Riding technology from NCR Corp., 7-Eleven is making a run at financial services.
The convenience store chain, already home to 4,600 cash dispensers and automated teller machines, is installing 37 souped-up NCR models in the Austin, Tex., area that can cash checks, issue money orders, and otherwise stand in for fuller-service bank facilities.
Bankers are not yet panicking at the advent of another competitor. The 5,400-store retail network owned by Southland Corp., building on its status as the largest retailing-industry owner of ATMs, is mainly hoping to attract people who do not have banking relationships.
But 7-Eleven calls its automated kiosks "financial services centers," has an eye on taking the concept nationwide, and could thus throw itself into the middle of established financial institutions' attempts to woo the unbanked.
The initial set of services, which could just as easily be offered by other buyers of "advanced-function ATMs," comprises check cashing, money orders, money transmission, phone cards, and basic cash withdrawals. Bill payments are a few months away.
A 7-Eleven spokeswoman said the kiosks should attract customers and save them time.
Mark McCall, an NCR spokesman, said never before has such a collection of automated banking services been offered in a retail setting.
"Some banks are doing things in remote branches or supermarkets, but those are usually multiple machines and staffed by someone during the day," he said. Any of NCR's 7-Eleven machines can perform multiple functions including some that, in a remote branch, might be handled by a staff person.
For the 7-Eleven deployment, Western Union Financial Services, a unit of First Data Corp., is supplying money-order and cash transmission services. Affiliated Computer Services, a Dallas data processor and ATM network servicer, does the transaction processing.
NCR is making a strategic departure in its relationship with 7-Eleven. While the Dayton, Ohio, manufacturer has close relationships with retailers, deploying machines in supermarkets and most recently in Kmart stores, this is the first instance in which a bank is not involved.
About 90% of the ATMs from NCR go to banks.
Wolfgang R. Dalichau, vice president of NCR's financial solutions group, predicted more deals directly with stores. "Retailers are becoming a greater focus," he said.
NCR is being careful not to alienate its bank customers. Mr. Dalichau said banks may benefit from 7-Eleven's initiative.
"Once this system has been implemented, some banks may see that 7-Eleven has so many convenient locations that they may strike a deal (with the stores) to put other functions on the ATMs, like loans," he said.
"I'm not so sure that banks are aggressively going after the low-end market," Mr. Dalichau added. "They are going after the high-end customer."
"The banking industry is focusing less on brick-and-mortar," said Jeff Rich, president of Affiliated Computer Services. Banks "could take aspects" of the ATM technology "and use it for their customers," he said.
NCR and 7-Eleven have plans for additional applications - such as branch banking, vehicle registration, credit reports, smart cards, airline tickets, loans, and insurance - and at least some of these would require bank involvement. But they will be on hold until the Austin experience can be evaluated.
Mr. Rich said the 7-Eleven ATMs are equipped with video conferencing software that could connect bank customers to service representatives.
The comfort level afforded by face-to-face contact "is particularly important when dealing with unbanked customers," said Mr. McCall, the NCR spokesman.
Paul Tomasofsky, vice president of remote banking services for NYCE Corp., the New Jersey-based regional ATM network, said bankers could find the bill-paying function attractive.
"This is a great way for a consumer to have an initial experience, and if they like it they might (be drawn to) more remote banking services," he said. "Anything that gets consumers interested in electronic banking is positive for banks."
Joseph Wolfson, president of the Cartel Network of Buffalo, an Affiliated Computer Services ally that purports to look after the electronic banking interests of smaller institutions, said the 7-Eleven ploy should not disturb bankers.
"The little banks have bigger problems," he said. "They have to worry about the NationsBanks and Banc Ones stealing their customers." As for the bigger institutions, he said, they don't keep retailers' best interests in mind, "so I don't think they have any right to object to this."
