Chemical Banking Corp. is negotiating to buy 1,000 automated teller machines equipped with many of the features pioneered by archrival Citicorp.
The ATMs, manufactured by NCR Corp., employ touch-sensitive display screens and "dip" card readers, which do not retain customers' cards. Citibank has successfully used these features to differentiate itself in the market.
No contracts for the ATMs have been signed, and Chemical executives say they are only in the preliminary stages of deciding which machines they will choose. At issue is which brand will replace an aging fleet of self-service terminals that has swelled to over 1,000 units as a result of the merger with Manufacturers Hanover.
Technology Wars
But officials at NCR and sources close to Chemical believe that the $138 billion-asset banking company is ready to emulate Citicorp's approach in order to take a run at its retail banking business.
"New York banks are especially sensitive to the technology wars," said Liam Carmody, president of Carmody & Co., Woodcliff Lake, N.J.
"Citi used the touch screens to move [market] share three or four points when they initially installed them, and with Chemical's new retail clout, it makes sense for them to make a gesture that says they plan to compete with Citi."
Initial |Token Order' Expected
NCR officials said they expect a "token order" from Chemical for around 50 ATMs in the next two months, with larger orders to be filled later in the year.
In all, NCR officials said Chemical is looking to install about 1,000 touch-screen ATMs over five years. These will replace about 500 of Chemical's Omron Corp. units and the 400 or so older NCR models that the bank inherited from Manufacturers Hanover Corp.
The total cost of the the ATMs before volume discounts is about $28 million, NCR Corp. representatives estimated.
At present, NCR is the only major ATM vendor in the United States that offers touch-screen ATMs in its newest product line. The technology allows ATM users to conduct transactions by touching areas of the video display screen rather than using a keypad adjacent to the screen.
Citicorp owes much of its reputation as a leading-edge bank to its aggressive installation of the touch-screens in the 1980's. The proprietary machines are designed and assempbled by a California-based subsidiary, Transaction Technology Inc.
Over the past 10 years, Citibank has been able to get about 80% of its customers to use ATMs, which is about 20% higher than average ATM usage rates for the industry, observers said.
Citicorp officials attribute much of this success to the consumer appeal of the touch screens and to dip card readers.
The Citi ATMs and the market share they helped garner have not gone unnoticed by Chemical executives.
"Certainly, in talking to consumers, the dip card is preferred over machines that ingest cards," said James Springer, vice president in electronic banking. "We are in the process of seeing whether that can be translated into new business."
Banking analysts doubt whether pulling even with Citi on ATM technology will be a splashy enough marketing event for Chemical to significantly move market share.
However, if the deal pans out as experts predict, Chemical will have the potential to go Citi one better.
Since the newest line of NCR machines are also capable of handling video images, Chemical could rig its ATMs to provide customers with video-conferences with bank service representatives on the ATM screens. Such technology is now being tested at Huntington Bancshares, Columbus, Ohio.
But, even in a best-case scenario, such a project is years off. For now, Chemical is testing about five touch-screen ATMs and 13 ATMs with just dip card readers.
Among the things that Chemical Bank officials said they are looking at during testing is whether the new ATMs comply with the Americans with Disabilities Act, a federal law that requires ATMs and other public facilities to be easily accessible to people with disabilities.
"If the way they have been proceeding with other areas of the merger is any indication, I would expect the feeling-out process to to go on for some time," said William T. Gregor, a senior vice president at the Mac Group Gemini, a Massachusetts consulting firm.
