In the 40 years since the first ATM was introduced the channel has become completely ingrained into customer behaviour. And with new technology offering ever greater functionality, this is a channel that banks cannot afford to ignore. David Longe, the CEO of ATM software developers Absolute Systems, shared his thoughts on how banks can drive the ATM channel forward.
FST. ATMs have become one of the primary channels for customers to interact with their banks. How can institutions develop their ATM offering to gain competitive advantage?
DL. ATMs have been installed in large numbers by banks worldwide. Bank customers have become dependent on the 24 hour availability of cash and as a result the ATM is now one of the highest usage customer contact points a bank has with its customers. It is an invaluable and currently under utilised opportunity to interact with them.
At the simplest level ‘cash and dash’ needs to be as efficient as possible. However, the channel should be used to communicate or to strategically influence customers. These strategies may be campaigns to drive people into the branch or towards other products that the bank may offer. There is an opportunity to develop the ATM into a customer contact point that interacts on a regular basis with its customers.
FST. The development of the ‘personal ATM’, with services tailored to individual customers has been talked about in the industry. What kind of functionality can the existing technology offer?
DL. It is possible with today’s technology to enable each ATM transaction to be a personal experience – true one-to-one banking for all. The trick however is how to lever this and create value for the banks and also the customer.
As a starting point each customer should have a profile of products that they use from their bank and associated information such as balances, renewals, etc at their fingertips on the ATM. Preferred or default transactions, which can be set up by the customer, will become the norm in the not too distant future. These default transactions will be presented on completion of PIN entry, which will eliminate the number of key stokes required to do a transaction.
The technology, which is currently available, enables the institution to know who the customer is and what kind of transactions the customer performs on a regular basis. I think that some of the limitations are not on the ATM, but rather in the host systems that are deployed.
FST. And can institutions customise these kinds of technologies for their own needs?
DL. Absolutely. We strongly believe that with the advent of Open Standards (XFS) and the introduction of new financial messaging protocols such as IFX, that the solutions need to be open to the degree that they enable the bank to become self-sufficient in the ATM channel. It is counter-intuitive to embrace Open Standards based solutions that require specialist or proprietary skills and knowledge.
The adoption of the IFX protocol will eliminate the restrictions imposed by the legacy protocols and customisation will become more feasible, as the design of the legacy protocols did not facilitate the easy introduction of enhancements or new products the skills with domain knowledge are rare. In future IFX and Open Standards will enable customisations that can be undertaken in house which will enable banks to be independent of product vendors, if they so choose.
As a result banks will be able to differentiate themselves by introducing new functionality, new products or changing look and feel rapidly. This can best be achieved with their own in-house resources.
FST. The legacy operating system for ATMs – o/s 2 – is starting to come to the end of its useful life. How do institutions replace their operating systems, and what do they need to consider?
DL. Moving to Windows should be seen as a great opportunity to future proof the ATM application. It should not merely be a migration of the old application to a new operating system, although this approach is low risk it does not provide any future value to the bank. The opportunity to have a technology refresh does not come around often so it is important to seize the moment.
It is also an opportunity, if not already considered, to move to IP networking and a modern financial protocol such as IFX. That said, moving to the Microsoft operating system introduces a whole new level of complexity that the ATM channel has not had to deal with in the past. The challenge becomes one of leveraging the power of the Windows based processor in the ATM but also addressing the requirements introduced by the Windows operating system. The areas that need consideration include security lockdowns, enterprise monitoring system integration and software distribution. Most of these enterprise systems will probably be in place but are typically not well matched to the requirements of Windows or Open Standards based software. As such it is important that these elements be re-evaluated as part of the move to a new operating system.
The migration to IP networking and Windows provides wonderful opportunities to create a platform that will enable not only a sustainable channel but also facilitate more opportunities for channel convergence, particularly when one considers the requirements for branch automation.
FST. There is a drive within financial services to offer a more holistic view of the customer to offer better service. What’s the advantage of converging the ATM channel with other parts of the business, and how can banks achieve this?
DL. All banks would like to have ‘one view’ of the customer across all channels and this is governed largely by the back office systems. There is a natural convergence between the internet banking solution and non-cash, self-service (kiosk) in the branch.
In future, ATMs should be enabled to offer the same of similar content to the self-service terminal. Building on this it is possible to build an argument that there is convergence with the internet and the ATM, however this is only relevant with regard to content provision. There are good opportunities to converge the device rich environments and it is logical to converge branch teller, non-cash self-service, intelligent depositors and ATMs. Content provision in the above situations can be web service based which will enable significant benefits from the current situation.
FST. Can you tell us a little about you own solutions in this space?
DL. Absolute Systems, as a specialist software company only exists because it is able to create value for our customers through innovative software and we believe in a multi-vendor, multi channel (branch teller, self-service, intelligent depositors and ATMs) approach. Our AbsoluteINTERACT product was designed to meet these requirements and to also enable each customer interaction to be uniquely configured in real time.
As important as the product is it is only part of the solution and experience and integration expertise in deploying Windows based solutions is vital if the project is to achieve what it is designed to do. We believe we have both, as our experience in deploying into significant networks is invaluable.
FST. How different will the ATM experience be for the average user in five years time?
DL. You will not recognise the ATM of five years from now. We will have moved from a ‘hole in the wall’, which merely dispenses cash, to a customer touch point where one can conduct a host of daily transactions.
There will undoubtedly be far fewer cash withdrawals, which will be replaced with more loading of value onto smart cards. We will still go to the ATM and the number of transactions should stay almost constant. The experience will, however, be far more interactive as banks learn to utilise the ATM as a contact point rather than just a cash dispenser. More diverse functions will be available and I think the ATM will become a more multi-functional device. A large percentage of the services and products which it will provide, will not be bank related. This has already started, with airtime top-up available on most ATM’s today. I think it is very much the beginning of a cycle of re-invention of the ATM.
There is no limit to what one will be able to do at the ATM as it will remain a secure, 24 by 7 device with dispensing capacity.