By Jorge Fernandez
This article appeared in the C-store Self-Service Executive Summary, Summer 2006.
Imagine if you could only buy PC software from the hardware's manufacturer. In such a world, the personal computing business would not have grown as fast as it has over the last decade. Thanks to Microsoft, we live in a world where software products can be loaded in a common platform, regardless of from whom you purchased your PC.
I'm not here to sing the praises of Microsoft, but I believe the strategy of creating open-platform systems is good for the industry, especially the ATM Industry.
Slow to change, quick to catch up
The ATM industry has been one of the last to adopt an open systems approach. Until now, deployers have depended on vendors they work with for everything from hardware and software to services. All of that is now changing at a very fast pace.
The old world of proprietary systems came to a halt when IBM announced that it would stop supporting the OS/2 operating system. This void was quickly filled by Microsoft Windows, which is now becoming the new standard, at least in the Americas.
Realizing the promise of ATMs
Deployers also understand the promise of the ATM as a truly efficient and cost-effective delivery channel. The adoption of open-standards software is enabling deployers to use their ATM networks effectively to deliver new and innovative products.
Microsoft intelligently saw this coming and made the first attempt at creating an open standard called WOSA/XFS (Windows Open Systems Architecture).
The idea was that deployers could have a single application developed for their ATMs and then run that application across any vendor's Windows machine compliant with the standard. That ultimately would make ATM hardware a commodity and allow deployers to better negotiate terms, while also keeping the application consistent across the network.
WOSA/XFS eventually became simply XFS, and it defined the way applications would run inside the ATM.
ISOs need to buy in
While banks and financial institutions are moving into the open systems arena, the off-premise market seems somewhat behind, even though it seems to have the most to gain from an open platform approach.
ISOs and independent deployers have demonstrated time and time again that they are very efficient in marketing new and innovative solutions to the retail market. As the traditional business of off-premise ATMs becomes more and more saturated, and as transaction volumes at the average machine continue to see an aggressive rate of decline, deployers must look for ways to make ATMs more profitable. What better way to do that than to offer new services to their clients?
Using assembler-based software applications makes it very difficult to add new functionality. An open platform, coupled with more flexible software architecture, makes it easier.
In the US, processors and terminal drivers have the best opportunity, since they already work with ISOs and have the capability and infrastructure to develop and offer new products and services at the ATM.
Of course this isn't easy. There are more than 250,000 off-premise ATMs in the U.S. alone that don't support open systems. Like banks, the cost of an upgrade to these low-cost ATMs could be off-set by the additional revenue received from additional ATM services.
The ATM industry is now coming to terms with fast-paced changes, through the adoption of open standards such as XFS and IFX and the proliferation of new operating systems such as MS-Windows, Java and Linux. The off-premise ATM market must look at these emerging technologies as a way to combat the downward spiral. Open systems offer true vendor independence, help reduce costs and allow for maximum flexibility in adopting new services.
Jorge Fernandez is the president and CEO of Level Four Americas LLC and is a regular contributor to ATMmarketplace. He has more than 20 years of experience in the EFT industry. For the last 15 years, Fernandez has focused on the development of international markets.
