In addition to ATMs, it is focusing on other types of machines used for financial activities: self-serve checkout systems, payment kiosks, and point of sale terminals.
NCR, of course, was reshaped by the September spinoff of Teradata Corp., the data warehouse operation that generated almost a quarter of its revenue last year. The transaction was NCR's biggest since Mr. Nuti became its CEO in 2005.
Though Teradata was profitable and growing, Mr. Nuti, 44, said it simply did not fit with his idea of where to take NCR. Instead, he is fascinated with how technology has transformed the way people conduct business and make purchases, and he is trying to steer his company toward the spot where people, commerce, and machines intersect.
"Ten years ago you didn't procure anything over the Web. Today you're browsing, comparison shopping, procuring over the Web," he said. "Five years ago you probably didn't check into an airport using a self-service kiosk; you stood on line waiting for a human being."
Mr. Nuti expects "continuous, dramatic changes" in the way consumers interact with businesses. "The ways you're going to interact differently fall into the spaces of point of service devices like ATMs and kiosks, and the evolution of what you can do on those devices."
ATM Issues
He has no plans to ignore ATMs, even though he concedes that their United States transaction volume is waning.Banks have been so successful at promoting the use of debit cards at the point of sale and for receiving cash back that ATM withdrawals have been falling, and volume per machine has been dropping sharply, as financial companies and ATM operators have flooded the country with machines.
That's why NCR, like many of its competitors, is focusing abroad; most of NCR's big ATM deals in recent years have been in developing markets, such as Eastern Europe (where the company has a factory in Budapest), China, India, and Africa.
"They're very different markets" from the U. S., he said. "The density of ATMs to people in these countries is quite low."
But there's still plenty of demand for ATMs in America, Mr. Nuti said. "In my experience, most markets typically last longer than people anticipate, and today, with about 40 billion checks in the U.S. alone changing hands, as well as the amount of cash being used, we're going to be in a cash and check world for a very long time."
Gil B. Luria, an analyst with Wedbush Morgan Securities, said that most ATM manufacturers will generate their sales growth outside the U.S. for the foreseeable future. ATM sales typically follow very predictable replacement cycles, he said. "There hasn't been that much growth over the last couple of years, because there hasn't been a reason for banks to accelerate the upgrade cycle."
In 2004 and 2005, banks upgraded their machines because they were required to implement the Triple DES encryption standard for PIN pads, but since then banks have had little reason to update or replace their networks, Mr. Luria said. For the next several years "the upgrade cycle appears to be in deposit automation and things that are related to it."
Imaging Emerges
Though cash withdrawals likely will continue to decline, Mr. Nuti expects ATM deposits to become more popular, in large part because of imaging technology, which can make the transactions faster and more secure.NCR and several other companies have been touting the technology for several years, but it has started to take off with banks only recently. Imaging systems enable people to deposit checks without envelopes. A scanner creates a image of the check which is transmitted to a processing center immediately, instead of sitting in the ATM vault for pickup.
Though only a few banking companies, including Wells Fargo & Co. and Bank of America Corp., are using imaging in their ATMs now, the growth in use is already "surpassing our own expectations," Mr. Nuti said. Imaging "will dramatically increase the traffic volume at an ATM."
However, Gwenn Bezard, a research director at Aite Group LLC in Boston, said he is skeptical about imaging's potential.
"I think some institutions will move aggressively down that path" of installing imaging gear in their ATMs, he said, but most banks will be wary of investing in a technology that supports checks when they "watch how fast checks are declining."
Billions of checks are written in this country every year, but only a small percentage would be "good targets for capture at the ATM," Mr. Bezard said. "It's nice to invest in something that's growing. It's hard to invest in something that declining."
But Rob Evans, NCR's director of industry marketing for Americas self-service, said imaging could have another benefit. NCR has developed a marketing program touting the environmental benefits of imaging-enabled machines — a timely issue, given the sudden growth in interest in "green" initiatives. With imaging, "you don't have to have a degree in environmental sciences to understand that there are a lot of 16-ton Dunbar armored trucks that I don't have to have on the street, driving around picking that stuff up," Mr. Evans said.
Kiosks
Another area where Mr. Nuti sees great potential, despite plenty of industry naysayers, is in financial services kiosks.NCR developed the first kiosk, the Vcom, which is currently installed in about 2,000 7-Eleven Inc. stores. The machines can perform standard ATM functions, as well as more complicated services, such as cashing checks, bill payment, and money transfers.
In June, 7-Eleven sold its Vcoms, along with 3,500 standard ATMs, to the Houston merchant ATM deployer Cardtronics Inc., which has conceded that it is still trying to find the right strategy for turning a profit from the Vcoms, and that it may shut off the more advanced capabilities.
The Vcom line has had "its ups and downs," Mr. Nuti said. The early models were "quite costly, quite bulky," but over the past decade the costs have come down, and now the machines can offer more services and handle transactions faster. Despite some early issues, the kiosks have a "bright future" in the financial services industry, he said. Part of the reason for his optimism is young people, who he said have repeatedly demonstrated a willingness to interact with machines.
"We're doing a lot more research on our customers' customer," he said. "The demographic is widening every day, but the 18-to-35 demographic absolutely chooses to do business with banks through these multiple channels," including the Internet, mobile devices, and ATMs.
However, with ATMs appealing to a "widening demographic of people," Mr. Nuti warns that ATM operators may feel compelled to offer new services through the machines — a strategy that could backfire. In trying to satisfy all potential users, ATM owners often wonder "what else should I put on this device," he said, but adding functions means people will spend more time at the machines, forcing others to wait longer. "That's the rub in the ATM. You can't put so many applications on it where the queue time becomes inordinately long."
Potential Deals
NCR is also interested in potential acquisitions and partnerships that could expand its reach in specific regions or markets."We're going to be looking at acquisitions to drive geographic expansion in markets that we've underpenetrated or where we don't have our fair share of the market," including some small ATM companies.
In addition, it is interested in deals in markets adjacent to self-serve banking. For example, in July it licensed branch optimization technology from Cima SpA, an Italian provider of teller-assisted cash recycling systems.
Self-Service
NCR has been generating sales growth in retail kiosks, such as check-in machines used at hotels and airports, and self-serve checkout systems used at merchants.And Mr. Luria said that banks will be an important market for such technologies. "Kiosks as a bank feature, if anything, is kind of a longer-term trend," he said.
Mr. Nuti said that NCR has been pushing that concept with retailers as well as banks by encouraging merchants to consider "building a self-service center in their stores."
Such centers would allow consumers to conduct a variety of banking (and possibly nonbanking activities at kiosks. The appeal for merchants, according to NCR, is that people might visit a store primarily to conduct some kind of banking service but also might make an impulse purchase there.
Banks likely would see these kiosks as a way to extend their brands, and retailers could view them as a potential source of business, Mr. Nuti said.
"This whole world of self-service, these consumer changes that are happening, this technology adoption and innovation that has occurred in these other channels is what's causing retailers and banks to think differently about how they approach their customer," he said. "We've studied it, we understand it, and we're building a company around it."
