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Third-party providers, Diebold come together at San Antonio conference

Nearly two years after FSPA filed an anti-trust complaint against Diebold, the two factions have started talking. At FSPA's annual conference last week, Diebold was one of the attendees - a first in the organization's 33-year history.

June 22, 2006 by Tracy Kitten — Editor, AMC

Third-party service and maintenance providers are naturally independent thinkers. They pride themselves on being champions for the little guy, and they aren't likely to see eye-to-eye with original-equipment manufacturers.

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But last week in San Antonio, at a gathering dedicated to third-party financial and security service, maintenance and equipment providers, the setting was different. Rather than conflict, the two are moving toward compromise.

For the first time in the Financial & Security Products Association's 33-year conference history, OEM Diebold Inc. was invited. At the top of Diebold's priorities during the conference: clarifying its revised service, software and parts policies for third-party providers.

Diebold's unprecedented attendance stems from a October 2004 anti-trust complaint filed against the North Canton, Ohio-based company by FSPA. The complaint claimed that Diebold tried to gain an unfair advantage by restricting independent service providers from performing diagnostics on its U.S. bank ATMs. Specifically, third-party providers claimed that Diebold blocked their purchase of parts for Opteva ATMs.

FSPA hosted this year's conference in San Antonio, home of the Alamo.

The complaint, filed in U.S. District Court, asked for a rescission of Diebold's policies, which FSPA said gave the company an unfair advantage by requiring that only Diebold technicians perform hardware or software installations on its ATMs.

For months Diebold and the association were at odds.

In February 2005, association executive director John Vrabec told ATMmarketplace "Diebold has made it impossible for independent third-party maintenance companies to successfully compete for ATM service contracts."

But over the last 20 months, a lot has changed.

In August, after the court denied FSPA's motion for a preliminary injunction against Diebold, FSPA dropped its suit. And FSPA and Diebold are now talking, which Vrabec says is a step in the right direction.

"The litigation is water under the bridge," Vrabec told ATMmarketplace in April. "The attitude is very positive now and we're working together."

It may take a while for the bruises from the legal tug-of-war to heal, but FSPA members say they're eager to move forward.

ANI's Jack Reed, left, demonstrates Wincor multivendor software on an NCR ATM.

Of the conference's 400 or so attendees, 125 participated in Diebold's presentation. Even though the presentation didn't offer much room for dialogue with Diebold, FSPA members said they plan to stay open-minded.

Diebold's senior operations and planning manager, Nici Lucas, fielded questions - most of which revolved around license fees - and asked that others be submitted. Those submitted questions are expected to be answered in coming weeks. (ATMmarketplace plans to post a follow-up story after talking with Diebold next week.)

One message was constant among FSPA members: Market changes are forcing dominant OEMs - Diebold and Dayton, Ohio-based NCR Corp. - to change their ways.

Less-dominant U.S. players, like Triton Systems and Tranax Technologies, and new U.S. market entrants, like China's GRG Banking Equipment Co. Ltd. and even Germany's Wincor Nixdorf International, are changing the landscape.

San Diego-based ATM sales, service and transaction processor Advanced Network Inc. recently signed a partner deal with Wincor, making it the second Wincor reseller in the United States. (Georgia's Benchmark Technology Group signed a reseller deal with Wincor in April.) Not only does ANI have rights to Wincor hardware and software support in the U.S., but its deal with the company doesn't limit or restrict the selling and service of other vendors' products, ANI's Bob Plunkett and Michael Bodine said.

"It's a very business-partner-friendly contract," Bodine said. "And we think Wincor will help level the playing field."

Bodine said Wincor, through its partners, is targeting the U.S.'s small- to mid-sized financial-institution market in much the same way Long Beach, Miss.-based Triton is.

Like Wincor, Triton's partner policies are less restrictive.

The FT7000 is Triton's first ATM to include envelope-deposit.

Phil Suitt, president of Texas-based Triton reseller ATM Ventures, said the market's less-restrictive players are opening opportunities and changing the FI landscape.

"Triton doesn't compete with us," he said. "We sell it and service it. It's different from Diebold and NCR, who are big into their own service deals. This is giving options to the banks that they didn't have in the past."

Suitt, who focuses his sale of Triton and Tranax ATMs on the credit-union and community-bank markets, said FIs are catching on to market changes, too. In 2005, Triton's U.S. ATM shipments jumped 21 percent from the prior year, and Triton credited a portion of that growth to its increased FI-oriented sales.

Triton's FT5000 thru-the-wall ATM is popular with small- to mid-sized FIs, Suitt said. But the FT7000, which Triton introduced last year in Beijing, is expected to mark Triton's true launch into the FI space.

ATM Ventures expects in the near future to pilot the full-function FT7000, which accepts envelope deposits and is equipped for deposit-imaging upgrades.

Pi Systems president Sabrina Turner talks Triple-DES upgrades with an attendee.

"It has all the bells and whistles, from a functionality standpoint, but its price-point is going to be competitive," Triton regional sales manager Mark O'Rourke said. "We plan to launch this across the (FI) board, in credit unions, community banks and even some large FIs. This is the machine that will help with our foray into the FI space."

Triton's openness with third-parties regarding its Prism software, which the company bought rights to from OEM Fujitsu in 2004, also illustrates a market difference.

"It's more open than (Diebold's) Agilis and (NCR's) Aptra Edge, and we make it more available to our service providers," O'Rourke said.

Still, the dominant market-share that Diebold and NCR possess puts them on a different playing field, industry experts agree. Protecting proprietary interests is a real concern for them, as is ensuring quality service, Diebold's Rick Moore told ATMmarketplace last July.

"In terms of the resources we put into (technician training and documentation), those are areas where a third-party will never be as effective as an OEM can be," Moore said.

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