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 European ATMs Conference Defies Economic Gloom The European ATMs 2009 conference held in London last month defied the economic gloom to attract record numbers of delegates and exhibitors to what has become the ‘must attend’ ATM event on the European conference calendar. With 300 delegates, speakers and exhibitors from 37 countries, the overall attendance increased 50% from the previous year, boosted by an expanded speaker programme and increased networking opportunities for banks, independent ATM deployers, network operators, vendors and service providers.
After the opening remarks, the conference got under way with a Keynote Panel Discussion on “The Impact of the Financial Crisis on Self-Service Banking” with panellists from Diebold, Fiserv, KAL, Level Four Software, NCR, VocaLink and Wincor Nixdorf. All of the panellists acknowledged that while the crisis will lead to profound changes in the banking sector, customer demand for self-service technologies and banks’ focus on operational and commercial efficiency are unlikely to diminish. In the short term, however, everyone is likely to be hit by the slump. Cutting Costs Through Collaboration Cost cutting was a key topic during the event. The impetus to cut costs as a result of the credit crisis has caused many banks to consider outsourcing as a solution. This subject was tackled admirably by a number of speakers who offered differing views. For example, Rabobank of the Netherlands has embraced full-service ATM outsourcing after its successful pilot, whereas some other large banks believe outsourcing is counterproductive to the use of the ATM as a strategic tool for differentiation. In Finland, banks have embraced a level of collaboration not seen in any other country, and by co-operating through the interbank company Automatia they have succeeded in lowering the cost of a transaction significantly. Altti Kuorikoski, the managing director of Automatia, claims this cost is the lowest in the world. Although some regard the Finnish model as an unfair monopoly, the scope for efficiency has won Automatia the approval of the Finnish authorities. Automated Deposit – Enhanced Functionality, but at a Cost Another key subject was deposit automation. Turkey in particular made an interesting case study (given by Mark Glover of RBR) as it has more deposit ATMs than any other European country. In Turkey’s Garanti Bank’s Paramatik ATM network, 98% of terminals have bulk note acceptance and 58% of cash deposits are made via this channel. Jürgen Maier of Credit Suisse discussed the importance of automated deposit technology to a bank’s self-service strategy. Despite being high-maintenance machines, the bank has found that recycling ATMs are more cost-effective than a combination of dispensing ATMs and night safes. Uptake by private customers can be slow, but business clients tend to embrace deposit ATMs enthusiastically. Maximising Profitability at ATMs Mike Foster of Bankzone spoke about enhancing ATM profitability, with the central theme that “every point of contact [with the customer] counts”. He said that whilst ATMs are becoming more sophisticated, the customer experience of ATM usage has changed little. This should be enhanced by ‘no-go’ safe areas around terminals, on-screen security information, and shields or housings to protect against attack and inclement weather. Deployers have to maintain consumer confidence in the ATM channel if they are to maximise its profitability. Profitability was also discussed by Mike Smith of Raphael’s Bank, one of only two British ATM deployers to offer Dynamic Currency Conversion (DCC). He gave an analysis of the ways in which a DCC-enabled ATM can generate up to 50% more revenue than a standard model. This has been shown to work in certain types of location – e.g. airports with high numbers of incoming overseas cardholders. For Sigmar Milton Mayer Filho, the head of new business channels at Banco do Brasil, it is necessary to exploit the possibilities offered by ATMs, rather than view the channel simply as a ‘cost’. He felt ATMs should be integrated with other channels, such as the internet, in order to maximise profitability. Opportunities and Challenges for African ATM Deployers The African market has shown strong growth over the past few years. In Nigeria, one of the main objectives of ATM implementation has been to decongest the banking halls in their cash-driven society. However, there are a number of challenges for deployers: a lack of ATM outsourcing companies, ‘unhealthy’ competition amongst banks, fraud, poor infrastructure and low levels of literacy. So far, most deployment has taken place in cities – ATMs are considered too expensive for some rural areas. An interesting point which came out of the presentation by Kingsley Emu of First Inland Bank and Dare Adeyeri of Guaranty Trust Bank was the decision by the Nigerian central bank to force banks to close all off-site ATMs. In the future, only IADs will be permitted to deploy off-site ATMs. In South Africa, reaching the unbanked population (of which there remain around six to seven million) is a major challenge for banks, and ATMs are one way to achieve this. George Chirwa of Nedbank described his bank’s use of mobile branches and the ‘branch in a caravan’, as well as mini-branches at retailers’ premises, to extend its reach. Kenyan IAD Pesapoint has also identified an opportunity by integrating the mobile phone channel into its ATM offering. Its mobile phone payment service ‘M-Pesa’ is a value transfer service for which anyone can register to send money via their mobile phone. It is so popular that it receives 10,000 new registrations per day and at the last count had 6.5 million users. Payments can be withdrawn from a Pesapoint ATM via the use of a one-time ATM authorisation code. ATM Provision to Remote Locations Further north, Sergio Uran – the former managing director of MBU in Croatia – shared his bold vision of ATM provision in sparsely populated areas. Croatia has over 6,000 settlements of fewer than 1,000 people, most of whom live more than five kilometres from their nearest ATM. Mr. Uran proposed a merchant-fill model based on income from interchange fees as a possible way to improve accessibility for those living in remote locations. Successful Implementation of Software and Technology Solutions Aravinda Korala, CEO of KAL, presented a summary of a recent report, Global ATM Software Trends in 2009. Among the findings were that security is the primary driver for ATM software change, that over half of respondents were already using or planning to adopt multivendor ATM software, and that the most desired new software feature is remote ATM monitoring. Mr. Korala was joined by Wayne Malone of Citibank, who detailed his bank’s transition from its Customer Activated Terminal (CAT) to multivendor hardware, and the corresponding shift from its proprietary Global CAT (GCAT) software to a multivendor solution provided by KAL. Jim Tomaney, Programme Manager of Barclays’ Technology Office in the UK, explained his view that the purchase price of software is much less than the cost of testing, deploying, supporting and maintaining software. He advised ATM deployers to accept the scale of these tasks, and described the ‘Virtual ATM’ developed by Barclays, which has allowed the bank to save considerable time and space (and therefore money) in its software testing and maintenance projects. Geert van Mol and An van Severen of Dexia and Dave Wetzel of Diebold spoke about Dexia Belgium’s Cash Protected Open Branch Concept (in which cash services are 100% automated) and the Diebold technology – such as the Opteva 328 recycling ATM – that has helped to achieve this. Kettil Stenberg of Wincor Nixdorf spoke about the successful integration of hardware, software and services. Nordea Finland deployed its first Wincor Nixdorf bill payment terminal in 1988, and reports that these machines remain popular with customers despite the availability of alternatives such as direct debits and internet banking. SEPA and the ATM Leonor Machado (Cash Working Group, European Payments Council), Oliver Hommel of EAPS (Euro Alliance of Payment Schemes), Marc Temmerman (Visa Europe) and Ian Kerr (Level Four Software) were on the panel for the discussion of the impact of SEPA (Single European Payments Area) on ATMs. One of the main effects of SEPA on the ATM market is the unbundling of payment scheme management and processing. On the back of this, Visa’s rules already allow a choice of processor. As yet, the Payment Services Directive (PSD) does not include the regulation of direct currency conversion (DCC) or surcharging on ATMs, but it is thought that such regulation will be brought in when the legislation is revised in three years’ time. It is considered possible that SEPA could allow foreign customers to undertake more complicated operations (e.g. the setting up of direct debits) at ATMs in countries where terminals provide this level of functionality. The Continuing Role of Cash The conference concluded by looking into the future of the ATM industry. Leonor Machado of Caixa Geral de Depósitos, discussed the implications of SECA (the Single Euro Cash Area), which aims to provide a fair and open playing field across Europe for institutions and consumers. Ron Delnevo of Bank Machine and Mike Bowen of G4S and the European Security Transport Association (ESTA) both argued that in times of financial hardship, when credit systems fail, cash becomes more important as consumers seek to better control their finances. Mr. Delnevo defended cash’s role in today’s markets and in the future of the payments industry, arguing that banks should not attempt to restrict consumer payment choices by heavily marketing payment cards or taking cheques out of issue. Mr. Bowen argued that the payments industry must work to make cash payments more efficient and cost-effective for all parties. As such, he went on to demonstrate how cash supply chains can be optimised, cash transportation cut to a minimum and costs lowered for all members of the chain. RBR’s Rob Walker gave an insight into RBR’s upcoming report, The Future of Cash in Europe. He outlined how the increase in cashless payments in Europe is not indicative of a fall in cash usage, as the amount of cash in circulation continues to rise. He went on to discuss the future of cash, which in many cases hinges on the costs of cash substitution. However, he argued that payment habits on a local scale must be taken into consideration when considering such issues. Current Trends in European ATM Market The conference closed with an overview of current trends in the European ATM market given by RBR representative Andrei Charniauski. He contrasted the continued impressive growth of central and eastern Europe and Russia’s ascent to the number one spot in Europe with the modest market growth and stagnant ATM usage seen in western Europe. ATMIA and RBR express their gratitude to the many speakers, sponsors, delegates and exhibitors for making the event the largest of its kind in Europe. The organisers look forward to welcoming back many of this year’s attendees as well as new delegates at European ATMs 2010, which will be held in London in May 2010. View Barclay’s Programme Manager, Jim Tomaney’s presentation ‘A new approach to end-to-end testing for the ATM service’ from 'European ATMs 2009’ conference. The presentation gives an insight as to how ATM deployers can increase test coverage, reduce risk and save money at the same time. 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© 2009 ATM Industry Association. All Righs Reserved.