STRATEGIC PARTNERS
Many financial institutions remain reluctant to add advanced functionality to their ATMs, agreed participants in a panel discussion at NCR's recent self-service summit.
December 19, 2001
Financial institutions have long utilized their ATMs for more than cash withdrawals, offering balance transfers, PIN changes and other transactions they prefer to keep out of the teller line. But they remain reluctant to initiate such advanced services as bill payment and check cashing because of financial and logistical concerns, participants in a discussion on bank ATMs agreed.
The session, conducted by NCR senior business consultant Mark Shonebarger at the manufacturer's recent third annual self-service summit in Dayton, Ohio, examined some of the ways that banks can pump up their ATM functionality, migrating from the current strategy of offering basic banking services to one that would include a wider range of enhanced services.
Shonebarger and ACI Worldwide Inc. senior product manager Rick DuVall agreed that many financial institutions are concerned about the financial viability of advanced function ATMs, particularly when major infrastructure upgrades are needed to support them.
"It's a difficult business case for a lot of banks," DuVall said, "especially when you get into the whole Web ATM arena, or browser-based ATM, where everybody typically has to redo their network and go TCP/IP across the whole enterprise."
Yet browser-based technology has made many of the new ATM functions more feasible, Shonebarger said.
"Some of the Web-enabling technologies, a lot of those transactions were considered in the OS/2 environment, but you actually have to write the entire code to get that function. With HTML, it's a lot simpler; we've got object-oriented types of coding. We've got a lot of college kids coming out that can write that kind of coding," he said.
While Shonebarger agreed with DuVall that the business plan can be a problem because of the sometimes high costs associated with replacing legacy systems, he said that well-disciplined, patient companies can successfully execute an advanced ATM business plan. He cited the recent launch of multiple-function ATMs by retailer 7-Eleven at 94 of its stores in Florida and Texas. The terminals offer ATM services, money orders, money transfers and check cashing.
"The machines that are out there can be very cost prohibitive to replace in the first place," Shonebarger said. "In the case of 7-Eleven, they went at it hard for about five years. They were dedicated. If you really believe in what you're trying to do, you've got to be dedicated with it. If you understand the dynamics of the business, you can start navigating whatever obstacles you have there."
Mark Haddad, a consultant with Dove Consulting who presented a report on industry trends and developments for the summit, said the 7-Eleven example may not apply to banks because of the differing retail and financial environments.
"One of the reasons retailers are interested in getting these machines into their stores is because it attracts new consumers in who cash a check, and all of a sudden have all this cash so they're going to spend all this money in the store," Haddad said. "Potentially it's very beneficial in terms of incremental sales."
He added, "When it comes to a bank, they certainly have different priorities in terms of what services they want to offer their customers. Whether it would be beneficial from the bank's perspective I don't know."
DuVall said advanced ATM programs frequently require banks to establish new and unfamiliar partnerships. This represents a different way of doing business for the banks, who are used to working with a handful of traditional vendors.
"The other stumbling block we find is that there's no one vendor out there offering a true end-to-end solution," he said. "The NCRs and the Diebolds of the world have the ATM side, and we think we have the transaction side down. But this whole content side, the marketing, the personalization, all that stuff has to be done by somebody. In some cases the banks are doing it themselves, such as Bank of America. But not every bank has the wherewithal to pull that off by themselves."
"But even if there was an end-to-end solution," DuVall added, "I think unless you're big into advertising your service you'll really have trouble with the business case."
Haddad noted in his report at the summit that 87 percent of all ATMs shipped during 2000 were cash dispensers rather than more robust ATMs. He said ATMs such as the ones being used by 7-Eleven could end up falling outside current categorical descriptions.
"I don't know if we'll be considering it a full-service ATM or if it will be in a category all its own," he said.
