Q: What is the role of the ATM in banking today?
Heather Briganti, M&T Bank: Eleven years after the inception of ATM surcharges, consumers continue to be sensitive to fees and will actively seek out their bank's ATMs when possible to avoid paying them. Revenue-generating transactions are flat and declining as consumers are performing more traditional banking transactions through their bank's Web site and utilizing cash less frequently. The ATM needs to offer additional functionality for customers and align its offerings as closely as possible to what is available online. Integration among all delivery channels is a challenge for many institutions but will ultimately differentiate them. Finding and maintaining the better ATM locations has been and will continue to be a challenge for many institutions.
Madhavi Mantha, Celent: Some banks view the ATM as, first and foremost, a convenience device -- a critical customer service channel that represents a cost of doing business rather than a source of competitive differentiation. Rather than focusing on providing customers with new functionality, these institutions emphasize providing customers with more-convenient, surcharge-free access to ATMs in a wider range of locations. In contrast, other financial institutions view the ATM as a strategic component of a broader multichannel strategy. These banks are more likely to invest in advanced functionality to improve the customer experience.
Ken Justice, Diebold: While today's tech-savvy customers are more demanding of a secure and personalized experience, the unique role of the ATM continues to be its ability to dispense or deposit cash, as well as other banking services, 24/7. Banking regulations, technology advancements and the need to deliver current and future services and transactions are catalysts driving investments in new hardware, software, messaging and connectivity infrastructure. The challenge is to develop a flexible multichannel solution that will deliver a unified customer experience now and well into the future.
Rob Evans, NCR: The greatest immediate opportunity for ATMs is to now extend time and place convenience as well as cost efficiency into the deposit processing aspect of the bank branch environment. While ATMs and online banking both offer convenience, we expect they will continue growth as complementary offerings. Online banking offers in-home or at-work access to information, while ATMs offer immediate transaction fulfillment.
Q: Are ATM installations growing or declining? Which markets are the strongest for ATMs?
Briganti, M&T Bank: ATM deployments are pretty stable with adjustments being made to weed out nonperformers and add locations where increased distribution is necessary. Cobranding and surcharge-free alliances are on the rise as the availability of desirable locations is shrinking and revenue-generating transactions are declining. Significant investments continue to be the result of hardware and software replacements and upgrades required for both Triple DES and ADA (Americans with Disabilities Act) compliance. The development and rollout of Windows-based software is the focus of larger deployers and will be required to expand functionality and enhance the cardholder's experience at the ATM. Markets experiencing dramatic growth in both residential and retail businesses are attractive for the further deployment of ATMs.
Mantha, Celent: The ATM market in the U.S. has reached a level of maturity, with both transaction volumes and the number of ATMs deployed stabilizing. In fact, 2006 represented the first year in which the total number of ATMs in the U.S. declined overall (from 396,000 to 395,000). These declines are driven in part by the increasing use of electronic payment vehicles, such as debit cards. For the most part, new ATM deployments are being driven by new branch openings and by banks' desire to offer customers convenient off-premise access (although this growth is generally countered by the closing of under-performing branches and/or ATMs). ATM installations are also being driven by the ongoing replacement of older ATMs running OS/2 with newer hardware running the Windows operating system.
Justice, Diebold: Global ATM installations are still growing but at a slow pace. Traditional markets such as North America and Western Europe are very mature with little new growth. Shipments to these markets are mostly replacements that deal with compliance issues or new functionality. Real installation growth is coming from Eastern Europe in countries such as Russia and the Ukraine. In Asia Pacific, the largest growth opportunities are in India and China. Improved financial conditions and government support in these countries are creating expansive growth. Growth in Latin America is driven mainly by Brazil and Mexico, whose placements are typically cash dispensers supporting bill pay applications.
Q: What is "state of the art" today for ATM functionality?
Briganti, M&T Bank: Software appears to be the primary focus for many deployers as they migrate from a vendor-specific OS2 operating environment to a more open, vendor-neutral Windows-based operating system. Windows is still relatively new and has significant challenges and a steep learning curve for most deployers and vendors. The biggest change is that most of the intelligence in the network is moving from the back office to the ATM. Cardholder personalization, which enables cardholders to establish preferences for their desired and most frequent transactions and shortens the amount of time necessary to complete a transaction, is becoming increasingly more popular at bank-owned ATMs. Deposit automation and check imaging at the ATM will become increasingly more popular as banks leverage the investments they have made in their back offices in support of Check 21.
Mantha, Celent: Today's ATM environment is inexorably shifting toward more-open architectures, as marked by the rapid adoption of ATM hardware running the Windows operating system, the emergence of multivendor software supporting interoperability and a move toward TCP/IP-based networks. The move to open standards is spurring long-overdue innovation at the ATM, resulting in an improved customer experience, and is providing banks with more flexibility in their sourcing strategies -- due to the decoupling of the hardware and software buying decisions. However, this shift is also requiring banks to implement new tools and tactics to manage a more complex technology environment.
Q: What is likely to be the role of the ATM in the future?
Briganti, M&T Bank: The primary role of the ATM for the foreseeable future will continue to be cash dispensing. Additional offerings will eventually be provided more seamlessly and with shortened development times given the broader adoption of the Windows-based architecture. Product marketing and sales efforts will be expanded and become more targeted to the individual cardholder's needs. Security will continue to be a focus for the ATM business in terms of both data and physical security at the ATM. Cardholder authentication is likely to be expanded to include new techniques either in addition to or in place of the PIN code utilized today.
Mantha, Celent: Banks are beginning to leverage the customer service and marketing aspects of the ATM, transforming it into a relationship device. By effectively integrating ATMs with other channels to ensure a consistent user experience and by making use of personalization and targeted marketing techniques, financial institutions can solidify their customer relationships and enhance their brand. Banks are also examining the potential for check imaging at the ATM to both lower costs and improve the customer experience.
Evans, NCR: The overall decline in average monthly volumes per unit practically cries out for a strategic rethinking of what should and can be done on an ATM platform. It is almost a certainty that ATMs will be connected in ways we had not previously imagined -- providing many more services and new product delivery [methods].