News

A Five-Year Outlook

November 11, 2003

Mr. Krause is head of marketing, banking division, Wincor Nixdorf International GmbH.

Self-service is going to grow in significance, in terms of both usage rates and the breadth of functionality offered by machines. Their role, too, is set to change, moving further away from being rationalization tools, towards being a promotional medium, a source of profit and a pro-active customer dialogue tool - all the way through to entry into binding contracts.

To be sure, there will be big national differences depending on the relative importance attached to checks, bank transfers and the use of cash, and also depending on the role played by savings account passbooks and direct debits, and whether barcodes are used on invoices - say from utilities providers and insurance companies. From country to country, this can result in quite marked differences in self-service, and even at the regional level, too, depending on density of population and urbanization, income and social demographics.

Nevertheless, some general trends can be perceived:

Automated cash recycling and cash depositing are set to continue on an upward track internationally and to be a standard component, alongside monofunction deposit and withdrawal machines, of branches with corresponding cash flow profiles. They will quickly make their mark as the "units of choice" where cost pressures force banks into re-profiling their branches.

The range of services offered on self-service terminals will broaden and go well beyond deposits and withdrawals of cash. The range of additional functions runs from check-scanning with immediate account-crediting through to savings account transaction processing, allowing traditional passbooks to be eliminated. This also marks the entry into pro-active selling with a view to making money via transaction fees or commissions. This can involve banking-type products or, increasingly, non-banking products and services - whether this be topping up phone cards or selling tickets for events, whether issuing discount vouchers or user credits on a random basis with a view to strengthening customer loyalty when a terminal is used by the customer of another bank.

By necessity, there will be closer collaboration between banks and retailers, if banks do not want to leave the entire off-premises market in the hands of independent service organizations (ISOs). However, this will require banks to grab the bull by the horns and understand that self-service is more than just a cost factor. It is certainly revealing when a bank gives up its motorway/highway SST network because it got used more by other banks' customers. No wonder an ISO then ran it at great profit. Using the right business models, all sides can benefit from more concerted collaboration: banks, because they can point to presence in the field cheaply, and retailers because they can recycle their cash stocks on-site, reduce the cost of cash and make additional revenue - as well as potentially using dual function banking and customer cards to gain valuable intelligence on individual customer profiles. And the customer benefits because he or she can get cash easily in the very place they need to use it.

These strategies necessarily mean fitting cash systems with Internet technology, whatever the current status may be in individual countries. Without Web-compatibility, terminals at non-bank locations cannot be run economically. But even more important is the fact that this is the prime enabler allowing individual customers to be addressed in a targeted manner - an indispensable precondition to maintaining personal contact with the customer in times of further reducing customer loyalty and "anonymization" of standard banking transactions. The Internet connection also acts as the key to the current product offering as well as to promotional and marketing drives which can then be broken right down to individual branch location level.

More systems and systems at third-party locations all require new security strategies in order to counter growing criminal energies. It's true that security consciousness does indeed vary widely from country to country, specifically in the ATM arena, but the spotlight is going to be increasingly on more than just mechanical security, as demonstrated by the growing number of ATM attacks in certain countries. With growing instances of card-based fraud, identification - beyond doubt - of the user and secure encryption processes will start to play a key role. Biometric procedures such as fingerprint recognition will be used - albeit only in banks to start with - with mass application initially on passports and visa documents. To introduce them on ATMs in the form of smartcard-based fingerprint data complete with on-site checking, one will have to start by agreeing upon uniform international standards. Work on this must be commenced as quickly as possible, because local identification using fingerprints or other accepted practices, for example PIN numbers when traveling, simply don't work.

The ATM will be at the center of payments made by cell phones. It's true to say that, to date, cell-phone-based payments have not met expectations. Even so, this route should not be written off completely, and neither should one write off initiating ATM transactions using cell phones.

Especially in the hands of teenagers, this is increasingly becoming a universal tool whose benefits absolutely can be used in the world of self-service.