As the ATM Industry Consolidates, NCR Diversifies

While Diebold and Wincor Nixdorf may soon merge to form the world's largest ATM company, NCR is working harder than ever to set itself apart in the rapidly changing ATM/self-service payment market.

NCR's attempting to differentiate itself from its rivals by focusing on the intersection of the branch, mobile and ATM on the issuer side and a diversification beyond payments acceptance on the merchant services side.

"We're confident that a strategy that's focused on being a software-driven business and providing the best consumer experience will help us be the winner," said Brian Bailey, vice president of software and strategy for NCR financial services.

Diebold's $1.8 billion offer for Wincor is still pending, though it would give the combined company 35% of the ATM market, compared to 25% for NCR, according to Bloomberg News.

The potential gain in market share by a rival does not put NCR at a disadvantage, Bailey said.

"Being the global leader in ATM shipments for the past three decades, we feel good about our scale. We are fully distributed and will benefit from this," Bailey said. "If you look backward to major mergers of big technology companies, being bigger doesn't always mean more successful."

Much like the card networks are forced go beyond payments and mobile point of sale providers are expected to offer other merchant services, ATM makers are pressured to tie mobile payments to ancillary services for ATMs, bank branches and merchant acquiring.

"The branch of the future is the mobile phone," said Richard Crone, a payments consultant, adding the decline of traditional ATM use relative to other, more digital channels makes it a good time to "rationalize" the ATM market through consolidation.

Crone's firm has found the greatest increase in new transactions at ATMs over the past seven years is remote deposit capture, a newer use case that is already being disrupted. "Mobile RDC is hitting into that."

To that end, NCR, which is still adding and expanding ATM technology such as EMV, remote management and cardless access, has already made a pair of substantial acquisitions to address "dumb pipe" pressure, or the need to position the company as more than a way to move or access cash through ATMs.

NCR's purchase of Digital Insight two years ago made the company a vendor of digital banking services and gave NCR access to a broad range of financial customers.

"There are 800 clients that are using digital at an increasing rate, even moving more toward mobile versus online," Bailey said. "Whether it's a mobile payment or a check, people are looking for diverse omni-channel services rather than just an ATM company."

Its purchase of Alaric addresses the merchant acquiring market with services such as transaction processing, fraud detection, mobile payments, mobile point of sale and card management.

"While [ATMs and Alaric] are standalone businesses, we also leverage these in terms of banking clients when they deploy merchant services," Bailey said.

Since the Alaric acquisition, NCR has added browser-based point of sale services and card management to Alaric's Authentic electronic funds transfer system.

NCR also recently launched Retail One, a technology toolkit that allows merchants to combine tasks such as payments processing and transaction management as well as add new payment types. NCR has additionally dabbled in mobile biometrics as an enhancement to its authentication service, and built its own tablet-based point of sale device.

"Payments is an area that spans all industries. If you are taking a card payment or a bill payment or a digital payment, we want NCR software to be the common denominator across all of that," Bailey said.