Unbundling to Lower TCO and Maximize Profitability of ATMs
As consumers, we have come to expect the convenience of ATMs wherever we go. However, even with increased acceptance and capability, it is still a challenge for banks to leverage their ATMs to deliver efficient and cost-effective service, retain customers and win new ones.
The changing economics of the ATM channel has become a significant issue for most banks. Due to the proliferation of ATMs, the number of transactions per ATM is in decline or flat at best. When combined with the cost of migration to Microsoft Windows and compliance with federal regulations and card association mandates, the industry has undermined the profitability of ATMs. The 2006 Dove Deployer Study reveals that the most significant cost component, the amortization of ATM hardware, comprises almost one-third the total cost of ownership (TCO) in an on-premise environment. That rises to almost 51 percent with the addition of first and second line service.
Banks can take actions to address the largest single cost component of owning and operating ATMs. By selecting an open, multi-vendor ATM application like VISTAatm, hardware prices can be separated from the software and sourced using the same competitive bidding processes that are used by banks today for servers, PCs and teller equipment. In fact, according to Celent, unbundling software from hardware can save 10-20 percent of the acquisition cost of ATM hardware and services. Projected over a 500-ATM network these savings could exceed $3 million.
“Yesterday’s legacy OS/2 operating systems, proprietary software, service packages and traditional switches have given way to today’s more powerful Microsoft Windows, XFS standards and TCP/IP-based networking capabilities,” says Doug Parr, senior vice president at Phoenix Interactive Design. “With powerful, cost-effective open-standards software such as VISTAatm for Windows, banks can also take steps to encourage customers to do more through the ATM channel.”
VISTAatm enables a personalized ATM experience where customers can define their preferred transactions, languages, account choices and more. Banks also can interact with their customers on an individual basis through personalized messages and targeted marketing.
With VISTAatm’s full support for check imaging, banks will benefit from reduced ATM deposit fraud and can save up to $1.30 per deposit through the elimination of the expensive exchange of paper checks. Customers will benefit from quicker check clearing, faster access to funds, instant electronic check images and a greater confidence in ATM check deposits.
VISTAatm also can be tightly integrated with other channels in a service-oriented architecture (SOA). “Traditionally, the ATM had a binary technical relationship with the switch, whereas now ATMs can directly access other transactions and information servers in the network,” says John Spenler, chief technology officer at Phoenix Interactive Design.
Today, several VISTAatm implementations have utilized the TCP/IP infrastructure to tap into alternative data sources using SOA and integrate transactions and data seamlessly. Technologies such as Web services, HTTP, IFX, XML, and SOAP requests, are enabling the ATM for cross-channel sharing and single stream development. Leveraging a software solution such as VISTAatm and its modular and configurable design ensures almost any data can be retrieved using Web services.
“Our customers are now exposing their ATM infrastructure to these alternative data sources and Web services to enable advanced functionality such as ticket sales, coupons, electronic bill payment, and personal account lists as well as one-to-one personalization and marketing,” Spenler adds.
Consistent customer information and services can be delivered to the ATM, to the branch, and to online banking. Customers can define banking preferences such as language and account “nicknames” once in one channel to be recognized by multiple channels.
With the expanded acceptance of self-service, the ATM is a more sophisticated and integral part of a consumer sales and delivery strategy. By unbundling hardware and software, and selecting a powerful, open application like VISTAatm, banks can substantially reduce their costs while at the same time offer new products and services that increase ATM usage, improve the customer experience and generate transaction fee income.
www.phoenix-interactive.com
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Unbundling to Lower TCO and Maximize Profitability of ATMs