PNC Financial Services Group Inc. is moving ahead in two areas where most large banking companies have pulled back: wireless technology and the off-premises automated teller machine market.
In fact, the Pittsburgh company is combining the two. Last month it rolled out 67 wireless ATMs in nonbranch locations - such as shopping centers, railroad stations, and convenience stores - in Pittsburgh and Philadelphia, and it expects to introduce 100 more by yearend in Pennsylvania, New Jersey, Delaware, Kentucky, and Ohio.
Most banking companies pulled back from the off-premises ATM market a few years ago after concluding that the fee income the machines produced was not steady or high enough, and that merchants preferred to cut their own deals directly with suppliers or independent sales organizations.
But PNC says that, because wireless ATMs can be installed anywhere, they are a better option for merchants than other types of machines.
"It's difficult to install physical wires to the ATM machine, particularly if you're putting them up at shopping centers where you have to run wires under floors," said Jim Walker, a senior vice president and the manager of self-service banking at PNC Bank. "We're looking for an easier way to install the machines. We have some pretty big, important accounts, and they sometimes want to move machines within their facility."
Harry Cornell, an assistant vice president in PNC's self-service banking division, said that a pilot of 20 wireless ATMs began in November. The pilot ended in December, but the machines are still in use.
About 73.5% of the 3,300 ATMs in the company's network are off-premises machines, and the current wireless effort will drive that percentage up even higher.
The company's ATM network includes machines from more than one manufacturer - primarily from Diebold Inc. of North Canton, Ohio, and NCR Corp. of Dayton - and Mr. Walker said that the pilot program helped prove that the wireless technology was compatible with all the machines. "So far wireless ATMs are performing equal or better than" leased-line and dial-up ATMs, he said.
PNC says it can install wireless ATMs in under 10 days, versus the 60-90 days for a leased-line machine.
Also, according to Mr. Walker, it is easier to identify any problems with a wireless ATM than with it is with a leased-line ATM, where a number of different things can break, including the machine's phone box or the wires outside the ATM. "We hope this will make it easier to fix. When you only have an antenna and a little box, it's pretty easy to swap it out."
Alanna Kellogg, the president of Kellogg Group, a St. Louis ATM industry consulting firm, said PNC was making a good business decision by rolling out the wireless ATMs.
"Banks lost the off-premises market by choice or by failing to compete," she said. "There are a few organizations that continue to be selectively aggressive about" off-premises ATMs. "PNC is one of them, and they do a good job of what they're doing."
The company "innovates in order to improve operations, the customer experience, and profitability," Ms. Kellogg said. However, other banking companies probably will not follow suit, and PNC's effort probably will not be enough to spark a resurgence of bank interest in the off-premises market, she said.
Mr. Walker said that PNC's wireless ATMs use cellular digital packet data technology and a public Internet protocol data-based network to transmit data to the bank's electronic funds transfer processor through cellular networks. AT&T Wireless and Verizon Wireless are PNC's carriers.
Paul Nielsen, NCR's mobility director of self service, said that its ATMs support CDPD but that the company does not make ATMs specifically designed for wireless environments. "Instead, we view wireless as being one of a whole range of communication types that you can have to run an ATM."
Les Riedl, a senior vice president at the Atlanta consulting firm Speer & Associates, said that wireless technology has become a common option at ATMs and that the major regional electronic funds networks support it. "Wireless ATMs are primarily being used to lower the cost of installing and operating off-premises machines."
To transform its leased-line and dial-up ATMs into wireless ones, PNC is using Sierra Wireless Inc.'s AirPac Series of software and hardware products, specifically AirPac 300 and AirPac Gateway. Sierra Wireless, of Vancouver, said that 20 to 25 customers, including banking companies and processors, use the AirPac Series, which has been available since 1999.
Glenn Antonelli, the vendor's CDPD and mobile product manager, said that AirPac 300, a box that is installed in an ATM, converts legacy protocols to Internet ones so that the machine can send transactions through the CDPD wireless network. AirPac Gateway, a host server that resides at a bank's headquarters, receives and translates information to facilitate transaction processing, he said.
Mr. Walker said that to upgrade dial-up ATMs, the software has to be replaced with software to make it run as though it is on a leased line, he said.
"The ATMs don't know that they are wireless," he said. "It still thinks it's on a phone line."
Currently 75% of PNC's network are leased-line and the rest dial-ups. He would not say how much the conversion effort would cost, but said the expenses associated with operating wireless ATMs are about half of those for leased-line ones.
Mr. Riedl of Speer said that by installing wireless ATMs, "you're essentially eliminating the cost of installing telephone lines, anywhere from $100 for installation itself, then, depending on where you are, $30 to $60 a month just for the operation of that phone line and there's usually a monitoring cost that goes into it."
To install wireless ATMs, companies must pay for the hardware and the cell phone fees, but experts say the cell phone fees are coming down. According to Sierra Wireless, a transaction at an off-premises ATMs can be sent over a CDPD network for less than a penny.
However, Mr. Nielsen says that the wireless technology is not perfect. The ATM's low bandwidth reduces the options for on-screen advertisements and other visuals, he said.
According to Mr. Walker, "we suffer the same problem that cell phone users suffer from: It doesn't work everywhere."
