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Papelaco in a new Age of Discovery

In the latest installment of "On the High Road," ATMIA International Director Mike Lee finds that Portuguese ATM manufacturer Papelaco, drawing on the history of its homeland, has sets its sights on global expansion.

January 7, 2002

Mike Lee is international director of the ATM Industry Association, and is based in London.

Just after sunset, a sand storm whipped up suddenly on the coast road outside Lisbon, Portugal. A gale blew a fierce rain of sand up from the beach onto the road. Through the swirling sand illuminated by our headlights, we could see a Jaguar Xj6 was caught in a sand-drift ahead of us.

I was on my way to a seafood restaurant with Mario Castelhano, Director of Papelaco, Portugal's big ATM and kiosk manufacturer, to celebrate a milestone for the ATM Industry Association. Papelaco had earlier that day become the first European company to become a global sponsor of the association, creating an important bridge for ATMIA, with its roots in the U.S. and UK, to the European continent.

Mario immediately pulled his car to one side, his instinct to help the stranded motorist uppermost in his mind. The hapless motorist turned out to be an English "damsel in distress." It was impossible to face the piercing sand storm, so we averted our faces from the force of the blast as we struggled to pry the big car from its sand trap. Only when two other motorists stopped to help did we succeed in pushing the Jag onto safe ground.

Mario Castelhano may be one of Lisbon's most successful businessmen, with Papelaco possessing a 75 percent share of the Portuguese ATM market and expanding globally, but he did not hesitate to help a stranger in need at some inconvenience to himself.

An avid fan of Land Rovers and four-wheel drive vehicles, Mario is a man for all seasons, riding out the unexpected storms (even sand storms!) and generously embracing opportunities and good times when they arrive.

That evening we enjoyed a delicious seafood dinner – Lisbon is well known for its fresh shrimps, lobsters and shellfish – even though our hair, ears, pockets and shoes were lined with sand!

Papelaco's global sponsorship of ATMIA, following NCR, Triton and ATMmarketplace.com, is highly significant because of the bridge it creates between our membership bases in the U.S. and UK and the continent of Europe. And Papelaco is reaching out to the world from its base in Portugal.

A little world history

The Age of Discovery made Portugal great. Setting out from Belem, Lisbon, in 1497, Vasco da Gama first navigated a sea route to India, a world-changing discovery. Today's globalization has its roots in the fruits of that voyage, following centuries of world trade.

The wealth from the spice trade made Lisbon the mercantile center of Europe. Yet the city has always had a strong maritime aura. According to myth, the Greek hero Odysseus founded Lisbon on his journey home from Troy. The Portuguese hero-discoverers, da Gama, Magellan and Bartolomeu Dias, opened up Europe to the exotic East -- across the vast Indian Ocean, circumnavigating the great continent of Africa -- just as Columbus opened up the West across the lonely, stormy Atlantic.

Like the discoverers of old, Mario is pioneering the expansion of Papelaco into Africa and other parts of the world -- often in unknown and emerging ATM markets, such as Morocco, Angola and Mozambique, which are starting up from a zero base.

Papelaco, which started as a dealer in office equipment in 1970, began its bank automation business in 1989 and is expanding to become an international brand for delivery channel, bank automation and financial services solutions. Its main clients include banks, SIBS (Sociedade Interbancária de Serviços - the Portuguese inter-bank ATM and EFT/POS national network), telecom operators and several governmental institutions. Papelaco comes from the Portuguese word for "paper."

Mario has the drive and vision, combined with patience and humanity, required to steer Papelaco toward its growing place in the self-service world of the future, having risen through its ranks to become its director after starting his career there installing their fax machines. He regards himself as a citizen of the world, so some of that courage of the voyager, seen in Portugal's days of discovery, is in him.

A mature market

Portugal has a mature ATM market. In fact, Southwest Europe is the most densely "ATMized" region in Europe. Portugal has a 10 million population with 9,537 ATMs, a density of one ATM per 1,049 persons. This is well above the European average of one ATM per 2,237 persons and second in Europe only to Spain.

The Portuguese ATM network also has one of the most advanced sets of ATM functionality in the world. Additional facilities, other than cash withdrawals and balance inquiries, on Portuguese ATMs include: electronic road toll support activation; third-party advertising; bill payment; tax payments; cash, check and mail deposits; mobile phone loading; phone banking activation; and dispensation of transit and show tickets.

The success in implementing ATM multifunctionality on a national scale lies in the development of SIBS, one of the most efficient and capable ATM networks in the world. It was introduced relatively late, so there were no inherent problems integrating complex legacy systems that do not communicate with each other.

In 1983, 12 banks formed the alliance: Banco Borges & Irmao; Banco Espirito Santo e Comercial de Lisboa; Banco Fonsecas & Bornay; Banco Nacional Ultramarino; Banco Pinto & Sotto Mayor; Banco Portugues do Atlantico; Banco Totta & Acores; Caixa Geral de Depositos; Credit Franco Portuguais; Credito Predial Portugues; Lloyds Bank PLC; and Uniao de Bancos Portugues.

Today SIBS, with more than 30 member banks, is a market leader in ATM network security and centralized network functions, with a strong Multibanco brand. Part of its formula for success is in the integration of the network into the public sector, enabling tax payments and payment of utility bills at ATMs, something not available yet in most European countries.

On our way back home from the seafood restaurant on the night of the sand storm, Mario drove through a toll on the motorway back into Lisbon without stopping. The toll fee was registered automatically on Mario's Multibanco account through the SIBS network after registering the passage of his vehicle past the unmanned toll via a device stuck to his windscreen.

Role model

As a result of this advanced functionality, ATMs are very popular in Portugal. The annual volume of transactions has increased dramatically to an average per ATM of 5,100 transactions per month. This is not surprising as the ATM is the second most utilized channel in Portugal – 3.3 million habitual users of ATMs (those making 2-3 ATM transactions per week), compared to three million habitual users of bank branches.

Some of the emerging markets Mario is exploring could learn much from the Portuguese ATM experience. I would suggest that in African countries starting from a zero base, the involvement of the public sector will be critical. Compulsory bank accounts for civil servants into which their salaries would be paid would fuel quick growth of ATMs for them to withdraw cash. In addition, a SIBS-like arrangement for payment of bills and taxes would keep transaction volumes at a high level and greatly assist in familiarizing the population with use of ATMs.

From Lisbon, da Gama opened up the world in the 15th century, visiting exotic, undiscovered continents. How many undiscovered ATM markets are there in this increasingly global world?

The lessons from the Age of Discovery, of courage in reaching out to the unknown world, are there for today's ATM pioneers like Papelaco. The technical lessons from SIBS are there as beacons for future development.

Lisbon has been a place where voyages of discovery were launched in the past, braving storms, fears of failure, barriers to trade. It is possible to export formulas for success to brand new markets. But first of all, you have to set sail.

Included In This Story

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ATM Industry Association (ATMIA)

The ATM Industry Association, founded in 1997, is a global non-profit trade association with over 10,500 members in 65 countries. The membership base covers the full range of this worldwide industry comprising over 2.2 million installed ATMs.

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