News

You say you want a revolution?

I think we're on the verge of a second 'revolution' in the ATM industry, and I believe there are three key factors converging that will cause this revolution to occur.

November 5, 2003

Mr. Phillips is vice-president, business and product development, ATM Solutions, Transaction Network Services. For the past 20 years, he has been involved in all facets of the industry, from developing and deploying new ATM-based services to managing the implementation of a shared, online ATM network.

ATMs have come a long way, baby! In fact, ATMs arrived on the scene back when that ad slogan was in-vogue.

Since then, people around the world have accepted ATMs as the place to get their cash. And one of the most prominent roles that ATMs have played in modern history came about in January 2001, when many European nations adopted the Euro: ATMs played a major role in distributing this new currency to the masses. Imagine the queues people would have endured if bank tellers were the primary source for getting the new currency! In my own personal experience, ATMs have changed the way I travel. When traveling internationally in the 1980s, I was compelled to go to my bank to obtain either local currency, or to purchase travelers checks. Now, I have no worries, as I'm confident that I can get my local currency at an ATM once I've landed, and at competitive exchange rates!

In my view, there has been only one "revolutionary" period in the brief history of ATMs, and that occurred in the mid-'90s. As a result of federal regulation, off-premise ATM deployment radically shifted the "norm" for ATM locations. While some FIs had invested in ATM placements in retail sites, most ATMs were still located at the branch. The "off-premise explosion" of the late '90s radically changed the ATM landscape, and introduced an entirely new market strategy around these new ATM placements

I think we're on the verge of a second "revolution" in the ATM industry, and I believe there are three key factors converging that will cause this revolution to occur.

First, the ATM manufacturers have been producing ATMs with tremendous capabilities for several years now. Basically "PCs with a safe and a dispense mechanism," these machines have tremendous processing power, capable of offering many more services to the consumer. But until recently, these ATMs have been stymied by antiquated operating systems and resident application software. These barriers are now coming down, with the advent of truly open system architectures. Now more than ever, the new generation ATMs are "PCs in a box." They are quite capable of supporting many new revenue-generating products and services. The emergence of 7-Elevens, Vcom units and the continued growth of new ATM services such as check cashing and mobile phone top-ups are evidence of these new capabilities.

Consolidation of ownership is a second agent of change affecting the ATM landscape. Many of the original off-premise placement contracts are nearing the end of their term. Coincidentally, merchants may be faced with having to replace or upgrade their ATMs to comply with network regulations. These two conditions, I believe will flush out the truly "prime" locations in a variety of retail tiers. It's quite possible that the overall number of ATMs may contract due to these factors. Darwin's theory may well play a role, even in the ATM industry.

Last, but certainly not least, will be the migration to an IP data communications infrastructure and broadband access services. Without question, IP protocols are the future of ATMs, replacing the legacy protocols, such as 3270 bisync and SNA/SDLC.

Additionally, there are more choices of broadband access services than ever before, and at attractive price points. DSL, cable modems, persistent dial connections are among the terrestrial-based services emerging. Wireless access services, including GPRS and CDMA1x look to be promising wireless alternatives for either fixed or mobile ATM applications. No longer limited to either expensive Frame Relay or point-to-point data circuits, these new access methods will provide the data throughput required to carry information from and to these new ATM applications with speed and security.

All of these changes will converge to bring about the ATMs of tomorrow.

This revolution will bring about:

While the term "information superhighway" is a bit cliché, its presence is a fact of the here and now. Affordable and secure broadband access has enabled consumers to enjoy the convenience of tapping into a broad array of information and services from their personal computers. In much the same way, ATMs of the future will need to access this same superhighway to keep pace with consumer demand for services and information.