Published May 27, 2022
The internet of things (IoT) is a term which is permeating everyday life and is widely recognized as a transformative technology as inventors, designers and manufacturers find new ways to integrate items to the internet. Who would have thought 20 years ago, your fridge could reorder milk? We see businesses finding new uses for this innovative technology all the time and, for financial services, the next version of the XFS standard (extensions for Financial Services), XFS4IOT, promises to move things along at a much faster pace. This has been acclaimed as the most exciting development of the last 20 years, with many believing it has the potential to revolutionize the ATM experience. So, what’s behind the hype?
The IoT has been around for decades, ever since Coca-Cola used it in their vending machines in the early 80s. However, it is only in the last ten years that it has truly come of age. IoT refers to the connection of physical objects with embedded sensors, software and connection capabilities that enable the devices to communicate and share data. It allows all sorts of items to be connected and work as a sophisticated and linked network.
Right away, we can see why IoT might spell exciting things for ATMs. To truly understand its impact, we need to take a step back and to examine the role of XFS.
The CEN XFS standard defines the ATM device platform running on over 92% of all ATMs, so just under three million globally.
The current version, 3.x, was released back in 2000 and was itself revolutionary as it finally delivered a truly multivendor middleware for ATMs.
This unlocked what was previously a proprietary model of ATM software being coupled to a vendor’s hardware. With the release of CEN XFS 3.x a customer could choose their ATM software vendor and was not tied to that vendor for delivery of their ATM hardware. They had a choice.
Twenty years on and we have seen a radical change in the landscape of multivendor software. Now companies who don’t even supply ATM hardware can offer multivendor software making for a more innovative and competitive market for financial institutions (FIs) to choose the best-fit solution for their customers.
The CEN XFS standard covers physical devices in the financial sphere, so ATMs, ITMs, and even some TCRs, note counters and other add-on modules. But much has shifted technologically in the intervening years and despite multiple revisions – this year will see version 3.50 of CEN XFS released - the cracks are starting to show, highlighting a need for a radically overhauled standard to meet the demands of a modern FI. An architecture that is more flexible, cloud-native and digitally minded. Enter XFS 4.0 better known as XFS4IOT.
The XFS standard committee, which comprises more than 30 members including NCR, Diebold Nixdorf and KAL have been working for a number of years on what will be needed for ATMs and self-service devices in the coming decades and in January 2022 this new version of the standard known as XFS4IOT was released to CEN, the European Committee for Standardization, for ratification. CEN, is an independent international standards body, selected by the committee to ensure the standard was not ‘owned’ or controlled by any single industry vendor.
So, while it’s the XFS committee who defines the strategy and the specification criteria it is CEN who publishes the standard and y acts as the repository and independent controller for each version of the standard and ensures it can be accessed by any interested party.
So what’s different about CEN XFS4IOT? The headline-grabbing reform is the fact that CEN XFS4IOT is Operating System (OS) agnostic. Through the years, from XP to Win10 the standard has always been grounded on Microsoft Windows. With XFS4IOT that reliance goes away and opens up the possibility for financial institutions to use other Operating Systems or even in the case of certain peripheral modules possibly no OS at all. That said, it’s widely anticipated that Windows will remain the predominant OS for the next 5 to 7 years as it still has many benefits that shouldn’t be underestimated. What’s more, any change in OS will require new device drivers, new services and many other changes including monitoring and a complete retest of the ATM stack. This is not a trivial task for an ATM vendor, application provider or indeed a FI. Secondly, there is the question of what OS is an appropriate replacement, it would need a clear, invested roadmap and inherent security. After all, there is stability, supportability and security all to be considered.
Should an alternative to Windows be decided upon, any ATM or module vendor would then need to rewrite or ensure their services and device drivers were compliant to this alternative operating system. This is a fairly significant investment, especially while continuing to support the predominant Windows operation system. With an install base of almost three million, this support requirement will continue for decades for most hardware vendors.
The important point of difference is that XFS4IOT lessens the operating system (OS) reliance on Windows and will provide more choice in the future. This could be especially significant for side or add-on modules, such as new devices supporting more complex or exotic self-service transactions.
The ability to introduce innovative and non-cash modules, as well as locally supplied devices such as cameras or printers without the need for support within the defunct XFS Manager, makes deployment much more agile and adaptable. The complexity involved in adding ‘off-the-shelf’ modules to the XFS Manager has been one of the common complaints about the current XFS 3 architecture which is solved by XFS4IOT.
XFS4IOT brings big advantages around flexibility and a far more lightweight framework. The XFS Manager goes away and is replaced with WebSocket connections. This enables more of the ATM application to reside in the cloud. It also empowers more modern deployments of ATMs such as shared devices, sidecars, and the addition of modules that expand the ATM beyond traditional financial transactions and offer a much wider Self-Service menu of facilities to consumers. Some of these we are starting to see already; recycling, coin and card issuance, but also ticket and voucher dispensing, bill payment modules and even modules we haven’t envisioned yet. Imagine an ATM with multiple devices exposed externally to the cloud. Coin, card issuance, even card readers could be standalone or shared. Sidecars and shared devices may no longer need a Windows OS to comply to the CEN XFS standard.
The shift to a cloud centric architecture fits well with the ATMIA (ATM Industry Association) Blueprint for Next Generation ATMs offering FIs the choice of running applications either internal to the ATM or in the cloud which could be lower cost and require lighter infrastructure. It also offers the capability of having devices and modules from multiple vendors all integrated and managed from the cloud. This offers a more flexible lightweight software stack.
Therefore, while CEN XFS4IOT is concerned with financial physical devices, this far-reaching re-design is complimentary to other financial standards with a view to the future such as ISO 20022. The Financial Payment standard ISO20022 has a wider scope and can apply to ATMs, digital, online, mobile, and payments. That standard spans all channels of a FI whereas XFS will focus on ATMs, EFTPOS and branches - essentially areas with physical financial devices.
That being said, these two new standards do complement each other in terms of offering a more cloud centric approach with a lighter framework offering more flexible, agile implementations.
The XFS committee have learned a lot over the past 20 years, and many of these lessons and improvements have also been incorporated into the new standard and built into the architecture including enhanced security delivered in part with the adoption of WebSockets.
Most important, XFS4IOT has arrived and offers a strategy for choice. It should not be viewed as an ‘instant’ move away from Windows but does facilitate more flexible modalities of ATMs using sidecars and shared devices and does empower the ATM network to be more cloud centric, which all in all presents an exciting time ahead for self-service banking.