London Hosts Europe’s Largest ATM Conference
(Article reproduced with the kind permission of Retail Banking Research)

European ATMs 2008 was held in London on 14th and 15th April. The event, which is jointly organised by ATMIA Europe and RBR, has established itself as Europe’s largest ATM conference, bringing together over 200 banks, independent deployers, network processors, vendors and service providers.

This year’s conference offered a vastly expanded speaker programme, including 19 case studies by banks and independent deployers from across the region. During the conference gala dinner, delegates were treated to an entertaining speech by John Shepherd-Barron, inventor of the ATM.

Day one of the conference had been streamed to accommodate the substantial speaker line-up, including a stream focused on banks, one on independent ATM deployers (IADs), one on processors and card schemes, and one on ATM software.

Deposit automation helps drive retail strategies in central and eastern Europe

Mike Liebherr of Landesbank Baden-Württemberg in Germany and Konstantin Lezhnin, of Russia’s Alfa Bank, gave presentations covering the challenges and opportunities of the complete replacement of an entire ATM estate, and how self-service technology can be leveraged to change radically bank branch operations.

Cristela Georgescu described how Citibank Romania is developing a customer-to-business (C2B) payment channel using ATMs to address Romania’s relatively under-developed banking infrastructure.

Citibank Romania was the first bank in the country to deploy automated deposit machines, in 2001, allowing the easy payment by bank customers of utility bills, taxes, insurance and university fees. In 2004, Citibank Romania began installing so-called Unikasa machines inside retail premises. These terminals allow customers and non-customers to make cash-based bill payments.

Sotiris Sirmakezis of Greek Piraeus Bank, spoke about his bank’s new ‘Instant Cash’ cardless withdrawal facility, a system which allows customers to facilitate an ATM withdrawal of a specified amount by a named individual at a remote location. The transaction is organised by the payer at an ATM, via mobile phone or the internet, with a seven-digit Instant Cash PIN being sent to the mobile telephone of the payee, who then enters the code into a specific ATM to receive their cash.

ATM processing in fast growing markets

Janusz Diemko, Chairman of the Board of First Data Polska in Poland, provided insights into ATM acquiring in central and eastern Europe (CEE). His presentation included an analysis of the current status of EMV migration in the CEE region compared to western Europe. Mr Diemko pointed out that most CEE markets are less than 25% EMV-compliant, compared to the western European average of 40%-60%.

He predicted that EMV migration in the CEE region will speed up in the coming years, fuelled by increased chip card issuance and rising fraud levels on cards skimmed in western Europe.

Sertaç Özinal, CEO of BKM (Bankalararası Kart Merkezi) spoke about recent developments in the Turkish ATM market. Mr Özinal explained that Turkey’s banking sector has evolved rapidly over the past few years, with solid increases in both branch and ATM numbers.

According to BKM, Turkey’s ATM market grew from 12,857 in 2003 to 18,800 in 2007 – all deployed by banks. BKM predicts that it will reach 35,670 by 2010, of which 6,800 could be deployed by non-banks. Turkey’s first IAD, Talon, entered the market in March 2008 (see Bulletin issue 251).

Mr Özinal presented examples of how Turkish banks are using self-service technology in innovative ways. For example, Akbank’s ‘Credit Machines’ enable customers to apply for a loan or credit card. The customer receives an SMS message with the bank’s decision. If the loan is approved, the money can be withdrawn from any Akbank ATM. Garanti Bank’s advanced ‘Paramatik’ ATMs offer event ticketing and insurance transactions, and Yapı ve Kredi Bank’s ‘TELE 24’ cash recycling ATMs are equipped with barcode readers for utility bill payments.

IADs are making inroads across Europe

Nigel Constable, COO of UK IAD NoteMachine, provided insights into the challenges of the consolidating UK IAD sector. He broached the issue through an examination of the methods used to integrate the UK operations of US IAD TRM with NoteMachine’s own operations in 2007. NoteMachine is now one of the biggest IADs in the UK, with over 5,700 ATMs at the end of 2007.

Gunnar Jacobson, CEO of Swedish IAD Kontanten, spoke about the challenges and rewards offered by the Nordic IAD market. Kontanten is the only IAD present in Sweden and Finland, having started deploying ATMs in the latter country in March of this year through its subsidiary EuroCash Finland.

He outlined the problems of deploying ATMs in these Nordic markets, including traditional domestic ATM arrangements which are not open to IADs, and banks which are unwilling to act as acquirers on their behalf. To overcome such obstacles, Mr Jacobson explained how Kontanten had become an international acquirer for Visa and MasterCard, offered outsourcing packages to banks, and attained support from competition authorities in order to break into the bank-orientated markets.

Andrew Martin of SBS Partnership, and formerly of UK IAD Cardpoint, argued that in the European IAD market, SEPA is breaking down barriers and undermining the grip of large issuing institutions in the European market, and as such, there are new opportunities for IADs in the ‘moving target’ that is Europe. He argued that to deploy successfully, an IAD must have a thorough understanding of the target market, including its culture, consumer habits, cash usage, market players and retail segmentation. These factors must be taken into consideration when formulating a strategy (e.g. whether to outsource or not, and whether to surcharge or not), to ensure that the business plan is sustainable.

Krzysztof Trojak from eCard, which has deployed 233 ATMs in Poland since December 2006, argued that the local preference for using cash was being limited by the low number of ATMs, and that any deployment in a modern commercial area would be well used. ATMs installed in the future should have heightened functionality, including bill payments, ticket sales and interactive advertising.

Mr Trojak argued that opportunities were available for IADs in Poland due to the limited penetration of ATMs outside large cities, and because banks do not invest in off-site ATM estates. To capitalise on this, eCard has formed close relationships with banks, performed network outsourcing services on their behalf and acquired contracts with real estate players in order to deploy ATMs in promising locations, as well as providing ATMs with advanced functionality.

The benefits of multivendor ATM software

Sven Herrmann of Fiducia in Germany and Wolfgang Braunwieser from Salzburger Banken Software (SBS) of Austria provided insights into their experience of developing in-house multivendor application software.

Fiducia provides IT outsourcing for 770 cooperative banks and 42 private banks in Germany. Migrating to multivendor software meant one solution was used on 140 different models of self-service terminals including 11,000 ATMs from three different vendors.

Mr Herrmann explained that Fiducia has been able to centralise the IT systems of its member banks. This provided a much more effective monitoring and management system, enabling tasks to be carried out remotely, including software updating. The benefits were a 40% reduction of the cost of application hosting and administration by banks, as well as significant improvements in the availability of machines for their customers.

Michele Rizzo, Head of IT Strategy and Architecture at Italy’s Banca Antonveneta (part of the ABN AMRO group) and Brad Evans, General Manager, Phoenix Interactive Design, discussed the bank’s implementation of an advance platform covering its 1,100 ATMs. ABN AMRO has decided it would be preferable to have a single global IT platform and selected its Italian subsidiary to carry out a pilot of Phoenix’s VISTAatm multivendor software, with the intention of rolling-out the software across the group globally.

For Banca Antonveneta the main objectives for introducing such a solution were to improve customer satisfaction, increase the use of direct channels – which in Italy are particularly underused – and introduce advanced functionality. The bank is confident all key objectives can be achieved, including cross-channel integration, speed-to-market, cost savings and improved customer satisfaction.

Arnt Røttereng, Product Manager ATM from EDB Business Partner (EDB) – the Norwegian IT service provider – described EDB’s proprietary multivendor software. In order to support different vendors’ hardware, EDB selected CEN XFS middleware from KAL. The main advantages of this software are that it is vendor independent and simplifies the XFS interface.

According to EDB the main benefits of multivendor software are the reduction of development and maintenance costs by between 35% and 45%, reduced time-to-market when adding new functionality and new vendors’ hardware, and the reduction in hardware costs through increased competition.

Deposit automation driven by customers rather than banks

Tim Hutchings, HSBC’s Head of Self Service, discussed how he believes the self-service world will evolve over the next three years. Mr Hutching’s presentation looked at how the ATM and deposit worlds must move forward in tandem with the outside world. He gave examples of how companies outside the banking industry are moving towards self service to varying degrees, such as petrol stations, airports, supermarkets and estate agents. In all of these cases, the move to self-service is part of a desire to give the customer more control.

Mr Hutchings pointed out that the adoption of automated deposit technology has been driven by customers rather than banks. HSBC has concentrated on making its deposit facilities simple and reliable and helping its customers to learn how to use them. It believes there is huge potential for such technology.

The case for ATM outsourcing

Matt Atkin, the Co-operative Bank’s Head of Commercial Payments, and John Ennis, Banking Director at Wincor Nixdorf, gave a joint presentation of the benefits of ATM outsourcing. The Co-operative Bank not only purchases its ATMs from Wincor Nixdorf, but has recently outsourced all ATM-related activities to the manufacturer, including deployment and maintenance of machines, monitoring and cash forecasting and transaction processing. Both companies feel this approach has been a success.

Jaques Rosenzvaig, Managing Director of TecBan, and Douglas Lucarelli, Business Head of Self-Service Devices at ABN AMRO Banco Real, gave a joint presentation on the Brazilian ATM-sharing model and the potential for ATM outsourcing.

Mr Rosenzvaig provided an introduction to the Brazilian ATM market, highlighting in particular the unusual structure of its shared networks. TecBan itself was conceived in 1982 as a joint venture by Brazilian banks to deploy a network of off-site terminals. Known as Banco24Horas ATMs, by 2007 these accounted for 18% of all off-site ATMs, although TecBan is eager for this share to rise to a quarter by 2012.

The potential for further deployment of off-site machines in Brazil will, according to TecBan, result in a healthy outsourcing market in the country over the coming years. ABN AMRO Banco Real has already experienced the difficulties of managing an off-site fleet, and Douglas Lucarelli explained the thought processes behind the bank’s decision to outsource the management of these ATMs to TecBan. The major problems the bank faced were associated with availability and maintenance, leading to low service levels and a high number of customer complaints.