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Web apps to join the Fleet

The latest financial institution to add Web applications to its ATMs is Boston-based Fleet Bank. For Jim D'Aprile, the man leading the charge, tweaking the technology hasn't been as difficult as adjusting the attitudes of upper management.

May 30, 2001

A 17-year veteran of the ATM business, D'Aprile is introducing Web technologies into Fleet's aging ATMs, creating more choices for the financial giant's 20 million customers by providing new features.

 D'Aprile and six full-time staff members are working with NCR to develop the ATM application and with Zentropy Partners to design the user interface for the bank's rebuilt ATMs.

 He plans to test the new machines beginning late in 2001 to early 2002. Fleet will conduct a pilot with its employees in Boston. If all goes well, ATMs with Web components and expanded customer choices will roll out after the pilot.

 He's careful not to call these machines kiosks, although they will use Web components and have expanded self-service applications. The company's previous less-than-stellar rollout of five Internet kiosks probably makes it politic to avoid the term.

  D'Aprile wants Fleet's customers to feel that the new machines are as secure and familiar as the old. Hence, when asked if Fleet is changing its ATMs into kiosks, he was discreetly indirect.

 "Fleet is changing cash and balances to robust service and sales," he said.

 Addressing an audience at April's KioskCom, a kiosk industry trade show, he said that Fleet is changing its approach to ATMs because changes in the market are making cash machines less profitable each year. He summarized for kiosk industry leaders the major problem for Fleet:

 "Our network was suffering from basically the ultimate killer application gone too far: cash."

 In a follow-up interview, he explained from his Boston office that while customers are still withdrawing cash, buying stamps and making deposits at ATM machines, growth has stopped and the market will probably start shrinking.

 Between 1988-1997 ATM transaction growth averaged 12-15 percent. In 1998, growth had slowed to seven percent. By 2000, growth was flat. Now, more people use POS machines than ATMs, D'Aprile said.

 In the meantime, ATM competition from both traditional and non-traditional banking companies has increased.Traditional banks such as Wells Fargo and Bank of America are already experimenting with Web-enabled ATMs. Non-traditional banking companies such as E*TRADE and American Express are setting up large ATM networks.

More touchscreens and more choices at the touchscreen are raising customer expectations. To be competitive in this market, Fleet must give its customers what they want. It's the old case of keeping up with the Joneses, and it's D'Aprile's job to know what that means to Fleet.

 Fading technology

 Some complications are caused by Fleet's growth. When it merged with BankBoston in 1991, for example, it acquired Diebold ATMs that it now maintains in addition to its NCR systems.

 Other complications arise as old ATM software becomes obsolete. Though no one seems to know exactly when, experts are certain that in the near future IBM will end support for its OS/2 operating system, the system used by most of Fleet's ATMs and the overwhelming majority of ATMs in the U.S.

 Replacing technology calls for careful design. The interface needs to be quick and intuitive, as Fleet management doesn't want customers to wait in long lines. The user interface (UI) must also accommodate a keypad and touchscreen rather than a mouse and a keyboard.

 Attitude adjustment

 Perhaps the biggest challenge of all: creating sweeping changes in a cautious banking company isn't easy.

 To negotiate his difficult task, D'Aprile must understand his environment. He defines Fleet as a process-driven organization. Therefore, he set up a process to justify changing direction.

 He started with research, gathering information through market analysis, focus groups held in Boston and New York, and a quantitative study Fleet commissioned. Both Dove Consulting and the Boston Research Group conducted studies.

 The research results painted a picture of a financial industry moving to offer more self-service as part of a bank's overall services. Data also suggested applications Fleet could develop.

 D'Aprile learned that 21 percent of the people who use the phone to gather investment information would like to do so on an ATM, and that 35 percent of Fleet's customers wanted to pay bills on an ATM. These aren't staggering figures.

 "Customers are not beating down the doors demanding expanded services. But we do see a desire for them, and we expect that will grow," D'Aprile said.

 Armed with facts, D'Aprile devised a strategy. Fleet would add Web capabilities to ATM machines in order to add more services to customers than was practical to add without the Web. Next, he needed to take his message upstairs. He was fighting against history and misapprehension.

 Overcoming the past<?xml:namespace prefix = o />

The history working against D'Aprile was Fleet's first attempt at deploying Web kiosks. Fleet set up five Internet kiosks in 1999 after D'Aprile pitched the idea in 1998. Though the kiosks are still running, neither Fleet executives nor customers liked them. In addition, the company didn't have a way to monitor how they were being used.

 D'Aprile said that customers are more satisfied when the application includes new abilities along with what's familiar, but that the five Internet kiosks offered features separate from what customers were used to. "It was a non-integrated solution in a separate channel."

The new path to success lies in leveraging the current system, not ignoring it. It's a long path -- D'Aprile pitched the new idea of Web-enabled ATMs to executive management in 2000 after four months of planning.

 Bad choice of words

 His pitch caused quite a reaction -- all negative. The problem was the phrase "Web-enabled."

 "That was a big mistake," admitted D'Aprile.

 Unfortunately, the mental image evoked by "Web-enabled ATM" was a long line of customers held up by a teenager surfing the Web or playing video games at Fleet's machines. Following his presentation, D'Aprile said he had to perform damage control.

"We had to dispel the notion of card holders playing video games in lobbies and convince executive management that it's not customers surfing the Web. We're going to replace the old portion of our platform with technology to leverage it," D'Aprile said.

 Once he redefined his plan, he had better luck.

 "We were able to re-fix management focus away from the technology itself and onto its application," D'Aprile said.

 Once explained that way, management understood the greater possibilities for customer satisfaction and services with Web technology.

 "Things that you couldn't even consider before now become feasible, at least for consideration," D'Aprile said.

 For example, Fleet could sell baseball tickets through its ATMs. Such an opportunity could expand the use of its ATMs beyond its own customers, giving the potential to create new customers. Selling baseball tickets might not be justified by a business plan, but for management, it represented the possibilities Web technology made available. In April, executive management approved the general idea to move ahead with putting the Web on ATMs.

 Further application ideas Fleet is considering include other ticket sales, maps for tourism and sales limited to specific locations of Fleet's network. Such limited scale applications aren't possible without Web architecture.

ATMs in the open

 An ATM's specialized, often proprietary "states and screens" programming, where each screen contains one program state, such as "yes," "no" or "$10," makes it expensive to develop. Under those conditions, it's nearly impossible to build a business case for new applications or to argue for conducting a pilot. But open architecture makes it more feasible to add new applications and reduces development costs.

 "If you want to offer bill payment on an ATM and you already have bill payment via your online banking channel, if your ATM is Web-enabled you can re-use a significant portion of what you already have built," D'Aprile said.

 "Open architecture means that if it doesn't work you can take it out," he added.

 He explained that legacy ATMs are the last holdout on OS/2 operating systems. These machines use software specific to certain vendors, such as NDC for NCR and CSS for Diebold, that are difficult if not impossible for anyone else to modify.

On the other hand, Web architecture such as the networking protocol TCP/IP, Web languages HTML and XML and capabilities of Microsoft's Windows NT operating system are independent of the vendor. This independence allows ATM operators to deploy one application on an NCR, Diebold, Fujitsu or any other ATM.

 The cost of change

 While D'Aprile didn't say how much Fleet will spend to make its ATMs ready for Web-based applications, he cited an industry guideline of about $3,000 per ATM. With 3,900 ATMs, that's a potential cost of more than $11 million.

 Just changing operating systems is expensive. D'Aprile chose Microsoft's Windows NT as the replacement operating system, as both Diebold and NCR are familiar with it. He discovered that it would cost $1.5 million to convert 1,000 ATMs to NT. D'Aprile was reminded of the Y2K bug crisis, when financial companies spent millions to update their systems to recognize the Year 2000.

 In addition to operating systems, many ATMs need processor upgrades. Some machines have no processor at all and a great number use older Intel 386 models, whose speed and computing power are too limited for Web applications.

Earlier in the year, knowing that they would eventually approve some plan to add Web capabilities to ATMs, Fleet's management had approved an infrastructure upgrade. Nearly 40 percent of the machines were upgraded to add a processor.

 Even with these technological changes, D'Aprile pointed out that it's not the technology that's key.

 "The bottom line of all this is to resist the temptation to deploy new technologies just because they are available," D'Aprile said.

 The most important concern is giving customers what they want, in a way that's clearly defined as a business case.

 "Find out what your customers want, what they'll use, determine what your business needs are. The technology is not the story -- it's the application of the technology that is the story."

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