My trip to Diebold's May Partner Information Xchange conference provided proof that banks are not exactly taking a quantum leap into the ATM future. It's more like baby steps.

Like babies, banks are moving ahead — although slowly and a little shakily.

During a Q&A session, Diebold asked its partners — networks, software providers and transaction processors — which issues were top-of-mind for their customers. The issues mentioned most frequently were migration from OS/2 to a Windows-based operating system, deposit automation and remote key management.

While all of these will offer some benefit to the ATM user, banks are obviously interested in new technologies that also give them big bang for their buck in the back office.

What about Windows?

Most banks, if not all, are using Triple DES upgrades as an opportunity to switch from OS/2 to Windows, yet few of them have any short-term plans to use Windows to add new functionality. Research conducted in late 2003 found that only 36 percent of banks switching to Windows said they planned to add new applications in the next 18 months to two years.

Windows will reduce development costs for new ATM applications, allowing banks to use the same business application logic across delivery channels. The content and flow will be the same; only the ATM user interface must be tweaked a bit.

Vendors say the move to Windows is necessary for banks. Supporting existing ATMs will become increasingly costly due to the shrinking pool of programmers versed in OS/2 and a lack of standard, or even custom-driver, support for new peripherals.

New products, such as Diebold's Agilis and NCR's APTRA, are designed to allow banks to use the same software across mixed ATM networks, cutting operational costs. However, the new software is designed to run only on Windows-based machines.

Other new products and services designed specifically for Windows environments are beginning to hit the market. One example is a remote ATM management system by Star Systems that allows ATM owners to quickly and easily change ATM screens and receipts, among other features.

More bang for the buck

Both deposit automation and remote key management also seem to be quickly gaining ground with banks because of their potential to improve operational efficiencies and to lower cost.

With passage of the Check Clearing for the 21st Century Act (Check 21), which went into effect in October 2003, banks appear to be taking a serious look at offering check imaging at the ATM. Research firms first predicted that banks will implement imaging in their back office and branches, but not get around to ATMs for several years. Researchers have revised that outlook based on stronger-than-expected interest among banks.

Because banks must collect checks deposited at ATMs every day, the costs of offering the service are similar to the teller line: $1.25 to accept a paper check at a teller station and $1 to do so at an ATM. Diebold market research found that truncating a check at the ATM costs 27 cents, vs. 30 cents at a teller station.

An American National Standards Institute committee is developing standards for the electronic images that will be used in many cases to replace paper checks, both at the point of presentment and in the back office.

Another ANSI committee is developing standards for acceptable methods of remote key management, which should dramatically reduce the costs of installing a unique encryption key in each ATM.

With an increased emphasis on security, networks are expected to begin more strongly enforcing requirements for unique key per ATM. With remote key, ATM owners will be able to comply at a reasonable cost.

For the foreseeable future, it seems likely the emphasis will remain on streamlining operations rather than trying to wow customers with new technology.