Article

The way forward for ATMs in Europe

Speakers at Day One of the ATM Industry Association's 'Optimising ATMs in Britain and Europe' show agreed that retail ATMs are becoming a key part of the European landscape. Beyond that, however, no one seems sure of exactly what will drive the market.

September 23, 2001

Editor's note: ATMmarketplace.com was unable to make the trip to London last week for the ATM Industry Association's "Optimising ATMs in Britain and Europe" due to travel difficulties related to the tragic events of Sept. 11. Nick Kirby, editor oftouchpoints, kindly agreed to report on Day One of the conference for us. We can't thank him enough for his willingness to share his insights. 

The inauguralATM Industry Association Europeconference at London's Royal Lancaster Hotel could easily have been overshadowed by the tragic events in the U.S. in the preceding week. However, despite a number of exhibitors and speakers being unable to attend, it was a sign of how resolute the ATM industry is that the conference went ahead. Credit is due to the people at ATMIA, ATMIA Europe and the event organizers,TradeMedia Group.

After opening messages from ATMIA President Lyle Elias - who proclaimed the conference "a truly historic event which goes a long way to validating ATMIA as a truly global organization" - and Mike Lee, the ATMIA's international director, the packed hall, with more than 200 attendees from more than 20 countries, observed a minute's silence in memory of those lost in New York and Washington D.C.

Key drivers

Then it was down to business with the first presentation of the day from Dominic Hirsch, managing director ofRetail Banking Research, who gave a detailed insight into ATM penetration in Europe. Two observations were of particular note: While explaining that the current drivers for change within the industry in western Europe are customer demand at 18 percent and the banks' need to reduce staff (14 percent), he said that the latter and the accompanying need to cut costs would become the key drivers over the next few years.

Another significant point, and one that was echoed again and again during the day, was how the number of off-site ATMs was going to increase in western Europe. The present figure stands at 18 percent, but Hirsch reckons there is nothing to stop penetration reaching levels similar to those that currently exist in the U.S. - namely 50 percent.

This was one of his predictions for the future - others being that low-cost ATMs are going to become a key feature especially as off-site machines become more prevalent, and that surcharging (which only exists in the UK at present) will become more accepted elsewhere in western Europe.

Regulatory matters

John Hardy, chief executive of the UK'sLink Network, in his presentation explained how Link had grown in a relatively short period to become a system handling more than 125 million shared ATM transactions per month. He went on to focus on legislation and governance issues and how they affect the UK's ATM industry.

These issues address Link's effective monopoly in the UK and how that lies in reference to governmental legislation. Hardy said, "A successful network, by definition, precludes other networks coming to the market. This is a situation regulatory bodies are not necessarily happy with. So members of a network have to be very carefully watched and the network has to be open."

This is very much in line with the UK's new government rules, which deem that the network has to be open to all - subject to the meeting of standards - and that fee charging to customers has to be transparent. In addition, there is to be no "undue control" by major members of the network and there must be an openness for competition.

Doing it all

Paul Nicolls, business development manager forWincor-Nixdorf, outlined the business case for super-ATM multifunctionality. There was much talk at the conference of the exciting new possibilities at ATMs; most people within the industry are aware of the possibilities of ticketing, coupons and advertising, but what are the business drivers?

Put simply, Nicolls said that the role of the super-ATM is to "replicate in a self-service environment the bank counter and front-office functionalities for both personal and business customers."

Nicolls said that the market forces split into two categories - the banking perspective and the customer perspective. It is a case of marrying the two. This means satisfying the banks' need for reduction in manual processing, lower investment in infrastructure and the need to attract new customers against the customers' need for 24/7 banking, reduced charges and simplicity of operation.

Nicolls said that the constraint lies "not in the technologies but in the banks and their infrastructures."

Nicoll's predictions for the future? One slot for all media, utilization of Bluetooth technology, improved reliability and the emergence of the ATM as a virtual selling machine.

Everyone in the pool

The most interesting presentation of the day for this writer was made by John Hardy again, on behalf of Adam Reid of Link, who was unable to attend owing to the imminent arrival of his new baby. The subject? A theoretical model for ATM pooling which postulates the benefits to be gained from collaborations between normally competitive companies.

Reid has created a model that suggests a hypothetical break-even point for ATMs in a given location. In his sample, he looked at ATMs in a town center area and noted that the high number of machines meant that none were breaking even. He then suggested the removal of a number of these machines to allow for the remainder to be more profitable. In his model, the removal of 20 percent of machines would lead to only a 2.65 percent displacement of earnings.

Essentially, the banks that own existing machines would become a cooperative, effectively pooling their resources. Once the least profitable machines were removed, all subsequent revenues would be distributed to the group.

The benefits are many, as the similarMultibanconetwork in Portugal has already proven, but so are the barriers. Just getting the financial institutions to work together is a logistical minefield.

Yet the industry has joined forces on issues relevant to all before. As Hardy pointed out, "There is an integrated industry view of how fraud needs to be dealt with, it is no longer a competitive issue." To this writer, ATM pooling could be an intriguing option for the future.

All over the board

"Operators in the States are looking at different ways of generating revenue," said Stevi Lowmass, general manager UK forMosaic Software, when looking at how global trends in ATMs are relevant to European markets. Reinforcing the view that there is no clear "next big thing" in the industry, she admitted that key drivers in the U.S. right now are "a bit of everything" - from advertising and ticketing to deposits, check cashing and wire transfers.

And the reason for this? Financial institutions and ATM deployers are being forced to look at a variety of ways of generating new revenue. As Lowmass pointed out, surcharging revenues have dropped by 6 percent, despite the rates remaining roughly the same.

As a result, she believes that Web enablement is the way forward. "I see ATMs being a fulfillment device in the mobile world. Consumer demand is going to drive what we see on ATM/kiosks. There will be an increased focus on multi-channel services with technology not being the limiting factor, but what makes business sense," she said.

But exactly how it will pan out and what services will eventually be made available? "No one knows," she said.

Growing by leaps and bounds

The final presentation of the day - and the most humorous in this writer's eyes - was from Sherif Seddik, director ATM solutions for Retail Locations,NCR. Laying out a strategy for retail ATMs in Europe, he began by claiming that Europe is "under ATMed."  While many people blame a lack of surcharging for this, Seddik disagrees. He cited Australia, which currently has no surcharging yet has 700 retail ATMs per million people.

In fact he believes there is considerable growth potential for Europe's retail ATM market. "But how big is that opportunity? If you assume what happened in the U.S. over the last five years happens in Europe, you're looking at 350,000 new installations," he said.

This growth won't be without its problems - not simply from varying security and network regulations across countries, but also "from those people in Brussels who poke their fingers into pies - the size of bananas and cost of services - what role are they going to play?"

Seddik believes the forces are there for an upsurge in retail deployment in Europe but there are hurdles to be overcome. The biggest hurdle, he said, is closed network environments.

"These are operating as boys' clubs where they are restricting entry to other parties," he said. And then there are different regulations in each country, which Seddik said it took him 18 months to decipher. But if these can be overcome or at least made simpler, then there should be less to hinder the advance of the retail ATM.

The day was rounded off with a panel discussion where the panelists were asked to outline their vision of the future. Bill Jackson, chief technical officer forTriton, summed up pretty much the general feeling of the day: "We don't frankly know what the next best idea is going to be. What we do is build the platform in the hope that a suggestion comes along. We build the hardware and hope that someone comes along with the application."

So the machines are there. Now all that someone has to do is decide what to do with them.

Included In This Story

---

ATM Industry Association (ATMIA)

The ATM Industry Association, founded in 1997, is a global non-profit trade association with over 10,500 members in 65 countries. The membership base covers the full range of this worldwide industry comprising over 2.2 million installed ATMs.

Request Info

Learn More

Triton Systems

Triton FI based products • NO Windows 10™ Upgrade • Secured locked down system that is virus/malware resistant • Flexible configurations - Drive-up and Walk-up • Triton's high security standards • NFC, anti-skim card reader, IP camera and level 1 vaults are all options • Triton Connect monitoring • Lower cost

Request Info

Learn More