ATMs – the next generation

In a discussion with Aravinda Korala, CEO of KAL, a world leader in multi-vendor ATM software, FST looks into the future of ATM technology.

FST. Would you say that recently there has been a renewed interest by banks in their ATM channel?
AK. Just a few years ago, there was a common feeling that the majority of people would conduct all of their banking activities via the internet, thus rendering the ATM irrelevant. However, today it’s clear to see that that the ATM channel is as critically important as it has ever been.

Since ATMs aren’t about to disappear as predicted, banks are now looking more closely at ways to reduce the cost of running their ATM networks, as well as enhancing their functionality. The best way to accomplish both of these goals is to move to standards-compliant software, which makes it less expensive and easier to develop and deploy ATM software.

FST. What do you consider to be the major issues facing ATM owners today?
AK. The costs involved with an ATM network have always been an issue for banks because ATMs are still too expensive to buy and are far too expensive to operate.
Meeting regulatory mandates is periodically an issue too. An example of this is the requirement today for EMV compliance (also known as ‘chip and pin’). To meet the EMV requirement, banks have to replace hardware components and update their ATM software, which is expensive to do.
Banks also need to replace outdated and unsupported operating system software and move to Windows XP, because continuing to use outdated software can often prove dangerous for the bank.

FST. How is it potentially dangerous?
AK. Well if we look at one example – ATMs have an operating system inside them, just like a desktop PC does. However, many ATMs still use older software such as OS2 or Windows NT – software that is now well out of date. However, these ATMs cannot receive security patch updates in the way that Windows XP does. This is risky for the bank’s network and may impact also have a serious impact on its reputation.

FST. How then can banks better manage their ATM costs?
AK. One way that they can reduce ATM operational costs is by updating the software technology that they use. Today’s ATM software technologies take an axe to the overall costs by changing how things are done. For example, with the ATM software available today you can automatically download software updates and new features from a remote computer. It is also possible to perform remote diagnostic testing and trouble-shoot problems at the ATM. These new technologies minimise the need to have a technician visit the ATM and dramatically reduce the cost of running a large ATM network.

FST. And why is it important that the technology is ‘multi-vendor’?
AK. Banks that rely on one ATM vendor to supply them with everything put themselves in a difficult situation, as anything they do with their ATMs is going to cost a premium. But it doesn’t have to be that way. By upgrading their ATM software to multi-vendor technology, banks are not stuck with a single supplier. Instead, they become free to choose the ‘best of breed’ for their ATM needs and greatly increase their buying power.

FST. Has multi-vendor ATM software been widely adopted?
AK. Any doubts that banks may have had about the business case for multi-vendor ATM software have been erased for some time now. Banks around the world – especially those with large, complex ATM networks – have benefited tremendously from having a single application run on all of their ATMs. It provides huge cost reductions and is now a global requirement for banks updating their ATM software.

FST. What would you recommend that banks do next with their ATM software?
AK. Banks that have not already done so should move to multi-vendor technology. There are so many advantages in doing this that it does not make business sense for a bank not to. Moving to multi-vendor software along with Windows XP is the next step.