Though only a handful of banks are scrambling to install Web-enabled automated teller machines, many in the industry say the speed and efficiency of the new machines will make large-scale conversion inevitable.
The first generation of Web-enabled ATMs have made their debut across the country, and the banks that have installed them are touting their ease of maintenance, higher transaction speeds, and ability to target advertisements to individual customers. At this point the machines are, on the whole, no more costly than their predecessors.
Some banks are using the need to install talking ATMs for the blind as an opportunity to upgrade the machines. Others are installing them simply for the improvements they bring.
Though there has been plenty of hand-wringing over whether Web-surfing consumers will tie up the machines and create longer lines for cash withdrawals, those concerns have abated somewhat as bankers learn that they can block or limit the machines Web-surfing capabilities.
But even if some browsing is permitted, bankers say it may not cause the delays many of them fear.
Its not like theres a need to suppress surfing desires on the part of the customer, said Robert Chlebowski, the executive vice president of distribution strategies for Wells Fargo & Co. in San Francisco. It really depends on the transaction, but because its a more powerful machine, it actually reduces transaction time.
Wells has taken the lead among large banking companies in Web-enabling its ATM fleet. So far 1,000 of the 6,500 machines in its network have been Web-enabled, and the company says it is committed to revamping its entire fleet.
For now the Wells machines cannot be used for Web surfing. Mr. Chlebowski said that in the future it may permit consumers to surf a limited number of Web sites, particularly at retail locations, but he noted that many bank ATMs are outdoors not an environment where you would be surfing.
Over time some Web-enabled ATMs could bleed into a kiosk device thats not outside, but in an enclosed area where longer transactions would not be frowned upon, Mr. Chlebowski said.
However, if everyone has wireless access, and could do this from a handheld device why would they do it from a kiosk? he asked. It all depends on how these factors shake out.
Wells sees the advertising capabilities of the Web ATMs as a major advantage, Mr. Chlebowski said. In addition to playing high-resolution streaming videos, Web technology permits banks to target consumers based on their profile and type of transactions theyre performing, he said.
Heather Briganti, a senior vice president of electronic banking for Allied Irish Banks PLCs Allfirst Financial Inc. in Baltimore, said she expects the Web machines one-to-one marketing to have a huge impact. Last year its Allfirst Bank, which has 575 ATMs, bought and installed 79 Web-enabled machines made by Fujitsu Transaction Solutions Inc., a unit of Fujitsu Ltd. in Tokyo.
Allfirst Bank worked closely with Fujitsu to test and develop the software for the ATMs. The bank wanted to guarantee that the basic transactional functions worked smoothly before it tried anything new, Ms. Briganti said. New functions will be introduced gradually, so as not to overwhelm customers, she said.
We did a tremendous favor for Fujitsu, she said. We basically broke in their software for them.
The flexibility of the machines will also allow Allfirst to water down the functionality that you offer during peak periods, Ms. Briganti said. On a Friday at 5 p.m., you probably dont want a customer filling out an application. We cant lose the fact that the ATM channel is better than any other channel in dispensing cash quickly and efficiently. You cant interfere with the primary purpose of that device.
Banks will probably use Web ATMs to advertise their own products, while retailers may advertise a variety of products, she said. ATM ads from local retail stores or national companies may bring in more revenue for the banks, but, as Ms. Briganti said, is that the type of experience we want to give our customers?
Bank of America Corp. in Charlotte, N.C., which has around 14,000 ATMs half in retail stores and half in branches said it is not hesitant about retail advertising.
Daniel W. Sullivan, the banks ATM channel manager, said that his unit conducted focus groups last year about Web-enabled ATMs. Those customers said that they would not mind outside ads if they offered something of value, such as a discount coupon for a product in the retail store where the ATM is located, he said. However, Bank of America would probably advertise only its own products at branch ATMs, he said.
The ads would be as unobtrusive as possible, Mr. Sullivan. The initial attract sequence ad would disappear from the screen as soon as the customer inserts a card, and the ad that would run during a transaction would be calibrated to last only as long as the transaction is being processed, he said. Neither would cause the customer to spend extra time at the ATM, he said.
Bank of America hopes to convert 2,000 of its terminals to Web technology by yearend and the rest within the next three years, Mr. Sullivan said. We want to get our feet on the ground very solidly this year and put it in high gear next year.
The ATMs will also allow customers to customize what they see and receive. They can set various parameters that the system will remember the customers language, withdrawal amount, account, and receipt preferences. Soon, Bank of America customers will also be able to reorder checks at these machines.
By the second quarter Bank of America customers will also be able to use the ATMs to see and print copies of checks they have written, the company said. The Federal Reserve Board has been pushing a change in the law that would give paper replacement checks the same legal status as the original checks.
Four hundred of the Bank of America Web-enabled machines now running are talking one. Without the Web platform, it will be difficult to live up to the [Americans with Disabilities Act] challenge, Mr. Sullivan said.
Walden W. ODell, the president, chief executive officer, and chairman of Diebold Inc., a North Canton, Ohio, ATM manufacturer, predicted that all ATMs will become Web-enabled in the next 10 years. However, this year the migration will be incremental, with a handful of larger banks taking the lead, he said.
At the recent National Retail Federation convention in New York, Fujitsu unveiled a Web-enabled terminal with a larger-than-normal 42-inch gas plasma screen. The machine can offer traffic, news headlines, weather reports, and dynamic maps of the store where the machine is located.
Joe E. Russell, the CEO of Inabled Online Corp., the San Diego company that supplies the Web content, said the terminals could also be used for making e-commerce purchases. It drives traffic to the ATM, which generates fee income for advertising revenue. Then it generates ATM transaction surcharge fees.
For the most part, banks no longer deploy ATMs indiscriminately for branding purposes. Many have begun to remove machines from locations, particularly in retail stores, where transaction volumes are low.
Diebold and NCR Corp. say they do not expect all banks to convert their fleets as quickly as Bank of America is doing, nor do they expect that banks will want to buy completely new machines. Phil Kasper, an assistant vice president for Americas marketing at the Dayton, Ohio-based NCR, said it is less expensive to upgrade software than to buy a new terminal.
Most large banking companies are less enthusiastic than Wells and Bank of America about the new ATMs. For example, Bank One Corp. of Chicago said it is not focusing on Web conversion, and the Memphis-based Union Planters Corp., which tested a Diebold Web-enabled ATM at its Memphis operations center in 1999, has since dismantled it.
We have many technology priorities, but thats not one of them today, said Tom Woodbery, a Union Planters spokesman.
The ATM manufacturers say they understand the banks reticence.
I think they are proceeding cautiously, as they typically do with new technology, said Keith Lewis, the software marketing manager for Diebold. Migrating from OS/2 to Windows is a great example. They migrated to Windows very cautiously and deliberately to make sure it was stable.
The International Business Machines Corp.-designed OS/2 platform, which runs the older ATMs, is being phased out in favor of the more powerful and flexible Microsoft Windows platform.
Vendors are keeping quiet about which of their bank clients are Web-enabling their ATM fleets. Mr. Kasper would say only that NCR is working with more than 10 financial institutions worldwide.
With each project NCR undertakes with a bank, the cost of producing Web ATMs goes down, he said. Theyre becoming more affordable and feasible every day. Were getting better at it because weve done so many. Thats not just in the United States we have Web-enabled projects in Europe and Asia-Pacific. This is truly a global program for us.
