Monday, March 21, 2016

Payments? ATMs? Are we seeing the full story?

Making time to check the flowers may not be a priority for business and yet, as challenging as it was to arrange, financial institutions are facing bigger challenges as they look to better serve a rapidly changing constituency.   

My attendance at the recent ATMIA US Conference in New Orleans wasn’t just a time for networking and for sampling a little of what New Orleans offers but, more importantly, it was a time to hear firsthand what was happening in the world of ATMs, ATM networks and the payments solutions supporting them. For more years than I care to recount, I have been in and around payments solutions and so it would be very easy for me to become a little jaded and yet, with each conference, I run into a presentation that truly proves enlightening. Such was the case when I walked into the presentation A Blueprint for Next-Generation ATM Networks by Peter Kulik, Director, Digital ATM, Citibank.

The ATM network at Citi represents the face of Citi as seen by its customers everywhere on the planet and for much of the planet’s population the Citi brand is projected solely by the branding on show at each of its ATMs. Before diving into the future blueprints for ATM networks, Kulik stated that, for the foreseeable future, Citi would continue to rely on proprietary software for the interface to ATMs. When it comes to talking about visions, Kulik was even more forceful as he admitted visions are as much aspirational as they are goals as “there are technology challenges for which we don’t have answers.”

Over the course of the past forty years, we have seen many changes taking place in the way we interact with ATMs. Not every intention or opportunity panned out as expected but at the very least, financial institutions were prepared to try different things to keep ATMs a viable option when it comes to supporting consumers. When I watched as the first Nixdorf Computers’ ATM arrived in Sydney being uncrated in a warehouse, we were all bemused to see that the option to keep the fascia heated had been included even though it was a feature only required in northern latitudes where winters temperature would have otherwise froze operations. Maybe the challenges of working in the heat of an Australian summer had confused those assembling this ATM back in Paderborn.

For Citi however, challenges were coming fast and often – pulling together a vision therefore included both near term as well as longer term objectives. A Proof of Concept (PoC) has been underway – indeed, from the nature of what was presented there may have been more than one PoC under way with, at a minimum, one focused on the thin client and another on message routing and translation – and questions continued to be raised. The current situation had seen Citi supporting some 64 ATM functions but clearly, not every location around the planet needed them all so simply coming up with a scheme whereby each location had just the functions they needed was the first item to be addressed as this directly impacted the code within the payments solution they ran. However, this was going to be easy when compared to many of the other tasks slated for inclusion in the Citi vision.

However, one interesting aspect of tuning the functions on hand was that in select markets Citi was already offering a number of PIN-less transactions, including PIN-less Credit Card Payments. Obviously, what hacker would want to insert real cash to pay down a consumer’s credit card! So no, PINs weren’t a requirement. Then again, banking laws differ across markets too, such that in other select markets, Citi was supporting personal loans, prepaid mobile phone “top-up” and even charitable donations, all directly from the ATM. In Latin America there was even the option to perform currency conversions directly on the ATM as consumers could opt for accounts in currencies other than their own. All of which was fuel for the Citi vision as their current network architecture didn’t support a global customer experience.

The transformation of the ATM network was being driven, according to Kulik, “as part of a broader digital transformation being pursued by the bank and yes, this includes global customer experience whereby the user can interface with the digital ‘richest’ experience” that Citi can provide. As for the design centers anchoring the blueprint, there were a number of them and it was a key consideration in order for Citi to move beyond simply having a blueprint to where they would have a modern ATM network.

Among these design centers were the obvious – maintain a leading user interface and transaction- while laying the foundation to better support future enhancements. Also, it was imperative that they integrate the design with Citi’s banking technology infrastructure for mobile, online, internet, branches, etc. everywhere in the world. In other words, Citi wanted a single global code base to efficiently accommodate Citi’s diverse country and regulatory requirements and key to this was a future code base architected to support “micro services, enabled and aligned with continuous delivery and deployment.” These micro services would in turn, support backward compatibility, multi-vendor ATM support, be ATM OS agnostic (to allow choice of software stack), and a preference by Citi to rely on thin-clients wherever feasible.

Finally, and news that would be welcomed by any NonStop user, “Citi’s future technology will have a service based architecture that is built on a decoupled, scalable and responsive application that runs in a cloud!” Think of deploying an Enterprise Service Bus (ESB) – from any of IBM, Tibco, Oracle, etc. – into which plug the many micro services Citi envisions having. With clarity, surprising for bankers, Citi sees its future as having micro services as “reusable componentized services that are bound to specific business capabilities (and that) allows for release by module thereby reducing dependencies, shortening test cycles and enabling faster deployment.” That’s it – the blueprint for Next Gen ATMs.

Again, coming from NonStop I was both shocked and surprised. Dare I add, a little disappointed – is this the full story? So much of what was covered appeared to me to be routine considerations for the development of any modern solution on NonStop, but then again, we are talking about the most conservative marketplace of all. The business of dealing with our money, where change happens at a glacial pace! And yet, Citi folks while talking about clouds, service architectures, talked very little about off-the-shelf solutions even as they considered commercial, off-the-shelf hardware for both ATMs and the systems that they interface to as being important considerations when it comes to improving the overall TCO of their ATM network.

Furthermore, this blueprint only covered the ATMs that Citi owned and there was a gap in their overall vision when it comes to the many more ATMs that Citi simply doesn’t own and yet needs to support. More startling, with the necessity to migrate from Windows XP to something like Windows 7 or 10, when it comes to security, Citi is happy with what they see included as part of either version of Windows. And again, that’s it – leave it to MS (or perhaps, Android or even Linux both of which are being considered as future ATM OS options)!  No, the blueprint had very little to say about security and that kind of left me cold.

All of which is to say, with what NonStop provides today together with the ecosystem of partners focused on middleware, tools and monitoring, there’s ample evidence of NonStop support of ATMs will continue to grow. Lesser priced NonStop X systems are developing traction among tier 2 and 3 banks and retailers – just check with OmniPayments CEO, Yash, who took delivery of his third NonStop X system recently and has plans now for four more – and the potential for even greater choice among vendor solutions only adds to the longer term viability of NonStop in payments.

My recent travels have taken me through many states and driving conditions have been challenging at times. At the same time I have seen the desert bloom in Death Valley, something not witnessed for more than a decade. The challenges facing the big banks, on the other hand, are a lot bigger than simply stopping to check the flowers. To see a bank the size of Citi reverting to a do-it-yourself approach startles even as it frightens and begs the even bigger question – will they ever get to roll out anything new? Of course, kudos need to go to Citi and to Kulik for giving the attendees such a presentation.

Perhaps the biggest challenge of all that Citi will face comes down to just this final point, and one I know many within the NonStop community have seen before and oftentimes cringed when it’s first encountered: Will the acknowledged differences between what is aspirational and what is real destine blueprints such as Citis to become just another footnote in the history of technology introductions within banks?

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