News

Essay: New Standards And Technologies Are Changing The ATM World

Traditional ATMs are changing in many ways, according to ACI Worldwide's senior product manager Rick DuVall.

August 3, 2003

New standards and technologies are beginning to change the ATM industry. New standards such as Interactive Financial eXchange (IFX), Windows open services architecture extension for financial services (WOSA/XFS), and active XFS are becoming widely accepted.

Technologies such as hypertext transfer protocol (HTTP), transmission control protocol/Internet protocol (TCP/IP), hypertext markup language (HTML), and more recently extensible markup language (XML) are starting to be used in the ATM channel. The new standards, in conjunction with these technologies, are allowing ATM acquirers to deploy a different kind of ATM. This new type of ATM is loosely referred to as a "Web-ATM." The term Web-ATM was coined because of the technologies that these new ATMs employ and not due to the common misconception that Web ATMs either use the Internet for communication or allow customers to browse the Web. On the contrary, for the foreseeable future, due to both security and performance concerns, Web ATMs will probably continue to be driven across dedicated communications networks, such as the acquirer's intranet. Currently, banks tend to purchase ATMs from a single vendor. This is due in most part for compatibility and maintenance reasons. Banks that do have machines from multiple vendors often have them because of price considerations, functionality or, as is most common, from bank mergers. These new standards and technologies are changing all that.

IFX

The financial services community has been working to develop financial industry-specific standards for some time. In 1998, the open financial exchange (OFX) consortium and the banking industry technology secretariat (BITS) combined their OFX and Integrion GOLD standards to create the IFX standard. In February 2002, ACI Worldwide joined the IFX forum with the expressed intent of contributing to the creation of the necessary message infrastructure to allow for the operation of ATM and POS devices. At that time, NCR was the only ATM-industry vendor on the forum. Shortly thereafter, a new ATM/POS working group, co-sponsored by Bank of America, NCR and ACI, was created to concentrate on those activities related to the ATM and POS industries.

Today, the ATM/POS working group reads like a "who's who" of the ATM industry including among others, ACI, Diebold, eFunds, Fujitsu, Mosaic, NCR, Phoenix Interactive, and Wincor Nixdorf. Other members that have shown interest in the ATM initiative include e-Bank, Citibank and Wells Fargo. On February 18, 2003, IFX Version 1.4 was made publicly available. This new version contains all the necessary messages to operate standard ATM machines. Several vendors have already begun developing their respective modules to support this new IFX specification.

Other working groups within IFX include:

• Credit application processing working group
• Business banking working group (BBWG)
• Electronic bill presentment and payment (EBPP) working group

Together all four groups are working to develop a common standard that will open their respective areas of technology.

WOSA/XFS

The openness provided by Web ATMs represents a quantum leap in progress. The very first ATMs were completely closed and proprietary machines. Later, ATMs made use of simple single-purpose computers and software to control their various functions. The next generation of ATMs shifted to microcomputers and introduced the concept of "states and screens."

Different models of ATMs from the same manufacturer (sometimes even from different manufacturers) could be centrally controlled using a standard interface. Off-the-shelf ATM driving software from companies like ACI could be used to monitor and control these ATMs. The introduction of PC-based ATMs continued this trend of increasing openness through the use of a standard hardware platform and operating system. The PC platform, coupled with widely used operating systems such as OS/2, made some software development tasks easier. The type of software developed, however, did not advance much beyond the already established "states and screens" methodology. Adding whole new classes of transactions, such as non-cash items or mobile top-up, was still very cumbersome and often involved writing software specific to a particular ATM manufacturer and/or model.

On the other hand, Web ATMs represent a complete departure from the incremental steps toward openness made in previous generations. They take being non-proprietary at the hardware platform or operating system to a new level, providing a completely open and standardized programming environment. All aspects of the ATM, including interaction with low-level devices such as cash dispensers or card readers, have been simplified and standardized via the component-based software standard known as Windows open services architecture extension for financial services (WOSA/XFS), initiated by Microsoft, but now under control of CEN/ISSS (the European committee for standardization/information society standardization system).

In addition, in order to allow for easier control from browser-based interfaces, a Web-ATM can also support the newer activeXFS standard. This standard builds on the WOSA/XFS foundation by providing an even simpler programming interface. When compared with the proprietary programming methods of the past, Web ATMs provide a new level of openness unmatched by any previous generation of ATMs. Not only does this standardization give ATM software developers an easier way to program these devices, it frees them from writing software that is specific to a particular ATM manufacturer. Just as software written for Microsoft Windows can run on any type of Windows-capable PC, for the first time ATM software can be written that works on almost any type of Web-ATM, regardless of manufacturer.

TCP/IP, HTTP, and HTML

Likewise, the telecommunications environment is also changing. ATMs are no longer sitting behind their driving host, isolated from the rest of an organization's infrastructure by virtue of legacy point-to-point communications protocols. New possibilities now exist, including everything from scrolling news, weather and sports, to advertising and purchasing non-cash items such as tickets and transportation tokens.

This new openness in communications also allows customers access to not only bank services, but services from outside providers as well. These outside services may include brokerage, money transfer, bill payment or any other high value service of demand. From a technical perspective, all of these scenarios are made possible by the inherent flexibility and robustness of the Internet communications protocol called TCP/IP and the various application protocols that are built on top of it. Unlike earlier communications protocols used by ATMs, TCP/IP allows for multiple channels of information to be communicated across the same physical communication line. These channels now have the ability to dynamically generate the look and feel of the ATM user experience based on the customer profile, advertising campaigns, or other factors.

Other channels, such as ACI's BASE24-infobase™ system, can be used for the transfer of large multimedia or streaming media files to support advertising that is even more attractive. One of the important benefits of this new level of communications robustness is that, when coupled with a flexible, IFX solution, much more than the simple traditional EFT transactions can be communicated between the ATM and host systems. Whole new categories of transactions, such as event ticketing or e-commerce purchasing, can be rapidly added as new business opportunities and service partners are identified. This flexibility is a radical departure from previous generations of ATMs and presents both significant opportunities and challenges.

What's In It For The Bank?

While competitive and corporate objectives differ by ATM acquirer, there are some overall benefits driving the proliferation of Web ATMs. They include:

• Dusting off the ATM channel. Many banks have offered consumers the same ATM functionality for 15 years. For some machines that are strictly cash dispensing, a limited set of services is not an issue. However, ATM managers are constantly looking for ways to attract new customers to the channel in order to generate additional ATM revenue.
• Leveraging IT development. All significant future channel investments will be scrutinized for leveragability across delivery channels. Web ATMs now give acquirers the opportunity to look into the possibility of leveraging development between their Internet and ATM channels.
• Complying with the Americans with Disabilities Act (ADA). This new legislation will require, among other things, voice lead-through at an ATM. Using current Internet and Windows-based tools, such as text-to-voice speech engines, this task is accomplished considerably easier than in the OS/2 environments.
• Generating additional revenue. Web ATMs can offer a wide variety of financial and non-financial services. As part of this benefit, acquirers will need to make decisions regarding what services to offer, as well as which locations to offer them.
• Reducing maintenance and support. ATMs have traditionally been proprietary, with each major vendor offering hardware and software that was incompatible with those offered by competitors. Large banks usually have a variety of ATM machines as a result of merger and acquisition activities. ATM programming changes and maintenance differs for each vendor, considerably increasing costs. With ATM vendors now moving toward open architectures that have common infrastructures, communication protocols, and software, having machines that are compatible can result in significant support-cost reductions.
• Migrating OS/2 to NT. Most ATMs run on the IBM OS/2 operating platform. IBM has indicated they will no longer support this platform within the next few years. Because of this, most manufacturers are moving to the Microsoft Windows platform. The particular Microsoft Windows version (i.e., NT, XP, 2000, ME, etc.) is dictated by the vendor, but in most cases is not of concern to the bank.
• Extending CRM to the ATM. As the most heavily used consumer-banking channel, the ATM can be a powerful tool in a bank's CRM efforts. Although most ATM sessions are brief, banks continue to strive to better leverage the time a transaction takes. As mentioned previously, Web ATMs have the ability to exchange customer information between the ATM and a CRM system. It is of enormous benefit to the banks to offer a brief, but personalized campaign message or branding communication while the customer is processing their transaction. This is most commonly done during the transaction "wait screens," which inevitably occur.

What Are The Costs?

• Hardware. Web ATMs have specific requirements for hardware capabilities that some of the older deployed machines do not have. Machines 10 years and older may not be eligible for updates, however in all likelihood most of these ATMs will probably have problems satisfying other legal requirements such as triple DES, ADA, and EMV. Acquirers must decide whether to purchase new ATMs or upgrade an existing fleet, or a combination of these options. New machines are readily available from several manufacturers, such as Diebold, NCR and Wincor Nixdorf, and can run between US$30,000 and US$50,000. The costs to refurbish current machines vary greatly, depending on the current age and state of equipment.
• Software. Web ATMs need a specialized set of applications, including network infrastructure, browsers, device drivers, content managers, and updated operating system. Various vendors such as Diebold, KAL, NCR, Phoenix Interactive, and Wincor Nixdorf, to name a few, sell these ATM software applications.
• Telecommunications. To maximize the visual elements of Web ATMs, machines should have broadband connections such as TCP/IP. Establishing broadband connectivity to branches and other locations is likely to be the single most expensive cost. Today, most ATMs operate on 4800 or 9600 baud rates, suitable for text-based data feeds, but too slow for graphics or other images in a consumer environment. Upgraded communication must be made to ATM network's authorization systems, as well as possibly to a Web server.

Summary

Web ATMs represent a logical extension, albeit a large one, of the historical trends of increased connectivity and openness of ATMs. The flexibility of the TCP/IP communications protocol and the power of increased bandwidth provide a whole new degree of connectivity. Standards-based software components that control the ATM devices, coupled with a common message specification like IFX, provide a powerful new environment. At the end of the day, banks deploying Web ATMs are likely to achieve both short-term benefits through cost savings for fleet support and maintenance, and longer-term benefits, as banks integrate Web ATMs with other retail delivery channels and link into customer databases to boost CRM efforts. Taken together, it's easy to see why Web ATMs are poised to radically change the way we think about and use ATMs.