Not just another hole in the wall …
When Diebold hired John Ennis from rival ATM maker Wincor Nixdorf to become country manager for its UK and Ireland operation, a few eyebrows were raised.
Ennis, a former head of self-service at NatWest, had been general manager, banking global accounts, at Wincor Nixdorf, which he had joined in 2001 as director of its banking division in the UK.
Wincor is one of the main ATM suppliers in the UK&I markets, along with industry leader NCR. By contrast, Diebold’s presence in these markets is currently minimal, though globally it is the second largest supplier, with a 21% share to NCR’s 30%, according to market analysts Retail Banking Research.
Ennis’s job is to change that. Fortunately, he is doing so at a time when changes in the ATM world give him something of a following wind.
He describes his first few months in the job as “going round to all the banking customers to establish their view of Diebold, review opportunities and to tell them more about Diebold services, software and product propositions”. He believes that with Diebold’s global capability, they should not be “one of the best-kept secrets” in the UK/Irish markets and aims to change this quickly.
In essence, Ennis has been putting in place all the elements required to do business with the UK and Irish banks “so that way before they come to tender, they know that they have a choice with Diebold”. He is formulating and packaging Diebold’s UK/Irish service and software proposition, as in this market ‘it is not just about selling a box and walking away.’
The belief that that the banks are likely to be tendering for self-service devices soon is based on a couple of simple facts: the UK has some of the oldest ATMs – dating back 20 years in some cases – and new generations of machine offer a range of services that go way beyond cash dispensing and into the self-service or assisted banking areas that are set to transform branch banking.
“My view is that next year is going to be quite a big year for ATM replacement,” says Ennis. “Deposit automation and branch automation are going to be very important. We have come through a deferred purchasing stage and the banks are now looking to replace many old ATMs and increase automated deposit capability. There are circa 64,000 ATMS in the UK and many of them are ageing, so there is a big opportunity for replacement. I need to position Diebold to be the preferred option for that replacement.”
As a first task, it is essential to get the kit certified, which Diebold is approaching on both the hardware and software levels.
“The first thing you have to do when you start in this business in any country is look at your products, and get the banks to certify them, because until you do that, you haven’t got a ticket to the game,” he says.
“I also look at the software proposition in the UK. It is quite a mature market. My view is that Diebold has some excellent software and we could replace software where banks ask us to, but with certain banks the quickest route to market is going to be to integrate with their existing software. So we are working with some of our competition to certify their software running on Diebold machines,” he says. “That lets the banks deploy Diebold kit very quickly, so that’s our door-opener and allows the banks to test our capability.”
Another opportunity is in the servicing of equipment, where the company already has a footprint, “We have some business in the UK with a number of engineers, so we have the ability to scale from where we are,” says Ennis. “Again, because it is a mature market, in some cases the banks have already chosen their maintenance supplier, which is usually an independent. So we are looking to partner with some of the independent maintenance suppliers to maintain our kit.”
The more complex machines, such as the deposit-taking ones, “we will maintain ourselves and will be building our service and outsourcing capability both in the UK and Ireland,” he adds.
It is these more complex machines that are at the heart of the change in branch banking. “There is a global trend happening with many banks looking again at counter replacement via some form of assisted self-service, which is almost akin to supermarkets’ self-checkout banking. It is not all about automation; it is about making it easier for the customer and allowing bank staff to perform more value adding tasks with the customers,” says Ennis. “Branches are seen as key to this proposition, which is different to the situation a few years ago.”
Most banks are reviewing multichannel propositions, looking at using the same information down different channels. The ATM channel is in catch-up and all banks are reviewing their capability to allow customers to interact on the channel in the same way they can online or via their mobile phone. Diebold solutions are positioning for this trend.
Also important is recycling technology. Cash recycling can reduce cash management costs quite considerably in banks. It is not used much in the UK, but in Europe it is “widespread”, he says. “A lot of banks are looking at it because of the excessive cost of cash handling. I believe that we will see it used on a small scale to start with very soon, as the technology has improved and moved on so I think recycling is ready to take off in the UK.”
Deposit automation is one of Diebold’s strengths. One machine can perform cheque and cash deposit, including coin handling, cash recycling and dispensing, in a much smaller footprint than previous generations of multi-function machines. “I think that we have a strong proposition for off-branch locations and smaller bank branches where there simply isn’t room for six different machines.”
While technology is making everything smaller, it is also simplifying the management of ATM estates. “Cloud deployment and virtualised ATMs may remove the need to have powerful and costly PCs inside each device,” says Ennis. “It makes the total cost of ownership lower, and facilitates easier / quicker routes to deploy new business change”
A market ready for some interesting changes then? “I think so,” says Ennis. “I am very excited by the very interesting opportunities ahead, both as an industry and for Diebold.”