Bank On Feature-Filled ATMs - InformationWeek

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6/30/2005
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Bank On Feature-Filled ATMs

As financial technology matures, banks will offer personalization, personal alerts, and check imaging via ATMs

ATMs. No matter where you go, there they are. Over the past few years, ATMs have loaded up on features designed to capture consumers by providing a one-stop shop for their basic banking needs, along with the odd postage stamp, movie ticket, or prepaid cell-phone card. And as financial technology continues to mature--including Windows taking the place of IBM's OS/2, once the de facto ATM operating system--ATMs will provide users with an ever-richer banking experience.

Many banks view such value-added offerings as a way to differentiate themselves in the market. Yet consumers don't do much more at ATMs than withdraw cash (60%) or view balances (15%), both very basic transactions, according to research firm TowerGroup. Based on these numbers, it's vital that banks look critically at how they plan to spend their money on ATMs in the future, says Jerry Silva, a senior analyst with TowerGroup.

"The ATM is a great cash delivery tool, but it can also deliver other information to clients," says Jan Estep, executive VP of the transaction services processing division at US Bancorp. But should that information be an ad for a soft drink? Not according to Estep, who emphasizes that new features should be related to financial services, such as an ad for the latest rates for certificates of deposit.

Jim Merrell, director of global product marketing at ATM manufacturer Diebold Inc., has a similar view about the kinds of services ATMs should provide. "Some banks view offering non-bank services as diluting their brand, while others see it as an opportunity to expand their offerings," he says. "It depends on the bank. But their core business is managing accounts for people. They'll focus on this first."

As far as Merrell is concerned, banks aren't using ATMs to their full potential. "The capability of the ATM is underutilized," he says. "It's a fairly complex processor, and the potential for expanding its use is very good."

A key element in the evolution of the next generation of ATMs is the use of Windows. The Microsoft operating system essentially turns the ATM into a PC in a large box, and by its design, Windows enables banks to do more. "There's a huge opportunity to deploy new technology on ATMs," says Ben Ensor, a senior analyst with Forrester Research. "The hard part is deciding which ones to do. But this is a lot easier with Windows than with OS/2." Not to mention that it's easier to hire people who know how to write for Windows, TowerGroup's Silva says.

The financial-services industry has long talked about using ATMs to enhance consumers' relationships with their banks. Although nothing can replace a person-to-person interaction, the idea of providing a customized experience at ATMs is gaining steam. In fact, Silva says that true, targeted marketing will be one of the biggest changes to come along in the ATM world. Indeed, marketing is high on banks' priority lists. "This is going to be one-to-one marketing where, if the bank knows your CD is coming due in a month, it will give you hints as to other places for you to put that money," Silva says.

Personalization will be a big area of interest, Silva adds. "Call me by name, remember the language I speak, my favorite amount of money to withdraw--it may sound trivial, but it makes a difference," he says. Diebold's Merrell agrees that there's an opportunity for banks to use their ATM networks as better communications vehicles with their customers by connecting with customer-relationship-management tools and data warehouses. "This will offer nicer, more-personalized screens. The technology is there, and banks are starting to do this."


Wells Fargo is adding imaging to its ATMs, senior VP Velline says.

Wells Fargo is adding imaging to its ATMs, senior VP Velline says.


Photo by Jeffery Newbury
Of course, none of this is possible without first lining up the data from the various channels within a financial institution. That's why ATMs increasingly will factor into banks' cross-channel strategies. The goal is to provide users at ATMs with access to the same data they'd find at a branch, in the call center, and on the Internet. "It's always important to keep channels in alignment in real time," says Jonathan Velline, senior VP of ATM banking at Wells Fargo & Co. Consistency within the same channel is also important, he says. For example, all of a bank's ATMs should provide the same languages, access the same financial accounts, and have the same colorful touch-screen interface.

Another feature that fits in well with an integrated channel strategy is a personal-alert system. "If a bank sees that the customer is awaiting approval on a loan, an all-points bulletin will go out saying, 'Hello, your loan has been approved. Please come down to the branch,'" Silva says. These alerts could be little pop-up reminders that appear on the "please wait" screen. But this must be coordinated across delivery channels, Silva emphasizes, otherwise the customer will become annoyed if this same message continues to appear in other areas after it was broadcast already.

Beyond the technology banks may want to deploy at ATMs, there's also the technology they may have to deploy. "Some banks aren't investing in ATMs because they want to provide better service to their customers, but because the government or one of the card processors says they must," Velline says. "It's requirement-focused investment, not customer-focused investment." Examples include the requirements that ATMs use the Triple DES encryption protocol and that they're equipped with headsets for the visually impaired. And, although it's still in the early stages, Check 21 will compel banks to upgrade their ATMs to include imaging technology.

With the advent of Check 21, banks are scrambling to compose strategies with regard to digitizing the check-clearing process. It's no surprise that ATMs are being targeted as the perfect outlet for this automated self-service function.

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