By : Joao Perez
October 22, 2015 03:00 PM
For 50 years, the name “ATM” has been synonymous with cash. With that in mind and the recent news that ATM-maker Diebold plans to acquire ATM-maker Wincor-Nixdorf, it’s unsurprising that the deal would come down to cash. It is rare that industries are served well by consolidation of similar players as these rarely drive innovation and mostly seek to benefit from cost saving through scalability, operational efficiencies, and product rationalization. In the case of Diebold and Wincor, a new organization would be forced to rationalize as many as 40 product lines into a go-forward strategy of around 20 units. At the core this is about two struggling tech firms, who sell almost the same solution set, combining in the hope scale will fix their problems.
The fundamental gap for both firms is not scale. Rather, it is tied to strategy, execution, innovation and talent, resulting in an inability to generate profitable growth or increase share value. This acquisition does nothing to address gaps both firms share – especially in digital banking and payments software capabilities.
The banking industry today sits on the precipice of change, as banks still face an unprecedented compression in profitability. Industry groups Aite and ATMIA report that the banking industry will increase spending on compliance IT and physical security by 35 percent and 50 percent respectively in the next two years – just to control risk in their core businesses. Meanwhile, the cost of labor per transaction in branches continues to rise while branch sales associated have dropped their revenue contribution by 50 percent over the past five years. With all of these pressures on retail banking, the industry needs innovation more than ever before.
Unfortunately, marriages of equals such as the one between Diebold and Wincor usually stifle innovation, especially in examples such as this one where gaps are not in company scale but in product strategy.
Ironically, amidst this rumor and speculation around consolidation, the opportunity for innovation growth is ripe for the ATM and other retail banking channels. It’s for those reasons that NCR Corporation has made significant investments in R&D and acquisitions to transform itself into a software-driven business. Through our significant investment in R&D and strategic acquisitions, NCR has transformed its Financial Services division from an ATM manufacturer to arguably the world’s most important financial services technology provider across physical and digital banking channels.
We purchased Digital Insight, one of the largest providers of digital banking services in the U.S. and the top rated provider on the Apple and Amazon app stores. We acquired innovative businesses and pioneers in adjacent industries, such as Alaric in transaction processing and security, Transoft in cash management, and uGenius in video banking.
Banks and credit unions are investing today in technology that can transcend siloed channels and create a true omni-channel banking environment. NCR has aligned its resources to deliver a comprehensive solutions portfolio (hardware, software and services) that helps financial institutions grow revenue, reduce costs and unlock amazing customer experiences.
In the process, NCR is driving new value out of the ATM channel – creating NCR Interactive Teller, which lets a live teller take remote control of an ATM to efficiently deliver services to transform a bank’s retail network. NCR pioneered the use of mobile cash withdrawal, pairing ATM authentication with a mobile banking app to replace a bank card with a photo of a 2D barcode. And we continue to invest in the ATM channel, developing the market’s first cloud-based ATM solution, NCR Kalpana software, which moves ATM software and operations to an ATM deployer’s enterprise servers.
The future belongs to financial services technology providers with the expertise and assets to bridge the physical and digital worlds for their customers while preserving investments these banks previously made. This is NCR’s strategy and we are already bringing more innovations to life through integration of the Digital Insight platform with physical channels.
The ATM remains an extremely important and valuable tool as financial institutions engage their customer bases. But it will be innovation through the lens of an omni-channel view of banking that will truly drive the future of retail banking. This innovation will be software driven and hardware agnostic. Consumers expect the same amazing experience found on the web from their physical channels. Financial Institutions are turning to NCR to deliver on this dream.