2015 ATM AND SELF-SERVICE SOFTWARE TRENDS

Transcription

1 2015 ATM AND SELF-SERVICE SOFTWARE TRENDS DEVELOPED AND PUBLISHED BY SPONSORED BY

2 CONTENTS Page 3 Page 5 Page 8 Page 12 Page 14 Page 18 Page 20 Page 24 Page 36 Page 40 Page 41 Introduction Chapter 1: Chapter 1: Increased Focus on ATM Security Chapter 2: The Customer Experience Chapter 3: ATM Estate Management Chapter 4: Branch Transformation Chapter 5: The Future of the ATM Looking Back: Reflections on Past Guides Appendix 1: Analysis of financial institution survey results Appendix 2: Analysis of survey results from vendors/iads/service companies Contributors Sponsors Published by Networld Media Group 2015 Networld Media Group Written by Kim Schneider, contributing writer, ATM Marketplace Tom Harper, president and CEO Kathy Doyle, executive vice president and publisher Suzanne Cluckey, editor Tiffany Smith, custom content editor 2015 NETWORLD MEDIA GROUP 2

3 INTRODUCTION In its eighth installment, the ATM and Self-Service Software Trends 2015 guide moves in an exciting new direction by focusing keenly on the survey responses from industry insiders to provide financial institutions with a comprehensive industry forecast. In addition to survey respondents, ATM Marketplace reached out to industry experts across the globe and asked for their opinions on where self-service systems and bank branches are headed. With more than 700 survey participants representing the global self-service market, ATM Marketplace has compiled a map for the future covering the most critical areas for financial institutions (FIs). From security and new functionality demands to customer experience, marketing and transforming the traditional bank branch, this guide outlines the critical role of the ATM now and for the foreseeable future. Survey demographics Of the 742 survey respondents, 49.1 percent identified as FIs, while the remaining 50.9 percent identified as other. For geographic locations, an almost equal weight of respondents reported base operations in North America, Europe or the Middle East and Asia (29.1, 27.9 and 23.8 percent, respectively). USA, Canada, North America 29% Central or South America 7% Europe or Middle East 28% Africa 9% Asia 24% Australia 4% 2015 NETWORLD MEDIA GROUP 3

4 Participants with an ATM estate of more than 2,000 machines represented the bulk of survey respondents at 33.7 percent, while the 501 to 2,000 machine range followed closely at Those representing smaller ATM portfolios entered in at 17 percent with 101 to 500 ATMs, and 20.4 with 1 to 100. For the number of bank branches represented, having between 1 and 100 comprised the majority of survey participants at 35.6 percent, while those with more than 2,000 represented only 13.9 percent of respondents. For 101 to 500 and 501 to 2,000, there was equal sampling at 25.1 and 25.4, respectively. Hot topics It probably comes as no surprise that security and fraud prevention and optimizing operational costs were singled out as the most critical issues facing banks ATM networks today. Significant focus was also placed on new functionality demands, customer experience and branch transformation. Optimizing costs are always a concern, and it is a fine balancing act between operational efficiency and customer satisfaction that all banks strive to maintain. Fraud prevention and security are important too and have a direct impact on operational efficiency and customer satisfaction and trust, said James Trocmé, senior vice president, ATM Channel Manager, Citibank, United States. According to the survey, the biggest challenge FIs face for achieving ATM and self-service goals is, by far, customer acceptance of new or different technologies. Less significant, but still important, are maintaining security and the increasing use of mobile phones for banking transactions. ATMs have historically provided a very static user experience with a non-graphical interface and the same core set of peripheral devices supporting a very limited transaction set, said Aravinda Korala, KAL CEO. However, customers now expect, and banks are delivering, a much richer, and more dynamic experience with graphical, personalized user interfaces and new devices delivering a very wide set of transactions. We are seeing banks around the world providing amazing technology in response to customer demands. ATMs have historically provided a very static user experience with a nongraphical interface and the same core set of peripheral devices supporting a very limited transaction set, said Aravinda Korala, KAL CEO. However, customers now expect, and banks are delivering, a much richer, and more dynamic experience with graphical, personalized user interfaces and new devices delivering a very wide set of transactions. We are seeing banks around the world providing amazing technology in response to customer demands. Once customers learn how to use ATMs or CDMs, they feel the benefits of self-service, but the banks must offer new technologies according to the customer satisfaction indicators, said Alejandro Mena, vice president, ATMs and self-service, Banamex, Mexico. Survey respondents identified better integration of the ATM with other banking, improved customer experience, and more automation in branches as the most immediate changes banks needed to make to their self-service networks in 2015/

5 CHA PTER 1 Increased Focus on ATM Security Fraud prevention and security of ATM networks continue to be of the utmost concern because of the far-reaching implications. The effectiveness of an FI s security measures affect customer trust and satisfaction as well as the costs associated with operations and ATM fleet management. The majority of survey respondents maintained that ATMs are generally secure but more could be done to improve security. Because today s malware attacks continue to grow in sophistication, security remains a priority at the ATM. Banks (and ATM fleet operators) are responding, by deploying software-based solutions that provide access protection, intrusion protection and hard disc encryption. These measures bolster customer confidence and help to assure that ATM transactions are secured, said Javier López Bartolomé, president, Wincor Nixdorf (Americas). It is essential that the ATM network is fully secure from every conceivable type of attack whether it is from inside the bank or an external attack, said Michel Denis, KAL s Chief Technology Officer. Security is now receiving an intense amount of focus from both the deployers and the technology providers to make sure that ATMs are impenetrable against any type of attack. This is critical in maintaining consumer confidence. In relation to ATM software, a hefty 41.7 percent of survey participants said they rely on their ATM hardware vendor to provide the expertise and technology needed to secure the ATM software, while 39.7 percent said they require vendors to adopt their FI s security policies. Finally, 18.6 percent say they rely on their ATM software provider to secure their ATMs. Because today s malware attacks continue to grow in sophistication, security remains a priority at the ATM. Javier López Bartolomé, president, Wincor Nixdorf (Americas) 2015 NETWORLD MEDIA GROUP 5

6 Unauthorized access via compromised passwords 1% alware, viruses 8% 3% Gaining physical access inside the ATM Whether it s software- or hardware-related, survey participants agreed that fraud prevention and security are immediate needs that require attention. To illustrate the point, within the next year, 37.2 percent said their banks intend to install anti-skimming devices, 32.7 will implement port lockdown (USB, keyboard and mouse) to prevent unauthorized access, and 29.5 percent will employ remote password management. A considerable 31.4 percent listed hard 23.Which, disk encryption if any, as of a the high following priority item security on their features to-do list will for your the next year, bank seek to implement in the next year? (select all that and anti-virus support came in at 28.8 percent. apply) Anti-skimming devices Lockdown of ports (USB, Keyboard, Mouse) Hard Disk Encryption Remote password management Anti-virus support Software Restriction Policy support (whitelisting) Remote Key Loading (RKL) Firewall protection ned ues None of the above 18% 37% 33% 31% 30% 29% 25% 24% 22% Implementing EMV (Europay, MasterCard and Visa) as a card security standard is another way to help prevent ATM fraud attacks, but the U.S. in particular is becoming increasingly vulnerable because so many other countries have completed EMV migration. Most European, Latin American and Asian countries have migrated to EMV, or are in the process of migration. According to the ATM Marketplace white paper, ATM Fraud Prevention, the European ATM Security Team says that the U.S. is now the top destination for attacks such as magnetic-stripe card skimming. For many customers, the experience at the ATM will change with EMV. While they will likely learn quickly, there could be initial confusion. Because different C NegaPdraobpil mu reb ATM operators may handle the EMV experience differently, customers may be confused as they use ATMs outside their current bank s ATM network, a representative at a major U.S.-based bank told ATM Marketplace. 6

7 The U.S. migration to EMV is a long and costly road, but it is a necessary measure in ongoing fraud prevention efforts. Biometrics authentication, a form of identification and access control using metrics related to human characteristics, continues to be adopted by FIs in international markets. Western banks are poised to integrate biometric technology, but the process continues to lag largely due to the implementation costs and managing consumer liability. According to ABI Research, $3.1 billion in global revenues is forecasted for biometrics in 2015 in the consumer and enterprise sectors. Much of the expected growth will come from smartphone solutions, according to reports published by the research firm. Biometrics is becoming an urgent need due to the additional security it provides, along with cardless ATM withdrawals. Also, just as smartphones are providing an alternate to cards at the point-of-sale, they are likely to do the same for ATMs, said Rohan Muttiah, chief information officer, Commercial Bank of Ceylon, SriLanka. As fraudsters continue to find new ways to get around current fraud prevention tools, banks will have to continue to stay ahead of their efforts. 7

8 CHAPTER 2 The Customer Experience According to a 2014 Ernst and Young global consumer banking report, Winning through Customer Experience, a negative customer experience was the single most common driver for closed accounts. In the search for simplicity in day-to-day banking, customers ranked easy access to ATMs and bank branches high on the list of essential requirements. We need to ensure that we are meeting and exceeding customer experience expectations to keep them as customers. If customers have a great experience at the ATM, they will think positively about the bank. Similarly, if they have a negative experience they will think negatively about the bank. Customer experience is often the differentiator between banks, so in order to keep and attract new customers, their experience at the ATM needs to be positive, a representative at a major U.S.-based bank told ATM Marketplace. Survey participants were asked what new functionality their banks intended to incorporate into self-service systems, and 66.1 percent said their banks 66% Add new transactions on the ATM 40% Incorporate sales capabilities to facilitate selling bank products via self-service 37% Use new types of devices to deliver bank products and services inside of the branch (such as statement printers, coin devices, recyclers) 32% Increase marketing to promote the use of smartphones and/or the bank website 29% Support remote assistance capabilities to enable bank personnel to assist customers with new self-service functionality 28% Offer banking products and services in off-premise locations via self-service 18% Use video conferencing to provide access to bank product experts 3% Other 2015 NETWORLD MEDIA GROUP 8

9 planned to add new transactions on the ATM. Another 40 percent planned to include sales capabilities to facilitate selling bank products, and 37.2 percent aim to use new types of devices to deliver bank products and services inside the branch. Banks must customize the capabilities of the ATM to the daily needs of their clients to be able to offer extended transactions like payments of services, acquiring cinema tickets, or insurance, at any time during the day or night, to avoid long lines in the bank branch, said Juan Pablo González Gasque, CEO, Stratus Technologies, Mexico. However, when respondents were asked what new functionality is most important that banks should provide for self-service systems, 47.8 percent said cardless transaction support, and 45.8 percent said mobile phone integration. The next highest ranked answer, at 33.7 percent, was automated customer identification, such as biometrics. More and more cardholders are used to doing their daily transactions online and with smartphones. This requires a new set of pre-staged application types and cardless transactions, said Heiko Zissner, general manager, Financial IT Services, Itecon, Germany. Mobile ATM withdrawals via NFC Mobile ATM withdrawals via one-time-use PINs Managing ATM user interface via a mobile device (menus, available transactions) 51% 55% 53% Mobile ATM withdrawals via QR codes 39% 3% None of the above For mobile-atm integration services, participants were asked to select all the services they thought banks would adopt. Fifty-five percent said banks will adopt mobile ATM withdrawals via near field communication (NFC), while 53 percent said mobile ATM withdrawals via one-time-use PINs. Another 51.4 percent thought banks will adopt management of the ATM user interface via a mobile device. 9

10 Customers are already mobile, so all the channels, including ATM, should also adapt accordingly. I believe that ATM will be integrated and driven by mobile apps, said Bahadir Samli, chief information officer, ING Bank, Turkey. For the U.S., at least, mobile integration may not be moving fast enough to meet the demands of customers. J.D. Power, a global market research company, released a retail banking report based on U.S. consumer survey results in April 2015 that said mobile banking satisfaction, which had increased each year since it was included in the study in 2012, has declined by three points in Satisfaction with mobile banking and ATMs is dropping as customer expectations are outpacing technology improvements, said Jim Miller, senior director of banking at J.D. Power. Customers expect to be able to perform more functions on the same device this year than they did last year and that it will be easier to use. Success will not be driven by just adding more bells and whistles, but by balancing functionality with ease of use and then clearly communicating features and benefits to customers. Customers are already mobile, so all the channels, including ATM, should also adapt accordingly. I believe that ATM will be integrated and driven by mobile apps. Bahadir Samli, chief information officer, ING Bank, Turkey A good multichannel/omnichannel strategy is imperative to the customer experience, according to the Ernst and Young report. It s no secret that customers want convenience, and providing convenience means supplying 7. the Select customer the statement with several regarding access omnichannel options. that most closely matches your bank's view (choose up to THREE options). We are in the process of implementing an omnichannel strategy. 47% Omnichannel should be thought of as more of a long term strategic goal rather than a project that can be delivered. Our strategy is to look more at tactical integrations (such as mobile phones with ATMs) than a larger strategy involving all of our delivery channels. 33% 31% Our omnichannel strategy has already been implemented and is a success. The various life-cycles of the products within each channel make it extraordinarily difficult to manage as a single "omnichannel" entity. Implementation of a true multichannelarchitecture is too complex and costlyto be achievable. Each delivery channel is unique and requires its own skill sets to manage and operate so handling all delivery channels as one omnichannel is not achievable. The risk of failure of an omnichannel implementation is too great. 19% 15% 11% 10% 7% 8. What are the most important considerations in achieving your bank's multichannel goals? (select all that apply) 10

11 Survey respondents were asked to identify where they were in the banking omnichannel strategy process, and 18.7 percent said their omnichannel strategy has already been implemented and is a success, while 46.9 percent are in the process of implementing an omnichannel strategy. Interestingly, 33 percent thought that omnichannel should be more of a long-term strategic goal rather than a project that can be delivered. When asked what the most important considerations were for achieving a successful omnichannel strategy, 59.3 percent responded that choosing the right partner for each component of the overall strategy was most important, while 35.9 percent said it s important to select a software platform to use as a foundation for the most critical components. As the use of electronic channels grows, customers go to branches less often, so customers perceptions rely more and more on their experience at each channel, said Pere Rafols Castellvi, director of information technology, CaixaBank, Spain. According to López Bartolomé, Wincor Nixdorf (Americas), customers want speed and more options, but they also want personalized experiences. Banks should never forget about the never ending quest for speed and efficiency at the ATM. Tighter integration with mobile devices, and automated cash and check solutions that handle deposits in real time and give customers earlier availability to their deposits are also priorities, said López Bartolomé. Banks should never forget about the neverending quest for speed and efficiency at the ATM. Tighter integration with mobile devices, and automated cash and check solutions that handle deposits in real time and give customers earlier availability to their deposits are also priorities. Javier López Bartolomé, president, Wincor Nixdorf (Americas) 11

12 CHAPTER 3 ATM Estate Management Managing the operational costs associated with an ATM estate can be a daunting undertaking. From software and hardware upgrades to remote management and monitoring services, to cash handling and management, the costs of an ATM estate can add up quickly. However, an effective ATM estate must be both operationally effective and accommodate consumer demands. When putting a lot of effort on operational cost reduction, the bank must be careful to avoid impact on availability. Reducing maintenance, cash provisioning, etc., can have a very fast negative influence on the availability of the machine, which will result in channel dissatisfaction, change of customer habits and thus going to other bank s ATMs for their cash, having a direct impact on interbank/interchange fees, said Rudy De Wolf, project manager for payments distribution, BNP Paribas, Belgium. In the survey, respondents were asked about their banks views on remote management of ATM estates, and 40 percent said they currently do a good or very good job of remotely managing and monitoring the operational status of the ATM network. But, 31.3 percent said they have a general view of what is happening with their ATMs but need more detailed information. In general, and obviously, banks want to better manage their estates, as the estates are growing increasingly complex due to new types of self-service, as well as the expansion the ATM estates. Subsequently, 33.3 percent of survey respondents reported their banks are investigating the use of new types of self-service systems within the branch, while 26.1 percent said they are increasing the size of their ATM estate both in branch and off-premise. Similarly, 23.3 percent said they are actively expanding the use of ATM and self-service machines inside their bank branches. One key aspect of better managing the bank s ATM estate is having detailed knowledge of the estate s assets type of machines, where they are installed, how they are configured, what versions of software are currently installed on them, etc. Interestingly, 46.7 percent of FI survey participants maintain an inventory of their ATM assets using a manual process implemented by the bank, and 2015 NETWORLD MEDIA GROUP 12

13 only 22 percent have an automated process to remotely maintain a real-time inventory of all assets. Historically banks have relied on people in the bank maintaining a spreadsheet of all of the assets. Asset management, which is very important data, in many cases falls into a great black hole, so it is done manually, if at all, said Steve Hensley, executive vice-president, global sales, KAL. A well-managed ATM estate includes overseeing activities for software distribution, monitoring and reporting, ticketing, marketing efforts, cash handling and asset management. However, many banks treat each of these activities as its own island, rather than integrating for complete, allinclusive management. We provide a comprehensive management system called KTC. KTC includes about 10 separate applications all integrated into a single system. It includes monitoring, ticketing, management reporting, marketing campaign management, asset management and other critical ATM management applications, Hensley said. Historically banks have relied on people in the bank maintaining a spreadsheet of all of the assets. Asset management, which is very important data, in many cases falls into a great black hole, so it is done manually, if at all. Steve Hensley, executive vice-president, global sales, KAL Additional cost considerations enter into the estate management equation as well, namely software, operating systems (OS) and security measures. When asked about ATM software strategy, 34.2 percent of participants responded that they currently use multivendor software, while 20.5 percent say they use software and hardware from a single manufacturer. Of the bank participants surveyed, 27.3 percent intend to replace their current ATM software in 2015, while another 24.2 percent plan to replace in 2016 or Željko Medved, senior manager, Direct Channels Division, Erste & Steiermärkische Bank, Croatia, said the next step for his bank is implementing multi-vendor applications for ATMs as an essential infrastructure approach for rapid development of new services on ATMs. Easily linking to remote institutions and vendors is key for effective estate management, according to Medved. Managing costs is huge. Windows 7, EMV and added security measures are driving the one-time and operational costs higher. Utilizing multi-vendor software across a fleet helps keep ongoing operational costs lower, a representative at a major U.S.-based bank told ATM Marketplace. 13

14 CHAPTER 4 Branch Transformation With the saturation of alternative banking channels, such as mobile devices, online access and self-service options, the bank branch faces more competition than ever before. More and more, banks are realizing the branch channel needs to be transformed to remain relevant. Of the participants surveyed, 31.1 percent said they are currently rolling out new branch designs across their branch network, 29.7 percent said they are in pilot testing mode right now, 29.2 percent said they are in planning stages and 10 percent said they have no plans to introduce a branch transformation program. 10% 29% 30% 31% No, and we have no plans to introduce No, but we are planning to introduce Yes, we have pilots in test Yes, we are rolling out new branch designs across our branch network All the banks are now seeing self-service as the most important channel, above online, mobile and IVR. Self-service is the main contact with the customers, and for this reason, banks are increasing features, investing in more devices and redesigning branches with bigger self-service lobbies, said Alejandro Mena, vice-president of ATMs and self-service, Banamex, Mexico. An executive from a major U.S.-based bank told ATM Marketplace that his bank has adopted the Universal Banker staffing model at many branches. This means that customers conduct all of their business with the same banker with no need for hand-offs or additional waiting for service. In conjunction with the staffing model change, the bank has also changed the branch layout. The traditional teller counter is replaced by concierge stations which allow more personable interaction between banker and customer NETWORLD MEDIA GROUP 14

15 Tellers roaming among self-service devices is quite popular in Germany compared to other countries. The use of non-cash devices for doing transfers, bill payment, recurring transfers, account balancing, etc., is very popular. Some transactions are not self-explanatory, so it s uncommon that tellers are placed in the self-service area just to support customers. Which, by the way, is still much cheaper than having the tellers do the transactions, Zissner, Itecon, Germany, said. KAL CEO Aravinda Korala says branch transformation is a strategic makeover the banks should consider that focuses on providing expertise in an efficient but welcoming manner. It s not just about continuing to provide human interaction, but more importantly, expertise. Whether it s in the physical branch in the form of a concierge, a roaming teller with a tablet, or remote assistance via video conference, it s the expertise, and the availability of the expert, that really counts, Korala said. Korala provided an anecdote he says he uses often to illustrate that branch transformation is more about delivering for various customer scenarios than determining the branch arrangement. Let s say I want to transfer some money to my son who is on a trip in Peru, and I want to do this quickly because he is in need, but it s not a transaction I typically perform. I go to my nearest bank branch for efficiency, walk in, and I m immediately provided with expert assistance. Now whether that s at the ATM via a video connection, or a help button that alerts a teller in the branch physically, matters less than the availability of the transaction and the expert assistance in completing it, he said. A major U.S.-based bank has also enhanced the customer experience at account opening, according to a representative. The branches have an instant card issuance terminal that produces a debit card at account opening. This allows the banker to demonstrate ATM capabilities for the customer, who then leaves the branch ready to transact. Additionally, branches have Wi-Fi which allows bankers to set up mobile banking applications on the customers mobile devices. It s not just about continuing to provide human interaction, but more importantly, expertise. Whether it s in the physical branch in the form of a concierge, a roaming teller with a tablet, or remote assistance via video conference, it s the expertise, and the availability of the expert, that really counts. Aravinda Korala, CEO, KAL Citi has been implementing a smart banking program for several years seeking to provide a more human touch in more open environments. There are number of ongoing initiatives supporting this strategy that involve business process improvements and technology to support them, Trocmé, Citi, U.S., said. 15

16 There will continue to be a push to migrate transactions away from the teller line to self-service options. As financial institutions make more selfservice options available, and customers become more and more comfortable with the self-service experience, branch transformation will continue to gain momentum. Continuing to move routine transactions to self-service is critical to driving efficiencies and optimizing the total cost of ownership. Building off of that point, improving intelligence around the channel to start to use it in more opportunistic ways that also enhance customer relationships and further discovers/initiates sales opportunities, said Devon Watson, vice-president of software research and strategy, Diebold Inc. However, the argument for human interaction is still a strong one, and industry experts believe that human contact is far from disappearing anytime soon. Human interaction cannot be eliminated, because some types of transactions require human assistance. New technologies can help branch managers make their jobs easier, such as remote authorizations and teller assistance for high volume of transactions. Also, a human teller can provide first-line maintenance in order to maintain the availability index. The future of the branches will be a high interaction between the devices and the human tellers, Mena, Banamex, Mexico, said. Exception transactions reinforce the need for the traditional teller role, according to the majority of the industry experts interviewed. It [the traditional teller role] will not disappear but will migrate to schemes of attention rooms. When a transaction requires cash dispensing, there will be available automatic cash dispensers, otherwise bank employees will go out to provide service to the clients on the floor of the branch, Gasque, Stratus Technologies, Mexico said. This introduces the role that video conferencing may play in the branch of the future. Video conferencing allows the customer to interact with experts about subjects and solutions that may not be locally present in the branch. Some examples are investment advice and business credit/lending opportunities. A group of specialists centrally located in a call center could serve several branches, especially in more remote locations, to deliver fullservice capabilities. Video conferencing is a great solution to reduce cost. Branches could have virtual tellers, virtual concierge, virtual customer service, virtual promoters. Branches could extend hours. A full branch could have just two tellers. 16

17 Mexican customers love face-to-face interaction, but if their problems could be solved in video conferencing, and they can make their transactions or get a new credit card, there won t be any problem. And customer experience will increase with this feature, Mena said. The argument against video conferencing is centered on security. Trocmé said Citibank customer focus groups worldwide have indicated that they don t perceive video conferencing as secure or practical at the ATM, but they do see a role for it in a private room within the branch. Zissner said it would make sense for self-service to have a small closed area which does not allow other customers to hear and see what s happening in the video conference. In my humble opinion, it s more likely that customers will do the video call within their comfort zone at home, Zissner said. It s safe to conclude that self-service terminals will play a large role in the branch of the future. Devices will become more and more capable. This will further drive transactions away from the teller line, which will make changes to the branch staffing model, layout and focus possible. We think that by transforming the branch through adding automation, streamlining processes, optimizing staff and branch footprint, banks can expect anywhere from a percent improvement in the efficiency ratio of their branches. This includes top line revenue growth and reduced cost base. It may take an individual branch at least three years to achieve those operating levels, said Raja Bose, vice president of branch transformation and advisory service, Diebold Inc. 17

18 CHAPTER 5 The Future of the ATM As branch transformation has moved from a branch of the future concept to an implementation reality, the role of the ATM will keep evolving. Banks will need to examine their physical and digital services and determine which offerings best suit their specific markets. We anticipate more convergence between the ATM and digital channels. In fact, we see the ATM as a hybrid channel that naturally bridges the physical and digital dimensions of retail banking service delivery to our customers worldwide. Even as digital banking rapidly is gaining acceptance and momentum, people still want to use cash. We think the ATM is ideally suited to reconcile both, Trocmé, Citi U.S., said. Diebold s Bose says banks need to reduce their cost and physical footprint, but can t afford to leave the neighborhood. Therefore, banks seek smaller branches with more automation. You have to begin to look at ATMs as an extension of a bank s branch network and an important touch point with consumers. ATMs can help extend a bank s reach, and software (on an ATM or assisted self-service terminal) can be a catalyst to enable more transaction types and migrating routine transactions away from the tellers, Bose said. With reducing costs within the bank branch as a major driver for increasing self-service options and availability, survey participants believe ATMs will continue to play a critical role in increasing efficiency for both branch employees and customers alike. Mexico is a country with a self-service culture in development. Mexican customers are now using the new technology and moving to self-service. Mexican banks are moving to increase the footprint of ATMs and CDMs because the banks need to offload low-value transactions to self-service. The sales strategy must be completely aligned with self-service, Mena said. Lorenzo Tassan-Bassut, chief operating officer of TMB Bank, Thailand, does not see a major role change for the ATM at the branch, per se, but as a channel that reduces cost per transaction by adding the capability to handle new You have to begin to look at ATMs as an extension of a bank s branch network and an important touch point with consumers. ATMs can help extend a banks reach, and software can be a catalyst to enable more transaction types and migrating routine transactions away from the tellers. Raja Bose vice-president of branch transformation and advisory service, Diebold Inc NETWORLD MEDIA GROUP 18

19 transactions, such as account opening and card issue. Zala Zsolt, senior manager, OTP Bank, Hungary, agrees. It helps the cashiers to focus on sales activity and to provide advice to customers instead of managing traditional cash in/cash out and transfer transactions, Zsolt said. Dr. Koson Sapprasert, head of innovation, Siam Commercial Bank, Thailand, said that self-service and ATM is becoming the most prominent channel in Thailand. In terms of the ATM s future role in Thailand, at least, he believes it will remain the most important channel for cash transactions. Wincor Nixdorf s López Bartolomé said that the future role of the ATM in the bank delivery strategy will not be one of singularity or isolation, but rather, one of extending the brand and customer experience through ease of use and increased functionality. It is no longer just a cash-and-dash functionality. The ATM is continuing to become an evolving and vital aspect of the increasing self-service offering of every bank. As mobile functionality continues to mature, banks also need to provide seamless integration and transition from the new wallet of the consumer, their mobile device, to their self-service device, the ATM, López Bartolomé said. The pace of change in the ATM industry has accelerated dramatically in the past year, with new models of ATMs, new configurations, more automation in the bank lobby, new features, increased focus on the customer experience and more. Having the right partners with the best technology seems to be more important than ever before, as is rapidly innovating in order to compete in the marketplace. With rapid change comes higher risk the risk of choosing poorly, the risk of betting on consumer acceptance of new ways of banking, fraud risks and so on. Missteps, carelessness and inattention to detail can be very costly. This annual guide aims to reduce many of these risks by providing the most up-todate information and expert industry analysis. It is also important to examine the past for perspective on where the industry is today. In the pages that follow, ATM Marketplace takes a brief look back at the previous seven editions of this guide, and offers excerpts that illustrate just how far the industry has come in just eight years. 19

20 LOOKING BACK Reflections on Past Guides The majority of industry experts agree that there was a long history of little to no innovation in the ATM and self-service space. More so than ever before, the banking industry is now a tremendously competitive market, and the adoption of new technologies and new ways of thinking about reducing costs, while also providing more innovative customer services, are critical for success. Looking at the entire series of ATM software trends guides including this one it becomes clear not only that the pace of change has picked up considerably, but also that it s accelerating at faster rate than ever. This is especially apparent today, with topics such as omnichannel banking and branch transformation dominating almost every discussion about the future of retail banking. Here is a look back at some of the findings and conclusions from prior guides. 2007/2008 In established ATM markets, OS/2, states and screens, and a proprietary, locked-in ATM system continue to rein. Banks are ready to start implementing new things like remote-key distribution, remote ATM management and remote-software distribution. According to Retail Banking Research Ltd., 15 percent of the world s ATMs had moved to multivendor software at the end of 2007, with Europe and Asia leading the way. ATM life in an XFS environment is a new concept. People can talk all they want about how much Windows improves user experience, but at the end of the day, it s about cost savings. Driving software forces established in ATM markets include: Deposit automation/check 21 in the U.S. Personalization, especially in the U.S NETWORLD MEDIA GROUP 20

21 Channel integration, so that the user experience is similar or the same Multivendor ATM software represents value in tough times. The No. 1 reason FIs look for an ATM software change is cost reduction. Not surprisingly, increased ATM security tops the list of reasons to change ATM software. Remote ATM monitoring tops the list as the most desired feature for ATM software. Reducing operational costs is the most critical change on the minds of the online survey respondents Primary reason to change ATM software: Increased security once again tops the list of reasons for FIs to change their ATM software. Remote monitoring tops the list as the most desired feature for ATM software. Although the economic pressures on FIs have not subsided, the focus has shifted somewhat to customer-facing enhancements. While the largest number of respondents viewed the ATM as the secondmost important customer touchpoint, it ranked a close second overall after the branch as the most important. The mobile phone space was solidly ranked as the least important. The branch is still clearly the top touchpoint, despite advances in customer facing technologies Increased pressure to be competitive with new services and features helped drive the ability for deployers to easily make changes to their ATM software to the top of the list of features deployers want to see, with 46 percent of respondents choosing that category. Regarding identifying the most critical changes banks wanted to make to their ATM network, Reducing operational costs topped the list The branch remains the most important customer touchpoint for financial institutions, although the number of survey respondents who chose the branch as the most important customer touchpoint decreased slightly, to 37 percent in 2011 compared with 40 percent in The number of respondents 21

22 tapping the ATM as the most important customer touchpoint remained fairly stable at 34 percent compared with 33 percent in change to with only five percent of respondents listing mobile/smartphone banking as their most important touchpoint, up only slightly from 4 percent in Multivendor ATM software is becoming ubiquitous. As FIs increasingly serve customers via a variety of channels, creating a consistent experience between those channels has become more important. And as the economic and regulatory environment remains uncertain, managing costs has become a primary concern. Tablet computing to inspire the next generation of interfaces. One of the main features our experts predicted will be offered on the ATM in the next few years is video banking. A variety of banking services are coming to the mobile phone, if they re not here already. Banks are incorporating mobile phones in other ways as well including allowing the customer to use contactless cards or NFC-enabled mobile phones to initiate their withdrawals in order to speed up the transaction Asked, What is the most critical change your organization needs to make to its ATM network in 2013?, survey participants chose as one of their top responses, Create a better customer experience at the ATM. Targeted marketing and transaction personalization was a main focus. Not only does the ability to tailor the ATM transaction to individual customers make for a more personal experience, it offers the bank the ability to deliver targeted messages to that customer. Integration with mobile phone transactions was by far seen as the most important future capability of the ATM channel, despite being ranked near the bottom in earlier surveys. Improving the customer experience is becoming more and more important. Consumers expect to interact with all types of technology in the same way they interact with their smartphones. 22

23 Cutting operational costs is by far the most critical change ATM deployers are looking to make to their ATM networks this year. Support for new technology, particularly mobile phone integration, topped the list of drivers for changing ATM software. Delivering new products via self-service technology is a priority for more than three fourths of survey respondents. More than half of survey respondents are thinking about the changing bank branch when testing new self-service technology A key theme identified by survey respondents is the need for FIs to add greater functionality to their ATMs. Nearly three-quarters (70.6 percent) of respondents planning to extend their self-service usage aim to add new transaction types at their ATMs. Targeted one-to-one marketing was identified as an important new functionality by 27.5 percent of FI respondents in While 17.9 percent of FIs surveyed in 2014 identify remote teller assistance as an important functionality they want to introduce at their ATMs, only 7.3 percent see videoconferencing with bank subject matter experts as an important new functionality. The 2013 survey also identified a low demand for videoconferencing, with only 15.6 percent of FI respondents identifying videoconferencing as an important new functionality. Integration of the ATM with mobile phone transactions was identified by 48.7 percent of 2014 non-bank respondents as the most important future ATM capability that would improve the customer s experience. Contactless card support came second, identified by 26.7 percent of respondents. With the ongoing drive to self-service banking, ATMs will assume more of the functions traditionally handled by tellers in branches. Increasing customer reach and coverage and adding new functionality to improve the customer experience are the dominant reasons for deploying new ATMs. 23

24 APPENDIX 1 Analysis of financial institution survey results Financial institutions 1. Please identify your industry segment. Financial institution Other 2. Regional breakdown of financial institution respondents (percent) USA, Canada, North America 29% Central or South America 7% Europe or Middle East 28% Africa 9% Asia 24% Australia 4% 2015 NETWORLD MEDIA GROUP 24

25 3. How many ATMs do you have? 4. How many bank branches do you have? 34% 36% 29% 20% 25% 25% 17% 14% 4. How many bank branches do you have? 4. How many bank branches do you have? 36% 25% 25% 14% ,000 More than 2, ,000 More than 2, ,000 More than 2, Does your bank have a branch transformation program in place now Does your bank have a branch a transformation program program in place in now? place now? 10% No, and we have no plans to introduce 29% No, but we are planning to introduce 10% 30% No, and we have no plans Yes, we have to introduce pilots in test 29% 31% No, but we are planning to introduce Yes, we are rolling out new branch designs across our branch network 30% Yes, we hav pilots in tes 6. Does your bank currently have an omnichannel/multichannel strategy? 6. Does your your bank bank currently have have an omnichannel/multichannel strategy? strategy? 48% 24% 48% 17% 11% 24% 17 Yes, we are in the process of implementing our strategy No, but we are now formulating our strategy Yes, we are in the process of implementing our strategy Yes, we have a well-defined strategy but not yet implementing No, but we are now formulating our strategy No, and we have no plans to pursue Yes, w strategy 25

26 7. Select the statement regarding omnichannel that most closely matches your bank s view 7. Select (choose the statement up to THREE regarding options). omnichannel that most closely matches your bank's view (choose up to THREE options). 7. Select the statement regarding omnichannel that most closely matches your bank's view (choose up to THREE options). We are in the process of implementing an omnichannel strategy. We are in the process of implementing an omnichannel strategy. Omnichannel should be thought of as more of a long term strategic goal rather than a project that can be delivered. Omnichannel should be thought of as more of a long term strategic goal rather than a project that can be delivered. Our strategy is to look more at tactical integrations (such as mobile phones with ATMs) than a larger strategy involving all of our delivery channels. Our strategy is to look more at tactical integrations (such as mobile phones with ATMs) than a larger strategy involving all of our delivery channels. Our omnichannel strategy has already been implemented and is a success. Our omnichannel strategy has already been implemented and is a success. The various life-cycles of the products within each channel make it extraordinarily difficult to manage as a single "omnichannel" entity. The various life-cycles of the products within each channel make it extraordinarily difficult to manage as a single "omnichannel" entity. Implementation of a true multichannelarchitecture is too complex and costlyto be achievable. Implementation of a true multichannelarchitecture Each delivery channel is unique is and too complex requires its and own costlyto skill sets be achievable. to manage and operate so handling all delivery channels as one Each delivery channel is unique and requires its own skill sets omnichannel is not achievable. to manage and operate so handling all delivery channels as one omnichannel is not achievable. The risk of failure of an omnichannel implementation is too great. The risk of failure of an omnichannel implementation is too great. 47% 47% 33% 33% 31% 31% 19% 19% 15% 15% 11% 11% 10% 10% 7% 7% 8. What are the most important considerations in achieving your bank's multichannel goals? (select all that apply) 8. What are the most important considerations in achieving your bank s multichannel goals? 8. (select What are all that the most apply) important considerations in achieving your bank's multichannel goals? (select all that apply) 59% 59% 36% 36% 17% 17% 15% 15% Select a single partner to Choose the right Select a software None of the above provide all of the partner for each platform to use as Select a single partner to technology we need for Choose the foundation right Select a software component of the for the most None of the above provide all of the each channel as well as for partner for each platform to use as a overall strategy critical components technology we need for foundation for the most the overall integration component of the each channel as well as for overall strategy critical components the overall integration 3% Other 3% Other 2014 ATM SOFTWARE TRENDS & ANALYSIS 2014 ATM SOFTWARE TRENDS & ANALYSIS C NegaPdraobpil mu reb C NegaPdraobpil 26 mu reb

27 9. What is the bank s deployment strategy for self-service systems (such as ATMs, kiosks) for 2015/2016? 2015/ % 26% 23% 13% We are investigating the use of new types of self-service systems within the branch We are increasing the size of our estate both in branch and off-premise We are actively expanding the use of self-service inside our branches We are keeping the total number of self-service systems steady for the near future 5% We are decreasing the number of self-service systems for offpremise use 10. What new functionality does your bank plan to incorporate into its self-service system? (select up to THREE options) 66% Add new transactions on the ATM 40% Incorporate sales capabilities to facilitate selling bank products via self-service 37% Use new types of devices to deliver bank products and services inside of the branch (such as statement printers, coin devices, recyclers) 32% Increase marketing to promote the use of smartphones and/or the bank website 29% Support remote assistance capabilities to enable bank personnel to assist customers with new self-service functionality 28% Offer banking products and services in off-premise locations via self-service 18% Use video conferencing to provide access to bank product experts 3% Other 27