As the ATM is turning 50 this year, it is at the centre of a massive overhaul of the retail banking landscape. Banks have to completely rethink the way in which they interact with their customers while the digital revolution is taking hold of the sector. The speed at which this change is happening is breath-taking: Data company CACI predicts that the total number of mobile app log-ins by banking customers are going to increase from 427 million in 2015 to 2.3 billion in 2020, while the number of bank branch visits is expected to almost half to 268 million per year over the same period.
With the banking revolution right under way, most ATMs today are still based on a ‘cash and dash’ model with limited additional functionality. However, with the right software strategy, they have the potential to become a cornerstone for the omni-channel banking world as the last remaining touchpoints for banks in the majority of local communities.
Our survey of 13 major ATM operators, representing over 250,000 ATMs in 30 countries, shows that the industry is held back by IT challenges, with the largest one being the continuous change in operating systems. Every time a painful operating system change has been concluded successfully, the next one is already looming on the horizon. Software changes are a challenge in and of themselves, but if they also require changes to the core of the ATM IT hardware – the PC –, the costs for what is basically just a compliance initiative can be very high. The industry’s second biggest nut to crack is change management, as rolling out new functions requires long development times and complex integration with the existing, ageing host systems. Finally, with the sophistication of large scale attacks on the rise, security, especially around malware, is a pressing issue that the sector is currently trying to solve.
The fact of the matter is that the ATM industry needs to re-think the underlying architecture of its systems if it wants the ATM to stay relevant in a modern banking world. The answer to this problem can only be to move away from PC-based hardware to a cloud based model, which would give the ATM technology that is out there the breathing space to innovate at the same speed as other channels such as mobile banking.
In a cloud model, the role of the PC-core is reduced to manage the user interface, while the cloud controls the cash dispenser. This provides a higher level of security as the nerve centre is taken out of the ATM and placed within a safe distance. What is more, ATM functionalities could be based on an ‘app’ approach, which would speed-up product development and allow banks and ATM operators to add more features at lower costs.
Rethinking the system architecture under these premises will allow the ATM to develop its full potential rather than continuing to be a simple ‘cash and dash’ facility. Moving to the cloud would be a natural (and potentially vital) development for the ATM industry and the financial services sector as a whole. The first step in this direction would be for operators to agree and implement a standard API, which would provide a set of protocols for building software applications, specifying how software components should interact.
Cloud technology is high on the agenda of the next industry event ATM and Cash Innovation Europe and there are various other initiatives among the industry that are already well under way; all of which shows us that the cloud is the direction of travel for the ATM of the future.
Eric de Putter,