paper checks. This technology is being applied at the ATM and over other banking channels.

“Waterloo has developed software that lets a customer take a photo on their smartphone of a check that someone has given them,” Villeneuve said. “The software scans the details of the check from the photo, and then the customer deposits the check electronically to their bank account using the phone. But they don’t need to go to the bank or to an ATM to deposit the check, as it enters the banking system once it is scanned by the phone. If the customer tried to pay the check in at an ATM as well as via smartphone, our software would warn the bank about the double-deposit.”

A number of Canadian banks are testing NCR’s technology, which enables envelope-free, ‘intelligent’ check deposits at the ATM, and have found that it is popular with customers, Villeneuve said. “In the U.S. ATM market, NCR has seen major adoption of intelligent deposit of checks and of cash,” he said. “However, because Canada does not have the equivalent of the U.S. Check 21 law, there is no compulsion for Canadian banks to adopt intelligent deposit at the ATM. If the Canadian government did introduce a Check 21 law, all the banks would invest in intelligent deposit.”

There are 40,000 ATMs in Canada that accept envelope deposits of cash and checks, Villeneuve said.

Another technology developed at Waterloo is ATMs that accept deposits of different currencies. “Our software can tell what currencies are paid in at what foreign-currency ATMs, and then tell the bank which currencies are most likely to be deposited at specific ATMs,” Villeneuve said.

NCR Canada is seeing major growth in its self-service kiosk business, Villeneuve said. Apart from retail self-service, which Villeneuve says will be big in Canada, one sector NCR is targeting is health care.

It is developing kiosks for the pharmacy and hospital markets, where patients can check in electronically, access their medical information, and order prescriptions without having to stand in line to pay.

“In the self-service environment, we aim to provide a consistent customer experience, whether the customer accesses a retailer’s website using their home PC or their cell phone web browser, or goes to an in-store kiosk,’ Villeneuve said.  “The customer could start a transaction by researching a retailer’s products on their PC. Then, when they are waiting in the car, they can carry on this research using their smartphone. Finally, when they come into the store and use a web-enabled kiosk to make the purchase, the kiosk will remember the research the customer has done."