Paul Verra, global solutions marketing director at NCR, was in South Africa to meet with banking customers. He shares his insights in this Q&A.
Q: What is the most important business driver for banks today when it comes to ATMs?
A: Top of the list is the ability to accept cash and cheque deposits intelligently. For years, selected ATMs have been able to accept a mix of bank notes and cheques in a bank envelope, but this can lead to dispute regarding the contents of the envelope.
Cheque usage is rapidly on the decline in most markets, and the cost of accepting cash at the teller point is high for both bank and customer, so the drive is to move low-value, high-volume transactions to the ATM. Being able to accept bank notes natively and intelligently now becomes the key consideration.
Another consideration is cash recycling, which is set to become the new buzz phrase. We all expect virgin notes when we withdraw cash from an ATM, yet we also have a need to be able to deposit notes, sometimes old ones, in an ATM, and have the machine recognise these notes in various states of advanced age. Among other considerations, this is very important when banks start to implement cash recycling. We started this journey in South Africa a couple of years ago. We now have over 300 intelligent deposit ATMs installed. We are expecting to see this number growing significantly in the next few years. But this represents a small fraction of the more than 18 000 ATMs in use in South Africa. By way of comparison, 80% of NCR ATMs in use in Turkey can take cash deposits directly.
Q: Does this mean job losses among tellers?
A: Not at all. It will in fact free tellers to do more selling. Research shows that 70% of sales are still done through the branch. Migrating transactions to alternative delivery channels such as the ATM will allow the teller to cross-sell more to existing customers, and therefore improve customer satisfaction.
Q: Many people deal in cash in order to avoid tax. Surely they will be reluctant to make cash deposits, which then immediately become traceable?
A: The tax issue is clearly beyond our scope, so we cannot address it.
Q: We understand coin deposits are something to look forward to in the near future?
A: The SA Reserve Bank and the Mint are unhappy about the volume of coins that remain out of circulation once they are issued. To avoid penalties, banks in the future must return up to 60% more coins than they do today, but given the weight and volume of cash, that is a real challenge. Banks have to weigh up the two considerations of penalty versus investment, and indications are they will accept the need to make the investment.
Essentially, a depositor will be able to enter excess coins into an ATM and be issued a banknote in return or have it credited onto their account. And we all have significant volumes of unwanted coins lying around at home, in the car, in jars, in shoeboxes. Now, for the first time, we will be able to return them to the banks, who can in turn return them to the Mint.
The SA Reserve Bank and the Mint are unhappy about the volume of coins that remain out of circulation once they are issued.
Paul Verra, global solutions marketing director, NCR
This initiative's success will depend to a great extent on changes in consumer behaviour, so the new way of doing things will have to be communicated and people encouraged to use it. We expect the first pilot to be in place in South Africa before year-end.
Q: There seems also to be a drive to add value to ATM transactions.
A: Moreover, with the advent of the intelligent deposit technology discussed previously, numerous functionalities can be offered not only to a bank's customers, but also to non-bank customers. For instance, today's technology allows that anyone could go to an ATM and without a specific card, pay for their utility bills (such as electricity and water) or recharge their mobile phone by buying additional talk time. All of these represent revenue opportunities to banks while offering superior value to the public.
This is one of the banks' main business drivers. They want to be able to add more transactions and services to boost revenue. These include CRM and couponing. By way of example, normal coupon redemption rate is 3.5%, but through the ATM it can go up to as much as 15%.
Couponing these days becomes even easier with the introduction of the double-sided thermal printers, where the actual coupon can be printed on the back of the receipt that a consumer typically receives. This opens the potential to do deals with retailers in specific retail outlets. In addition, we can add an alphanumeric keyboard onto an ATM, so allowing a variety of transactions. There are many moves afoot to enhance the customer experience, while boosting banks' revenues.
Q: What of security? Especially in South Africa, where so many ATMs are blown up?
A: You might be surprised to learn that South Africa does not lead the world in ATM bombings, even if it seems it does. The phenomenon occurs all over the world. NCR considers security to be one of the primary pillars of its research and development efforts. Over the past several years, we have taken industry-leading approaches to ATM security. Security constantly evolves. Our multi-layered approach includes a sensor to detect manipulation of the dispenser shutter; sensors that alert a bank's internal alarm system or ink stain the cash to “spoil the prize”; and enhanced safe technology that can withstand a substantial attack (including explosives). We designed our multi-layered approach to ATM security not only to help protect the assets of financial institutions, but also to dissuade criminals from attacking and delay their attempts in order to give local law enforcement time to respond. While no piece of hardware is 100% secure, we have built advanced tools to defend against these attacks and we continue to invest heavily in this area in order to stay ahead of criminals.
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