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The so-called "Super ATMs" being deployed by Wells Fargo, American Express, InnoVentry and others won't leap tall buildings in a single bound, but they may help push ATM technology to the next level.

January 7, 2002

They offer the first examples of ATM deployers taking advantage of Internet technology to roll out the kinds of bells and whistles that to date have been more talk than reality: full-motion video advertising, personalized user interfaces and advanced transactions such as check
cashing and wire transfers.

"Web enabled" is the most popular term to describe these machines, but some experts think it has created a widespread misunderstanding -- even among those in the ATM industry -- about how the technology works.

Johann Dreyer, executive chairman of  Mosaic Software, a South African company with offices in Ft. Lauderdale, Fla., that counts American Express, InnoVentry and 7-Eleven among its clients, said, "The fact that the ATM can connect to the Internet doesn't mean somebody can just sit in front of it and browse on it."

The Internet is simply used as a pipeline to connect ATM users to Web sites that have been pre-selected by an ATM owner. So, for example, a financial institution could offer customers access to its Web site to view a bill payment schedule or check account balances.

For many deployers, the biggest benefit of adding Internet technology to an ATM is the ease of creating new applications. "Irrespective of Internet connectivity, this environment is far easier to do systems development in," said Bob Chlebowski, executive vice president of
distribution strategies at  Wells Fargo. "It will allow us to expand the level of products we offer."

Of particular interest to the bank is the ability to customize the ATM experience, allowing customers to designate their preferred language and Fast Cash amount, for example.

While some fret that Web-enabled ATMs may lead to longer lines and disgruntled customers, Chlebowski predicts that transaction times will shrink due to the combination of a speedier microprocessor (Pentium III, in Wells Fargo's case), more intuitive screens and the aforementioned customization.

Wells Fargo has four Web-enabled ATMs in California -- one in Los Angeles and three in the San Francisco area. All are running full-motion video clips of Dreamworks movies like "Gladiator," live news feeds from MSNBC.com (updated every half hour) and personalized customer greetings and product information.

The movie clips run only while the machines are idle. Ever mindful of transaction times, Wells stops the clips when a card is inserted. The MSNBC headlines, which appear in a ticker at the bottom of the screen, are the only content currently pulled from the Internet.

Like Mosaic's Dreyer, Chlebowski emphasized that the ATMs do not transfer content directly from the Internet to the ATM. All content flows through the bank's private Intranet. Noting the "intense need for security," he said, "You'll always have that filter of the Wells Fargo network."

While the flashy full-motion video clips grabbed the attention of the national media, Chlebowski believes that subtle enhancements such as the intuitive screen sequences will have a more lasting impact on customers.

"It's really the little things that count," he said. "We're trying to provide an interface that is more similar to what you would experience at a PC than at a traditional ATM."

The San Francisco-based financial institution plans to upgrade an additional 800 ATMs in California and Arizona by the end of this year, with plans to Web enable its entire network of more than 6,400 machines in 22 states by the end of 2001.

Wells Fargo isn't the only financial institution to make a major commitment to Web enabling its ATMs. Charlotte, N.C.-based Bank of America will have 22 of the machines -- 12 in Charlotte and 10 in Atlanta -- up and running by year's end. All will feature internal and external advertising in full motion video and sound, as well as the ability for customers to personalize transaction preferences.

Bank of America spokesperson Mark Williams said BofA, the nation's largest ATM owner, will survey customers to gauge their reactions and determine their interests before rolling out more machines and services next year. "We want it to be what they want -- not what we think they want."

Eventually, most of BofA's 14,000-machine network will be Web enabled, Williams said. "This is our first toe in the water, but we're definitely going to jump in."

PC-based ATMs aren't new; it's the addition of a Windows NT operating system that's the key to incorporating Internet protocols. Making machines Internet ready is largely a matter of adding a faster processor, more memory and Windows NT, Mosaic's Dreyer said.

Most deployers dabbling in Internet technology, including Wells Fargo, American Express and InnoVentry, are also opting for touchscreens. Though not a necessity, a touchscreen is a logical add-on, Dreyer said. "If you're going to add more transactions and you don't want to slow down the process, you have to supply something to the user that's easy
to understand."

Bruce Chapa, a project manager at North Canton, Ohio-based ATM manufacturer Diebold, said all of his company's equipment dating back to the mid-80s is upgradeable. The cost of upgrading a legacy ATM varies, but typically hovers around $3,000 to $5,000. Chapa doesn't recommend Web-enabling a low-end machine.

"While you can do it at a lower-end machine, it's not going to fit the expectations that consumers have grown used to through using the proprietary, OS/2-based systems that are out there today," Chapa said.

"With a low-end cash dispenser," Dreyer agreed, "you're going to gut so much of the machine that you'd do just as well to replace it."

The economics of upgrading are particularly compelling for deployers who want to deliver the same application over multiple channels, Chapa said. "You don't have to invent the transaction, the service, the offering more than once."

Creating a bill payment application for multiple channels is a costly proposition, for example. But Memphis, Tenn.-based Union Planters Bank, working with Diebold, was able to migrate an existing bill payment application from its online banking site to a Web-enabled ATM at its corporate headquarters.

"That cost savings will become exponentially more important as the consumer gains more ways to access financial services through the Internet," said Bob Nemens, Diebold's manager of global marketing, noting that several banks have announced plans to introduce wireless services to customers.

Without new applications, Nemens added, moving to NT doesn't make much sense. "If you only want your ATM network to reliably dispense cash, the legacy systems out there are doing that very well."

Most agree that the move to Web-enabled technology is being driven by deployers tired of the constraints imposed by the highly proprietary ATM infrastructure.

InnoVentry, the San Francisco-based company that has installed 500 Web-enabled terminals called the RPM in retail outlets like Kroger, Albertson's and Circle K, encountered so much difficulty when it introduced an earlier, non-NT version of its check cashing machine in late 1997 that it decided to migrate to an open platform after just a few months.

"We concluded that we needed a more current technological state of thinking to do what we wanted to do," said InnoVentry CEO Frank Petro.

Because OS/2-based legacy systems were dominant among U.S. vendors, InnoVentry turned to international companies like Mosaic and Scottish software developer KAL to help create an open architecture platform for its machines, Petro said. The process took about 15 months.

InnoVentry had a unique advantage in developing its platform, Petro said. "The reason we've been able to do this is we basically started with a clean sheet of paper. We had no legacy technology to worry about."

As more ATMs migrate to NT, Petro foresees a "dramatic explosion in innovation." He compared the ATM industry to the pre-Windows PC industry, noting that new applications proliferated when PCs moved to an open architecture, hardware and software were unbundled and a common standard was created.

Petro believes vendors were initially reluctant to support an open, and thus hardware-independent, platform. "Theoretically, with our platform, we are in a position now that if we wanted to buy a check reader from Vendor A, a cash dispenser from B and a processor from C, we could do that. We have the ability to build the ultimate machine," he said.

The RPM currently features check cashing and advertising capabilities in addition to standard ATM functionality. But new Web-enabled applications are on the way, Petro said.

In the works is a pilot program that will allow customers to conduct simple e-commerce transactions at two Circle K locations in Phoenix. They will order merchandise at the ATM, then return to the store later to pick it up at their convenience.

The Circle K pilot is similar to a successful program at 7-Eleven stores in Japan. 7-Eleven, working with American Express, is launching an e-commerce pilot at stores in Texas. American Express reportedly plans to upgrade a much larger chunk of its 8,600-machine network if early results from Texas are promising.

The range of new applications possible on a Web-enabled ATM may be limited only by a deployer's imagination, Dreyer said.  "ATMs were brought out 30 years ago to automate what a bank teller did. Now I can automate any process that requires some form of a payment system."

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KAL is a world-leading provider of multivendor ATM platform, application and management software, specializing in solutions for bank ATMs, self-service kiosks, and bank branch networks.

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