As the most used customer touchpoint, the ATM has a key role to play in an evolving multi-channel environment.  No longer simply a cash withdrawal device, functionality in the ATM is increasing to allow for deposit capture and ad placement that can provide new sources of revenue streams, cross-selling and other personalized customer communications.

In this converged channel environment, failure to achieve the highest levels of reliability, availability and security of the ATM can adversely impact the financial institution’s brand. At the same time, financial institutions recognize that it is neither feasible nor practical to keep ATM management expertise in-house and are turning to specialized managed service providers to provide an innovative service delivery model that delivers high availability in a secure fashion.

Two primary areas that managed services can drive efficiencies at the ATM channel are security/compliance initiatives and availability benchmarking.

1. Security and compliance

The ATM remains at the core of converged channel delivery because it is a known and trusted channel.  This trust entails an awareness of, and strategy to counter, the persistent threat of fraud.  Along with unprecedented levels of card fraud, we are witnessing increased numbers of malware attacks directed at the ATM perpetrated by sophisticated and organized digital criminals. 

Payment Card Industry (PCI) has introduced data security requirements and guidelines for financial institutions accepting cardholder data to limit the risk of fraud, which includes fraud at the ATM.  PCI Data Security Standards (PCI-DSS) includes security management requirements, and policies and procedures for organizations that accept, transmit, and store cardholder data.  One of the key features of the PCI-DSS standard is the requirement to retain not only a vulnerability management program (a defense against malware threats of any type) but to have a reporting mechanism to ensure policy enforcement.

Managed service providers can assist financial institutions in demonstrating compliance by providing best-in-class security processes, expertise and personnel to ensure necessary vendor supplied security patches and updates are applied consistently, across the entire estate, in a cost-efficient manner.

In addition to offering patch management,  managed service providers also help defend against known and unknown threats, addressing the root cause rather than dealing with the symptoms, by providing zero day protection. Software integrity management services protect against unauthorized software updates and malware by preventing unknown software from being installed on your ATM and blocking attempts of unknown software modifications.

The direct and indirect costs of resolving issues arising from malware attacks can be significant, ranging anywhere from hundreds of thousands to millions of dollars.  Having a reliable security process in place through a managed service provider can avoid these unplanned costs while providing you and your customers with enhanced security, in a scalable and cost effective manner.

2. Availability of endpoints

For financial institutions, time is money, and as such, availability is critical.

Minimizing downtime is essential, and this requires managed service providers to transform how they view service events.  Waiting for something to break and then dispatching a technician to fix the ATM is like having an ambulance waiting at the bottom of the cliff. Thankfully, service innovations are now available that can fix ATM issues before they impact the customer experience.  Managed service providers are transitioning from the break-fix model to a predictive model, anticipating failures of critical components by cataloguing and analyzing device warnings to determine potential failures and proactively scheduling fixes before the ATM ever goes out of service.

Additionally, monitoring services like ATM Incident Management can help service providers respond faster to outages when they do happen, and provide a scalable and repeatable process to get ATMs back up and online for customer use. With Incident Management taking over day-to-day monitoring and service dispatching, financial institutions can improve results and spend more time focusing on core business initiatives.

All this has to be achieved on a budget, with already stretched internal resources. 

To confidently face the challenges of the converged channel era, forward-looking financial institutions are leveraging the economies of scale, domain expertise and innovations offered by managed service providers to drive high availability, by protecting the converged channel with enhanced security, and maximizing the availability of critical, customer-facing endpoints.

ATM Marketplace Infographic on The Future of ATMs

The Future of ATMs – Mobile, Security and Regulations – Oh My! [Infographic]
Compliments of ATMMarketplace.com

www.youtube.com/watch?v=Brro3pMd0OQ

[As published in ATMMarketplace.com's FutureTrends report]

By Michael O’Laughlin

Senior Vice President, NCR Financial Services

Consumers’ appetite for information has changed. This revolution is fueled by more than just the consumer’s demand for the next best electronic device or upgraded gadget. They want an experience. They want an interaction. They want to be heard.

The ATM can play a more pivotal role in responding to the customer’s needs.

One hundred million Generation Y consumers in the United States alone are already voting with their wallet. More than 2/3 of consumers age 18-34 – part of the “Digital Native” subset that was born into this electronic-driven world – say they would rather use a kiosk than perform a face-to-face transaction. Whether it is paying bills, buying a theater ticket, loading a transportation card or even buying an airline ticket, many ATMs already offer the technology backbone, security and ubiquity necessary to serve as a key part of this consumer revolution.

For banks and all of us involved in the innovation, development, deployment and maintenance of the more than 2.5 million ATMs around the world, we find ourselves in an advantageous – and unique – opportunity to help meet the needs fueling this new consumer behavior. For nearly 50 years, ATMs have been cash machines, cash acceptors and (most recently) check acceptors. Today, and in the near future, the ATM will see its role broaden into that of a value exchanger and fulfillment device at the center of this new conversation with consumers.

In Singapore, public transportation customers can convert cash or move money from a checking account in order to pre-load their transit cards at NCR-developed Maybank ATMs.

Saudi Arabia's largest wireless provider, QTel, uses NCR SelfServ ATMs for a drive-through bill pay service.

In the U.S., a major bank uses its ATMs to raise money for charitable causes.

In Qatar, the largest wireless telecommunications company, QTel, uses NCR ATMs as a drive-through bill payment service.

NCR continues to innovate around further uses and interaction with the ATM. NCR Labs is piloting an ATM in India without a traditional CRT-user interface where underserved illiterate or semi-literate consumers can perform basic transactions without having to read a screen, and other consumers can use their mobile phone as a dislocated interface to pre-stage more complicated transactions.

NCR's concept Pillar ATM does not rely on a traditional user interface, but instead features pre-set keys to enable use by illiiterate and semi-literate populations.

The future will bring even more advanced capabilities. Imagine using an ATM to sign a mortgage application, enroll in mobile banking or add minutes to a prepaid phone.  The ATM will serve as a touch point for marketing opportunities by financial institutions looking to personalize promotions based on the consumer’s preferences. Throughout this experience, the ATM will turn transactions into conversations, allowing financial institutions to establish personal relationships with customers.

To meet this demand, financial institutions will begin replacing real estate capital with technology capital, designing branches with more automated solutions, such as the ATM, which will serve as the main touch point for customer interaction. This transformation, along with branch consolidation, is already happening in many places as branch automation capabilities rise with fully automated and unattended solutions as well as the increase in online and mobile services.  

Financial institutions that master these concepts now will solidify themselves as a leader in the financial marketplace of the future and put themselves at the center of the consumer conversation.

Last month, I presented at the Wireless Technology Forum in Atlanta, Ga. During the Q&A session, the panel got the following question:

“What’s the consumer value proposition for mobile payments?”

My colleague at First Data, Dominic Morea, spoke up first with a response. Now, as a payments processor, the natural answer that you’d expect from First Data would be: MOBILE PAYMENTS IS GOING TO CHANGE THE WORLD! And who could blame Dominic or anyone from First Data if they responded that way. The more payments being made for a processor such as First Data, the better. But Dominic’s response surprised me. He said:

“You know, there really isn’t one.”

Whoa. A payments processor saying that there isn’t much of a consumer value proposition around mobile payments is like McDonalds saying that there isn’t much of a value proposition around chicken nuggets. But – in truth – Dominic was absolutely correct.

Let me be clear (and Dominic thinks the same way): a mobile wallet (or wallets) is the future. But the concept of the mobile wallet is receiving unprecedented hype. Lost in the magic of mobile payments is that fundamental question “How does this make consumers lives better?” Because, ultimately, no technology survives without undying loyalty of consumers.

For banks and credit unions, we need to think about the mobile wallet beyond replacing the magstripe and replacing a card swipe with a tap of the mobile phone. What is the total consumer experience? Can we improve upon the security equation – both real and perceived? Can we utilize the mobile phone to enable new ways of interacting with the bank, such as remote deposit capture for deposits, or pre-staging ATM or check cashing transactions. Can the enhanced interaction over the mobile device be effectively integrated with all of the financial institution’s channels – mobile banking, online banking, branch, phone and, of course, ATMs.

On the other side, mobile payments offers a scary scenario for banks. The potential for financial institutions to be cut out of the payment process by “virtual accounts” like Paypal or Google wallet, or even new forms of “currency” like rewards points and coupons,  is a real threat and it is keeping some institutions up at night.  Not to mention that using the mobile phone to displace card based payments with ACH based payments at the point of sale has huge fee income implications for banks.

But here’s my main point: if you focus too much on the threat of mobile payments, you’re going to miss the broader value proposition around the assimilation of mobile into the consumer’s purchasing ecosystem.

We know all the stats. Aite Group says about 3,500 financial institutions globally offer mobile banking, and they expect that number to double by the end of the year to result in nearly 40 million mobile banking users in the U.S. alone.

Juniper Research suggests that, worldwide, more than 530 million consumers will be using mobile banking by 2013. Consumers get the value proposition and mobile banking is here to stay. And mobile banking is a great opportunity for financial institutions to connect with their customers and expand their reach.

Financial institutions have to think about making the mobile phone an integral part of delivery channel – not just a one-off complement to existing infrastructure.

As I mentioned on the panel, NCR is working in our retail industry channel on concepts that would eliminate the checkout counter. Under NCR’s concepts, we can replace checkout with a mobile payments device for consumers to scan their products at the shelves. That’s the type of breakthrough, game-changing consumer experience that can last. And that’s how we have to think in the financial services industry.

Here’s a link to the video of the Wireless Technology Forum. I’d love your thoughts on how financial institutions should rethink their mobile wallet strategy.

http://wirelesstechnologyforum.org/meeting-videos/

Mark Critchett is director of marketing for payments and converged channels in NCR’s financial services line of business.

Few people would equate the ATM as a key area for reducing environmental impact, but this is the case. These machines have become an indispensable part of our lives, and they are everywhere. It is therefore a key focus area for responsible banks in reducing their carbon footprint.

Here are some of the ways ATMs can be made more green, and financial services decision-makers should look for ATMs that fit these criteria:

• Give customers the option of printing a receipt. While printed receipts can be a very important part of the transaction for some customers – especially for confirming automated check deposits – not all customers want or need receipts. Alternatively, two-sided thermal printing (which prints on the front and back of the paper), can use paper more efficiently and cut total paper volumes. Increasingly, consumers are open to receiving a text message or email as a form of receipt.
• There can be a lot of wasted paper throughout the ATM supply chain, so some vendors have focused intensely on the entire supply chain, from creation of paper to recycling of tally slips. Typically, this includes chlorine-free paper, recycled paper and 40% post-consumer waste. It’s not only the right thing to do, it costs much less. So everyone wins.
• NCR SelfServ ATMs incorporate features such as intelligent cheque deposit, remote diagnostics and self-healing. These features reduce the maintenance, material, energy and fuel costs associated with financial transactions. NCR SelfServ ATMs incorporate dual paper roll capacity, significantly reducing paper roll waste, as well as patented two-sided thermal (2ST) receipt printing. These features can result in less fuel being consumed by service calls.
•  Banks should should align themselves with ATM manufacturers that have developed and implemented a Corporate-wide Greenhouse Gas Inventory Management Plan. This allows companies to measure carbon emissions and then measure progress towards target reduction. And remember, every ton of carbon saved by a supplier counts towards a bank’s overall carbon footprint. Greenhouse gas is real and it’s here to stay as a business input. ATM Manufacturers, such as NCR, have already developed and installed solar-powered ATMs, with banks and financial institutions gaining significant benefits from this innovative solution.

ATMs consume electricity. They need to be on 24x7x365, and that is the reality. Around that reality, though, there is much ATM manufacturers can do to differentiate themselves and assist their banking customers to offset their carbon footprint. This list is but a starting point, and in the endless quest to reduce man’s impact on earth, ATM manufacturers have a role to play.

And they can help their customers with their own carbon footprint at the same time.

That’s why NCR believes industry events such as the annual security event in London organized by RBR (Retail Banking Research) and ATMIA provides a productive forum for sharing industry trends and best practice when it comes to addressing security threats.

Key themes from the event were not surprisingly card skimming, physical attacks – particularly a significant increase in explosive attacks – both gas and solid explosives and also the very real threat of cyber, or digital crime.

Card skimming has a long history and still represents the biggest cost to the industry in terms of hard cash losses. Despite the introduction of EMV (with 97 percent of all European ATMs now compliant) the continued existence of the magnetic stripe on cards provides an opportunity for skimming. However, the good news is that though criminals remain persistent and card skimming attacks at the ATM have increased by 3 percent, losses have fallen by 14 percent (EAST).

This is only the European side of the story. Fraud always migrates to the weakest, unprotected areas. A delay in the introduction of EMV technology in the U.S. has left this market exposed, where conservative estimates put card skimming losses at around $1 billion. However, significant moves are now being made towards closing this loop. News that Visa and MasterCard are introducing a liability shift for EMV compliance in the U.S. means that we can hope to see the decline of the magnetic stripe.

Viruses used to be perceived as the main software hazard. However, there is now widespread recognition of the very real threat from digital crime. This is highlighted by ATMIA’s 2011 Global ATM Crime Survey where cyber attacks were ranked third out of all ATM threats. As well as an increase in malware attacks specifically designed to undermine a system and exploit its weaknesses, reported in Verizon’s 2011 Breach Investigations Report, there have also been high profile insider attacks. All this highlights the need for increased data security. And that’s where PCI-DSS comes in.

NCR was delighted to share our speaker opportunity this year with two guests: Axis Xanthopoulos, Marfin Popular Bank Greece and Patrick Moyston, CIBC, Canada.

• Axis Xanthopoulos focused on the criminal lifecycle and the importance of achieving and maintaining PCI-DSS compliance. His message was around the security benefits that compliance achieves – it is more than just a tick in the box! (Marfin Popular Bank in Greece had chose to implement NCR’s multi-vendor APTRA software portfolio including Solidcore Suite for APTRA and Active Directory for APTRA.)
• Patrick Moyston shared his bank’s success in applying analysis and collaboration with law enforcement to detection technology. Turning the raw data, alerts generated at the ATM, into actionable information has significantly reduced the banks cash losses due to fraud and protected their user experience.

As an industry we need to continually innovate against crime. So we also joined forces at the event with Central Saint Martins, London. NCR’s Consumer Experience [Cx] team in Dundee, Scotland, had set a brief with the Design Against Crime Research Centre at Central Saint Martins College of Arts and Design, London and supported them in the ‘Design Against ATM Crime ’ project. The challenge we set was, “Can staff and students at these design institutions find new approaches to generating behaviour change as well as cost-effective solutions to help tackle ATM crime against the card holder?”. Design students at two other significant design schools in different parts of the world were also involved - TU Delft, Netherlands and University of Technology Sydney, Australia. 

Take a look at the whitepaper – the results of this project – on our website. You can make up your own mind as to how successful these concepts are – but hopefully you will find them thought-provoking as you continue to develop branch design and ATM deployment strategies. We believe at NCR that initiatives such as these will help us remain innovative and proactive as an industry in protecting the integrity of the self-service user experience.

This October, we exhibited at the BAI Retail Delivery Show in Chicago. It was a small exhibit for us, but we demoed four products – our new NCR SelfServ 4 financial kiosk, our SelfServ 34 ATM with scalable deposit module, our APTRA Vision management software, and APTRA Interactive Teller.

APTRA Interactive Teller was at our partner uGenius’ booth. If you aren’t familiar with APTRA Interactive Teller, we’ve integrated uGenius’ video banking technology with our SelfServ 32 and 38 ATMs and APTRA software to create a full function ATM with the capabilities of a teller from a remote location.

Customer feedback on this product has been through the roof! It meets a need banks have for expanding branch services into remote locations or extending branch hours via a self-service device.

Here were some of the other things we learned from customers about Interactive Teller at the BAI show:

1)     One customer was excited about being able to expand their branch footprint into Universities. They believe the younger generation will really feel comfortable using the video technology. Interactive Teller would give them a cost-effective way to expand on campus.

2)     Canada loves us. And, honestly, we hadn’t anticipated this. Based on the feedback at BAI, we’ve put Canada on the Interactive Teller development roadmap for Q2 2012.

3)     One customer wanted to be the 1^st to pilot an account opening transaction on the SelfServ 32.

4)     Another customer was excited by the opportunity of having a teller available up to 24/7. They could really see how this would fit into their strategy of offering longer teller availability for a better customer experience but not needing to keep their branches open for longer.

5)     Another customer could see the benefit of lower operating teller costs. By centralizing and migrating low value transactions from the branch teller to self-service.

We are in a very fortunate position that customers are queuing up for our new solution and want to be the first in their country to bring this to market.  What a position to be in – NCR will be the 1^st vendor to bring ATM and video teller capability to market in many countries around the world. There is more demand than you could imagine and the buzz and excitement at BAI was huge. The market is ready for this new technology and customers are ready to use it. If you think about Facebook, Skyping, iPhone-Facetime, ect., Interactive Teller is really coming into the 21^st century.

Strategies I hear fall into one of two areas. First, financial institutions are looking to improve efficiency. Owners of an institution, whether shareholders of a public bank or members of a credit union, expect a Return-on-Assets and Return-on-Equity that is superior to other investment options. Second, financial institutions must deliver an experience to their customers or members that is differentiated – one that drives loyalty and repeat buying.

First, Improving Efficiency

The need to lower costs crosses all industries and geographies. It’s not just banks in Europe; it’s retailers in Asia, and hospitality providers in Latin America.  The words are often different – bank CEOs use words like “Lowering cost” (South Africa), “Maximizing efficiencies” (United States), “Tighter cost control” (Turkey), and “Labor productivity” (Russia). Efficiency gains are usually tied directly to the use of multi-channel technologies. For example, a major bank in Eastern Europe notes their “Efforts to decrease the cost to serve” are directly linked to “Better leveraging a multi-channel focus”.  Another major global bank states their objective is to grow from “40% to 75% of all transactions via remote channels”, and links their goal of a “50% improvement in labor productivity”.

How are they achieving these results? In the United States, banks and credit unions are using automated deposit of checks and cash to shift transactions from tellers to the ATM. In Europe, banks are leveraging teller cash recyclers to simplify processes and free up time for tellers to interact (and sell) to the customer.  In India, banks are using personalization to make cash withdrawals faster, improving ATM utilization and providing precious minutes back to the consumer at the same time.

Second, Deliver a Differentiated Consumer Experience Across Channels

The other key theme I hear from banks around the world is the need to deliver a differentiated customer experience across banking channels. Why?  Because a differentiated experience drives customer loyalty and repeat buying. Whether in the branch, at the ATM, via the call center, using the internet, or via a mobile phone application, financial institutions CEO’s are saying their customers now expect – and even demand – an integrated and seamless experience.

They use different ways to express this; “Win through a differentiated customer experience” (Indonesia), “Superior customer experience, with technology as a facilitator” (Spain), or “Deliver a holistic customer experience across all touch points” (Thailand).  But the underlying objective is the same – offer your customers or members an experience that is better than the competition.

The payoff is clear – banks that achieve this differentiated experience will sell more products to their customers, and deliver higher profits. As one of the largest US banks notes, they are able to sell 80% more products, and deliver 50% more annualized profits, from their multi-channel customers.

And that’s an objective we all can agree on – sell more, make more.

The next best way to get your project funded is to tell your boss it will save money.

But if you’d like to get your project killed, just pitch it to your boss as an “improvement to the customer experience.”

For all of the talk these days about customer experience, why is it so hard to get companies to pay attention to it? Think about the experience with Remote Deposit Capture (RDC). The majority of banks still have their multiple RDC channels siloed, so that they don’t talk to each other. Consider the experience of a small business, which makes up the primary customer base for RDC. A small businesses staff can and often do make multiple deposits to the company account in a single day, and those deposits can come from the storefront, at an ATM, from a home office, or in the field via a mobile phone. Meanwhile, the experience at each of those channels can be different from one to another. It takes each employee a different amount of time to do the deposit, they input different data into different screens, they see different results, and they receive different forms of confirmation – physical receipts, online statements, or SMS receipts. Too confusing!

At NCR, we like to talk about customer experience in the context of flower companies. What can I say? We’re romantics. But think about the multichannel experience of a flower company. I get a text message to my mobile phone reminding me of my wedding anniversary. I can order flowers for my spouse on the phone. Check the status of my order online and then brag that I remembered my anniversary using connections to social media, such as Facebook. And, by the way, I can complete many of those same portions of the transaction through redundancies in the other channels, too, and the experience is largely the same no matter where I go.

A small business uses RDC for their cash flow – their lifeblood. If a flower company can have that level of multichannel integration and customer experience, why can’t a bank do so for remote deposit capture? Certainly check clearance is much more mission critical than a rose bouquet!

On second thought, remembering my last anniversary, that may be a bad example…

Thankfully, an enterprise wide RDC option exists, which creates a better, more streamlined customer experience. At NCR, we’ve seen more and more financial institutions turn to our APTRA Passport solution. Not everyone ignores customer experience. For instance, one bank we’ve worked with faced increasingly stiff competition, and, despite the economic pressures to focus on operational efficiencies, their key objective in rolling out RDC was to differentiate themselves as a mechanism to protect their customer base and attract new customers. They deployed the APTRA Passport solution, with an initial focus on the Commercial channel. APTRA Passport is an enterprise multi channel hub that delivers numerous, alternative ways to make deposits and interact with the bank – at the ATM, at the branch, online, at corporate or small business locations, and via mobile. The deployment provided improved cash management and instant reconciliation capabilities that led to an increased share of their customers’ wallets while delivering service consistency. The results were a significant growth of clients and revenue and they established themselves as a premier provider of sophisticated customer services. And the integrated and scalable APTRA Passport hub gives the bank the ability to invest tactically channel by channel while building out an enterprise solution.

Improving the RDC customer experience is just too easy to ignore any longer.

While today we have integrated location-aware branch and ATM finders, but what is next for mobile?

In our view, NFC (or Near Field Communication) and PFM (or Personal Financial Management).

NFC and PFM are two technologies that will change the way retail banking interacts with its customers.

One major innovation that could revolutionize mobile banking is NFC technology or Near Field Communication.  This is the same technology that lets you tap your credit card to make a payment at the gas station or local fast food restaurant will soon be able to power a new approach to making payments and keeping an eye on your finances.

Major device platforms including Google’s Android, RIM’s BlackBerry and Microsoft’s Phone have all announced plans to support NFC technology in the coming year.

With the increasing number of NFC enabled phones, technology providers such as NCR have the ability to leverage the portability of the mobile phone and the “always on” connectivity to the bank to enable an integrated payment experience.  For example, it will now be possible to make a credit or debit card payment with your mobile phone and instantly find out your updated account balance.

The other innovation, PFM, has yet to catch on in the mobile arena but with the phenomenal growth of tablets we expect this to quickly takeoff.  PFM is basically the ability to manage all of your finances through a single application or service.  This can include planning for retirement or other major expenditures, managing your investment portfolio, or budgeting and tracking your expenditures.  It is the later of the three functions that becomes incredibly powerful when brought to the mobile device so when I am standing in line at my favorite coffee shop I can quickly check to see if I have exceeded my budget for vanilla bean frapacinos for month with a couple of clicks on my phone.

Ultimately, this gives consumers a convenient method to make a payment integrated with visibility and control over their spending to help consumers make informed financial choices.