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Competition for ATM service heats up

October 26, 2004

Diebold and NCR are making product and policy changes that the manufacturers say are necessary to protect their brand integrity and better serve their customers - but which some financial institutions fear may limit their ATM service choices.

Ted Josephson, vice president of eBusiness and Operations for Connecticut-based People's Bank, is considering ordering some of Diebold's new Opteva ATMs. He has concerns, however, after learning that only Diebold technicians would have access to software tools used to diagnose serious second-line service problems.

"I basically had to tell Diebold that even though I like their equipment and would like to buy from them, their servicing arrangements have left me concerned that it might not be worth the switch," Josephson said.

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A Diebold spokesperson said that the manufacturer has built additional levels of security into some aspects of ATM applications, including maintenance and diagnostics, for its new Agilis software in order to ensure that data is secure.

The change is part of "an ongoing effort to support technology changes," the spokesperson said. "Relative to serviceability, we password protect our operations but continue to provide standard terminal information, such as terminal status, version identification, configuration and device self-test data to anyone servicing Diebold Opteva terminals."

Policy also changes for resellers

NCR has also modified policies for its resellers, instituting stricter controls over parts supply and technician training. Only participants in the new Authorized Sales and Service Partner program will be able to sell proprietary NCR hardware and software.

The changes were intended to protect its brand and customers, said Andy Orent, vice president of NCR's Financial Solutions division for the Americas. "If someone gets a part not authorized by NCR, in the end it does reflect back on us."

Susan Napier, president and chief executive of FTSI, an NCR reseller for the past three years, said that ensuring the integrity of NCR-authorized products will become increasingly important as banks deploy more Microsoft Windows-based ATMs.

She compared NCR's strategy to that of General Motors and other automobile manufacturers. "When you take your car to a GM dealer, you know you're going to get the right parts and service for it," she said.

The new policies also may help NCR optimize its distribution channel.

Napier believes the program will make it easier for companies like hers to offer turnkey ATM programs to small banks like FTSI client California-based USC Credit Union. "We increased our operational efficiency and reduced expenses" by consolidating first- and second-line service, cash replenishment and other services with a single provider, said Sharon Luke, USC Credit Union's vice president of electronic services.

Yet some third-party service providers fear the vendors' changes may result in fewer options for banks.

"Customers don't like to be forced into a corner," said Tony Green, a purchasing agent for Federal Protection, an ATM service provider since 1991."That's like buying your car from a Chevrolet dealer and having him tell you that you can't go anywhere else for service. Most customers at least want the option of taking the car somewhere else for an oil change."

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