The controversy over new teeth in New York's safety regulations for automated teller machines could soon be rendered moot by digital video storage.

Proponents of the technology, in which images are saved as computer files rather than on videotapes, say it offers the best chance of avoiding the image degradation that aging or otherwise faulty tapes can cause. The digital systems also make it easy to centralize surveillance, since there is no need to transport a tape. "Digital is the wave of the future," said Ralph M. Fatigate, director of criminal investigation for the New York State Banking Department.

Such systems made their way to market in the last year or so and are just starting to take hold. Several major banks are pilot testing the technology or beginning to phase it in.

Wells Fargo & Co. has installed several hundred digital systems and is phasing out all use of VCRs and tapes, said William Wipprecht, director of security for the San Francisco company. Conventional videotape systems are "extremely ineffective and inefficient," he said, because they are vulnerable to mismanagement at each branch.

"They require virtually full-time management … to provide law enforcement a good-quality photo," Mr. Wipprecht said. "With 3,000 stores and 6,000 ATMs, it's very difficult to maintain proper controls over all of those locations."

A recent New York incident, in which surveillance cameras captured an attack at an ATM but produced images too fuzzy to help the investigators, spurred the state's Banking Department to impose an emergency rule on reuse of surveillance camera videotapes. The tape used at the site, owned by Apple Bank for Savings, was four years old, according to a bank spokesman.

Under the new regulation, which was only a recommendation until January, tapes may be reused only 12 times and must be retired after one year from the date of first use.

The department had originally said that the tapes, some of which can record a week's activity, had to be changed daily. Now the regulation says they cannot be used more than once in 30 days.

The rule includes a provision offering banks the opportunity to develop alternative methods for ensuring clear picture quality.

Wachovia Corp. is piloting digital storage technology at two ATM locations, said Boris F. Melnikoff, corporate director of special services and head of security for the Winston-Salem, N.C., company. "I think when you weigh it out, it ultimately will cost the industry less" than VCR systems.Canton, Ohio-based Diebold, a prominent ATM supplier, has sold its Accutrack digital video servers to about 50 financial institutions since the product became available in May. More than 200 ATM locations are using the systems, which cost about 50% more than an analog videotape system, said Mark G. Radke, global marketing manager.

A hard drive can be "reused literally thousands of times to store new data, providing excellent quality for the duration," Mr. Radke said. Storing images on videotape begins to get risky after five to seven uses, he said.

Chase Manhattan and Citibank, which has distinguished itself by installing a state-of-the-art live monitoring system throughout its New York City ATM locations, are among banks studying digital storage systems. "Everyone's looking at the new technology," said John Bree, vice president and director of risk control and loss prevention for Citibank North America.

But Barry Schreiber, a criminal justice professor at St. Cloud (Minn.) State University and the editor of ATM Crime and Security Newsletter, contends that revenues from teller-machine surcharges have not translated into better ATM security. He added, "I don't see the efforts of a few of the megabanks in highly concentrated urban areas being typical."

Barbara Hurst, editor of Bankers' Hotline, a newsletter published out of Brookhaven, Pa., disagrees. "I don't think one has anything to do with the other," she said. "I think the services have increased incredibly, and I think the security has kept pace."

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