Article

New self-service tech, deployments can learn a lot from ATMs

Level Four's Ian Kerr explores the benefits and challenges of self-service during an age when it has become the norm, rather than the exception.

April 5, 2010 by Ian Kerr — CEO, Level Four

The ATM is a critical customer touchpoint for banks and is arguably as much a part of the consumer experience as the bank branches themselves. In fact, following the first U.K. ATM deployment in 1967 by Barclays, the ATM has become the most utilized customer touchpoint in retail banking.

It comes as little surprise that many companies across numerous sectors, including retail and transport, are now looking to replicate this success through self-service technology. Key lessons can be learned from the trial and error of banks during their early ATM rollouts.

Adhering to the four cornerstones

The benefits of adopting self-service technology are clear: greater customer satisfaction, lower costs and improved company revenue are the ones most often cited. On the flipside, a poor experience at a self-service terminal can result in customer dissatisfaction, tarnished brand reputation and lost revenue. Based on experience gained in the banking industry, four key cornerstones have emerged for creating a successful self-service offering: providing reliability, usability and security and adhering to industry regulations.

Providing a reliable service

The first and arguably most important factor to consider in self-service deployment is ensuring that the terminal is reliable. This is critical if the customer is to make the switch to self-service. As the ATM industry is well aware, limited functionality or terminals that regularly crash can significantly impact the customer experience.

Research commissioned by Level Four has shown that 38 percent of the U.S. consumers surveyed would consider changing banks if the ATM service was consistently unreliable. In addition, research within the ATM industry has shown that for every failed interaction at an ATM, it takes an additional seven positive interactions for customers to restore a positive brand image in their minds. On the other hand, a successful self-service transaction can help an organization provide customers with a positive brand experience. Brand loyalty and customer perception can be increased if customers receive efficient service, such as speedy transactions and easily accessible terminals.

To achieve this reliability, extensive testing of the whole transaction process is required, from the insertion of a card, such as a debit or frequent flyer card, or a passport, to the approval and completion of the required transaction. This process also requires integration and interaction with an external host system. The ATM offers a good example of the progress made in terms of testing over the past decade.

Over the past 40 years there have been significant changes from the manual, laborious and expensive testing process to automated testing, because of the introduction of chip and PIN card technology. Because manual testing is so time-consuming and leaves the ATM network at risk of high levels of undetected downtime, automated testing was adopted. For organizations looking to provide maximum availability to their customers, automated testing is essential, as it allows a far greater depth and breadth of testing scenarios as well as a higher level of testing consistency. Given the automated testing solutions already developed for the ATM environment, organizations across all sectors are now well placed to take advantage of these technologies and ensure that their networks are running smoothly from initial rollout.

Providing the best customer experience through ease-of-use

Second, usability is key to customer acceptance of self-service. To ensure successful uptake or adoption, customers must not only understand how to use the technology but also trust that it works. Interestingly, Barclays Bank used comedian Reg Varney to publicize the first ATM deployment — reflecting the bank's understanding that consumers need to feel a level of familiarity with self-service technology in order to be comfortable using it.

The customer should always be front-of-mind when terminals and application software are being designed. Functional selections need to be easy and straightforward to reduce processing time for the desired transaction. Furthermore, software should be flexible and be able to adapt to various situations, such as multiple languages. Having incorporated these features into the ATM, they are now an assumed part of the banking self-service experience.

Meeting industry regulations

Technological advances have encouraged significant changes to be made to the ATM industry standards over the past few decades, and this is also likely to be the case across other industries as the technology becomes established. For the ATM, the migration from OS/2 to XFS Windows middleware standards defined how application software interacted with underlying hardware components. Adherence to XFS as an industry middleware standard enabled banks to execute multivendor strategies, and encouraged innovation in hardware and software by opening the industry to third-party software suppliers. Similarly, this happened in the IT industry with the deployment of open operating environments such as UNIX and Windows, both of which were introduced to encourage the interoperability of a much larger range of software applications. In the airline self-service industry, an equivalent standard called the Common Use Passenger Processing System, or CUPPS, enables wider access to shared technology throughout an airport.

As the ATM industry has shown, organizations must be prepared to regularly update their technology in line with changing standards, as well as be aware of the need to future-proof systems to ensure consistently high service levels of performance. It is also likely that as self-service technologies become more widespread, the industry will increasingly see the value of open standards and interoperability in driving uptake and innovation across numerous sectors.

Don't let security be your downfall

Successful consumer adoption of self-service cannot occur if consumers do not trust the terminals to keep their data secure. ATM security has seen substantial progress over the past 10 years. The adoption of the EMV standard by some countries has resulted in a decrease in fraud at the ATM, and an increase in the level of consumer trust of the ATM in those countries. The potential for fraud at the ATM is significant; banks have rightly prioritized this aspect of service. But other self-service terminals such as airline self-service devices, which can use a passenger's credit card as the authentication mechanism, will also need a high level of security to protect customer details. In addition, as the use of self-service increases, higher value self-service transactions are likely to follow with time. The industry must ensure that it prepares for this development in order to adequately future-proof investment in self-service technology and continue to retain consumer confidence.

Ian Kerr is CEO of Level Four Software Ltd. To submit a comment about this commentary, please e-mail the editor, Tracy Kitten.