EXCLUSIVE: ‘Bringing ATMs in from the cold’ – Mark Aldred, Aurgia and Robin Setty, ACI Worldwide in ‘The Fintech Magazine’

Mark Aldred, VP of International Sales at Auriga, and Robin Setty, Senior Principal Product Manager, Partner Solutions, at ACI Worldwide, tell us how they’re banking on a new lease of life for self-service

In February this year, financial solutions providers Auriga and ACI Worldwide teamed up to launch an ATM acquiring and self-service banking platform. Yes, that’s ATM as in the automated teller machine technology that was pioneered in the UK in 1967. If you’ve been following the ATM’s recent fortunes through the prism of the UK experience, you might be surprised that anyone is putting it at the centre of its customer engagement strategy, given the rows over interchange fees, a sizeable contraction in the ATM estate (down nine per cent in 2020 alone, according to RBR) and, not least, an unprecedented decline in cash use forced by the pandemic.

ATMs in the UK are often casualties of branch rationalisation – often a euphemism for closure – leading to cries of anguish among communities, particularly rural ones like South Fermanagh in Northern Ireland, which lost its Bank of Ireland counter and ATM in Lisnaskea in July. But, in many parts of the world, it’s a very different story.

Elsewhere, ATMs and the interactive teller machine (ITM) that many ATMs have evolved into, are seen as solutions – not problems. ATMs-on-wheels have provided a lifeline to Indian communities that were isolated from banks during the pandemic, and will likely continue to play a major part in native HDFC Bank’s customer relationship strategy beyond the crisis. In Portugal, as social distancing and disruption to normal routines continue, the country’s 11,000 terminals, which are part of the fabric of daily life, have become even more valued – you can do anything from make interbank transfers to pay your income tax and (when entertainment is back in full swing), even order opera tickets from them.

But as banks’ branch networks morph into human teller-less advice centres and even combine into cost-saving, multi-brand community finance hubs, Auriga and ACI Worldwide are betting on ATMs and their derivatives featuring more strongly than ever in self-service banking estates. To do that, the back office technology that has historically seen ATMs operating in a silo, divorced from other customer channels, needs to be addressed. That’s where Auriga and ACI’s platform comes in. By making the terminals part of a bank’s omnichannel network, they’re bringing ATMs in from the cold.

Auriga provides solutions built on the principles of openness and multi-vendor software, which integrate a bank’s digital channels into a single environment, sharing services across them. It includes all of the components required to manage a self-service estate and ‘regenerate the branch of the next generation’. ACI Worldwide, meanwhile, provides real-time payment solutions for 6,000 customers across the globe, spanning the billers, merchants and banking sectors, including 19 of the leading 20 banks. It’s a partnership of complementary competencies, which sees ACI’s Enterprise Payments Platform – helping banks manage new payment types, standards and regulations – integrate with Auriga’s omnichannel banking solution, WinWebServer (WWS).

“Together, ACI and Auriga can offer ATM deployers – banks or not – and owners of self-service and branch estates, a best-of-breed solution,” says Mark Aldred, VP of international sales at Auriga. “There isn’t a vendor out there, or a collection of vendors, with a similar proposition. It’s really about each party delivering its speciality,” adds Robin Setty, senior principal product manager, partner solutions, at ACI Worldwide.

“The world of electronic payments has evolved so much since ACI delivered its first ATM solution back in the mid-70s, and that trend continues to accelerate. Our solutions have become more and more sophisticated, delivering real-time, any-to-any, secure, always-available, payments. Similarly, physical devices are also becoming more and more sophisticated, offering capabilities such as video assistance and targeted advertising in the self-service banking world.”

For that reason, he says, it no longer makes sense to treat the management of ATMs ‘as merely a component of the payment engine, which is what they have been so far’. “The management of terminals and devices merits its own solution,” insists Setty. “So, for ACI, it became a question of whether we wanted to build something ourselves or partner. Given Auriga has been providing advanced terminal management solutions for decades, and is hardware vendor agnostic, it made a lot of sense to form the partnership.”

Where does cash fit in?

In 2019, when LINK (the UK’s largest cash machine network) published the independent Access To Cash Review, it projected a sharp reduction in cash usage over the forthcoming decade. At the same time, it warned that Britain wasn’t ready to go cashless and that action needed to be taken to protect those continuing to rely on cash, who were at risk of being ‘left behind’. Fast forward 12 months and a LINK update suggested the shift away from cash (as the COVID-19 global pandemic took hold) had sped up significantly, but with the social inequalities previously identified in the Access To Cash Review remaining. Since then, total withdrawals have climbed back up (although still significantly below pre-COVID levels) and most ATMs that were closed in lockdown are now working again.

Branch closures, however, continue apace – and not just in the UK, which lost more than 300 in 2020 and is slated to lose several hundred more by the end of 2021. In the US, a recent study concluded that, at the current rate of contrition, bank branches will be extinct there by 2034. Such a dramatic remodelling of banking culture in mature economies could be a new lease of life for the ATM, albeit, perhaps, under a new management structure. For example, the pooling of ATMs, while not a new concept, having been around for 40 years and long-established in the Nordics, is becoming an increasingly popular go-to solution – especially to serve communities ‘left behind’ in the digital finance race.

Underpinning ATM pooling is the transfer of the ATM fleet ownership of two or more banks into a separate operation – maximising opportunities for banks to rethink and modernise their ATM services, reducing operational costs in the process. Banks then have the option of deploying next-generation services that can merge physical and digital channels in a highly secure, modern technology platform that offers improved customer experience through the integration of ATM with mobile and internet self-service banking capabilities.

Hence, banks will be able to define an integrated channel strategy, optimising and transforming their branch and ATM estates. And, for the poor folk of South Fermanagh, and others, it could even mean a broader range of services than were available to them from a single bank before.

“We’re already seeing a number of these devices – ATMs, self-service estates – now being run by organisations other than banks, including, of course, Auriga,” says Aldred. “We’ll see these organisations starting to deploy next-generation, self-service devices that offer a lot more.” In fact, says Aldred, operators should be looking to build the transaction sets available via self-service and assisted self-service machines to increase the commercial viability of both through investment in hardware such as scanners, video cameras, and cash and coin recycling.

“We see those owned and deployed by banks as being at the heart of branch estate modernisation. Self-service and assisted self-service are fundamentally important – the same technologies, but with more capabilities.”

In short, self-service customer experience will improve as new added-value features are rolled out, such as video banking, contactless withdrawals, government disbursements and automated deposits. For providers like banks, processors and independent sales organisations, using a single ATM and self-service banking platform means further scope for revenue growth by accelerating the speed with which they bring services to market, and creating cross-selling opportunities at the ATM. It will also help banks maintain cash access and reduce costs, to help their ATM networks break even or become profitable.

More widely, it remains a question of balance for banks: offsetting branch rationalisation against the use of online channels, with ATMs as a half-way house. The ‘branch’ of the future might not be a branch in the traditional sense, at all, its functions delivered by totally self-service or assisted self-service devices. Whatever the new format, Setty says it’s time to reinvent the ATM.

“The ‘T’ in ATM stands for ‘teller’, but it’s never really been a teller; it’s been a cash dispenser. So, perhaps the real teller machine is a self-service device that allows the customer to interact (perhaps through video assisted terminals) and perform functions in a branch-type environment, with staff using tablet technology, engaging with customers one-to-one, and selling them products and services tailored to their specific needs. With the new technology available, now is the time to repurpose the ATM channel. The business case is there.”

This article was published in The Fintech Magazine #21, Page 37-38