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Crash course in UK ATMs

After driving around the English countryside for four days with European sales rep Steve Warner, ATMmarketplace editor Ann All is glad her education in the UK's ATM market wasn't literally a crash course. While she can't tell you how to get to Sheffield, she did learn a lot about the British ATM business.

January 27, 2003

During my recent trip to the UK, European sales representative Steve Warner (the human compass) ferried me around the English countryside in his weathered Renault.

Careening at high speed from one roundabout to the next was like taking a spin on the old "Mr. Toad's Wild Ride" attraction at Disneyland.

My whirlwind trip to the UK was very much like the late, lamented "Mr. Toad's Wild Ride" attraction at Disney World.

To those folks who waited patiently for Steve and I to show up just so you could help me understand the UK's ATM market, I'd like to extend a belated but heartfelt "thanks."

Steve's driving wasn't the only thing that reminded me of "Toad's Wild Ride." The interviews themselves were often fast, fun, slightly confusing and left me wanting more.

Here, some quick impressions of my trip:

Good to be different: Mark Aldred of iliad Solutions Limited, whose Asx authorization and switch software facilitates advanced ATM transactions, believes more folks are viewing transactions such as mobile phone top-ups not just as a possible revenue generator, but as a differentiator.

Aldred said that deployers who stick to cash withdrawals only will find themselves stuck in the "no benefit/great need" category. Translation: You must offer because it's expected. If you don't, your customers will find someone who does. Yet you likely won't attract any new customers.

When ATMs were first introduced, Aldred said, they fell into the "no benefit/no need" category. Consumers hadn't experienced them, so there was no reason to have them. As they caught on with consumers, they moved into the "no need/great benefit" category. Customers appreciated them and sought them out. From there, they moved to "great need/great benefit" and, finally, to "no benefit/great need."

Supply and no demand: Anthony Walton, iliad's managing director, said that Asx operates on any hardware platform  -- including an HP (formerly Tandem) server. However, he added, there is no production version as "no one has asked us for it."

Bizarro: Just like the Bizarro world celebrated in "Superman" comics and a memorable episode of "Seinfeld," LINK chief executive John Hardy said that while connections from ATM hosts to LINK were largely Triple DES compliant, connections from ATMs to the host were another matter. "We hope to take a big step forward in order to meet the 2005 deadline," he said.

Strangely compelling: At TNS headquarters, showcased in the reception area was a screen on which one could watch transactions as they were processed. The afternoon we visited (during the run-up to Christmas), the number topped 2 million. On really hectic days, we were told, a slight delay is built in;  "otherwise it's just a blur."

Hanco ATM Systems wants to take over the world -- or at least the UK -- as evidenced by this map of its sales territories.

Borders? Big deal: TNS facilitates some of the world's most traveled transactions, as evidenced by its work with USA Payment Systems, a California-based company that processes ATM/debit/credit transactions for casino deployer Global Cash Access (GCA). Some GCA transactions originate at UK casinos, cross the Atlantic for authorization and then back to dispense funds. 

Chain reaction: Terry Turner, managing director of Hanco ATM Systems Ltd., said that his company is doing more business with chains rather than independent retailers. Fewer than 20 percent of the 250 to 300 ATMs Hanco expected to sell in December would be purchased by individuals, he said. While corporations demand a far more involved sale, the financial rewards are greater.

Chicks dig it: Hanco has contracted with Harris International Marketing to produce research designed to help with its sales efforts. One of the odder facts revealed by Harris, Turner said, is that women -- in far greater numbers than men -- like the look of Triton's 9100.

Can-do protection: CSI Security manufactures modular systems that are designed to allow cash-in-transit workers to replenish ATMs, out of eyesight and harm's way. The structures are made of layers of steel. "Steel doesn't crumble like concrete or brick will. Just think of a Coke can. You can dent it, but it's incredibly difficult to break open," said Mike Parry, CSI's sales and marketing manager.

CSI's products weigh 4,000 to 20,000 pounds, depending on whether they are for interior or exterior installations, and are used by financial institutions and by retail chains such as Tesco and Sainsburys. An alien concept in the U.S. -- largely because our CIT workers are armed -- they resist bullets and all types of physical force.

InfoCash's Eamonn O'Nolan said his sponsorship of the UK's Army bobsled team is a great branding opportunity -- and just plain fun.

"You don't want something that you can shoot full of bullets then turn around and knock over with a sledgehammer," said Parry. The company knows exactly what kind of damage firearms can inflict - from a 9-millimeter Glock handgun to an AK47 -- because it has a firing range where it tests its products.

CSI's newest product, ArmaDock, was designed after CIT workers delivering cash for three busy ATMs at a retail store were victimized several times by thieves who staked out the store from a nearby high-rise apartment building. ArmaDock telescopes out from the wall and latches onto the armored car, creating a secure passageway. When not in use, it folds up against the wall. ArmaDock is being tested at two sites.

Unlocking key management: Ron Carter, product marketing manager for Thales e-Security, is confident that the ANSI X9F6 working group that is creating standards for remote downloading of the keys used for PIN encryption will come up with a plan the industry can live with, largely because the group is packed full of vendors such as Thales, NCR, Diebold and ACI Worldwide.

So why is it taking so long? "We want it to be as unambiguous as possible, and we're writing it so that a larger audience can understand it," Carter said. "At the same time, we don't want to make it so specific that it will be difficult to comply."

Fast company: Independent deployer InfoCash sponsors the UK's Army bobsled team. In addition to the obvious branding opportunity, InfoCash director Eamonn O'Nolan said it's a great way to entertain clients and prospective clients. "I always tell them they'll never get a buzz like that from another ISO," he said.

Keeping them honest: Have you heard the one about how to become an ISO? Buy some ATMs, multiply by 10 and tell everyone you know. They don't "get" this joke in the UK, where it's difficult to exaggerate the size of fleets because a monthly report generated by LINK that includes the number of ATMs -- and what's more, number of transactions -- for each deployer.

The new frontier: The next ATM hotspot may be Russia, according to Simon Rubin, vice president of EMEA marketing for NCR's Financial Solutions Group. Rubin said that some of the country's banks plan to begin offering deposit insurance. This may increase Russian consumers' faith in the financial system, boosting the number of bank accounts - and need for ATMs.

NCR knows about developing markets, having just opened its seventh regional office in China and a manufacturing facility in India.

Vendor independence: Andrew Medford, senior marketing manager for the Financial Solution Group's Software Applications Line of Business, said that truly multi-vendor software, with an XFS layer between the application and the device, is finally catching on after nearly 10 years of hype.

It's a mixed blessing for vendors like NCR, which pride themselves on their software. "It's created new competition for us with a number of new players in the self-service application space," Medford said. "The days when banks always bought their software from the same companies that supplied their ATMs, those days are over."

Some competitors have made headway by focusing on the ATM interface and flashy graphics. However, Medford said, "You can never forget the host interface. If you can't actually plug an application into the bank, it isn't going anywhere."

Scratch that niche: Steve Copestake, sales manager OEM for De La Rue Cash Systems, said De La Rue plans to go after high-tech "niche opportunities," such as cash recycling, bill payment systems and Internet kiosks, with its newly acquired banking automation business from Papelaco. The Papelaco products are a natural for the addition of De La Rue software used for cash forecasting, remote monitoring and other functions. Some of the products may have applications in other industries, such as health care, he said.

Target markets are Spain, Portugal (where Papelaco is the number one ATM supplier), France and Germany. "We're not going to chase after sales opportunities in Iman -- at least not initially," Copestake said. "We're going to focus on areas where we have a strong sales and service infrastructure."

King cobra: De La Rue's industrial strength currency sorter called the Cobra, used by armored car companies to prepare cash for ATMs, has a microchip that listens for crackle -- or lack thereof -- and separates limp bills from crisp ones.

At your service: De La Rue service teams compete head-on with the ATM vendors -- providing installation, first- and second-line maintenance and other services -- in Western Europe as well as North America.

The waiting room: Is the European advertising industry ready for Triton's full-motion video topper? Despite some promising trials in the UK, the answer seems to be "not just yet." Despite a far less fragmented market -- Triton has just six distributors in the UK -- and a more compact geography, the European advertising market is depressed, much like others around the world.

"We're still reviewing it, but it's on hold for now," said Jeff Barrow, Triton's vice president of sales and marketing. "Once the right ticks are in the right boxes, we're prepared to offer it."

The magnificent six: Six may well be Triton's magic number in the UK, said Barrow, who noted that the manufacturer has not signed any new distributors in the last 18 months. "Our six are very happy. The sooner they are profitable, the more machines they'll buy from me."

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