The New York times

January 17, 2002

Going to the A.T.M. for More Than a Fistful of Twenties

By DAVID L. MARGULIUS


TWENTY years ago, the PC industry was just getting started and looking
desperately for a killer app. Automated teller machines, introduced a
few years earlier, had already found one: dispensing cash.

Today, while personal computers have become multimedia network-connected
devices offering an endless bounty of services, most A.T.M.'s still just
give out cash.

That is about to change, and fast. Thanks to the "Web-enabling" of
A.T.M.'s - their retrofitting with Internet-based technologies - the
corner machine may soon offer a wider array of services and much more
personalization.

In trials involving about 4,000 of the world's 800,000 A.T.M.'s,
consumers are already gaining access to Web-enabled services like news
updates and coupon printing. Full-motion video plays in the background.
The machines can scan a deposited check and display the image on the
screen, then print a copy on your receipt. Many also offer
text-to-speech synthesis for the visually impaired.

"The idea is to take what's best of the PC- like experience" and put it
into "what historically has been a very dumb device," said Bob
Chlebowski, executive vice president for distribution strategies at
Wells Fargo Bank, which has already Web-enabled 600 of its 6,500 teller
machines.

Coming soon to many Web-enabled A.T.M.'s will be additional services
like ticket purchasing, personalized stock quotes, sports scores, maps,
directions, bill payment and the ability to call up an image of a
canceled check from your account.

In theory, you will be able to insert your card into a Web-enabled
teller machine and get screens in your preferred language with your
preferred content, account information and frequent transactions. You
may even be able to order chocolates and flowers.

"There's a tremendous amount of content out there that exists in an
Internet-accessible format already," said Bill Raymond, Bank of America
( news/quote)' s senior vice president for A.T.M. management and
development. "Our focus is to create benefits for our customers that we
couldn't do with the older technology."

But if you are hoping to navigate the Web at one of these machines,
don't hold your breath. Most banks do not plan to let you do so, for
fear of long lines. "This is about speed and convenience for customers,"
said Mr. Chlebowski of Wells Fargo ( news/quote). " You're not going to
stand in the pouring rain at an A.T.M. to surf the Web."

The banks do hope, however, that you will sign up for additional
financial products like loans while waiting for your cash.

"The biggest thing we're testing is how to use it as a targeted
messaging vehicle," Mr. Chlebowski said. He also said that Wells Fargo
had had early success enlisting users for its online banking service
through advertising on the new machines. The bank is also selling ads to
other marketers like Macy's and Condé Nast's Lucky magazine.

"The biggest advantage of Web-enabled A.T.M.'s will be a closer
relationship with the consumer," said Ian Rubin, an analyst at the
International Data Corporation. He said that users should expect to see
sales pitches targeted to their specific situations, like "Rates have
dropped - can we have someone from our mortgage group contact you?"

Web-enabling A.T.M.'s will also make it cheaper and faster for banks to
add new services to the machines and to operate and maintain them.
Today's A.T.M.'s typically have one wire that connects to the bank's
debit and credit database. Web-enabled A.T.M.'s will get a second wire,
using the Internet's TCP/IP protocol to connect to servers for almost
any service that can be delivered over the Web itself, including
software upgrades that currently require an expensive visit to the
machine.

Even nonbanking companies like 7-Eleven Inc. ( news/quote) are
experimenting with Web-enabled A.T.M.'s. The company, in partnership
with American Express ( news/quote) and Western Union, is running a
trial in 94 stores with A.T.M.'s that provide automated services like
check cashing, money orders and wire transfers to its customers, many of
whom do not have a bank account.

"I think we're leading the way," said Rick Updyke, 7-Eleven's vice
president for business development and commerce. "Banks are typically
slow." He pointed out that 7- Eleven already does 100 million
traditional A.T.M. transactions a year in its 5,300 stores (of an
estimated 11 billion total annual transactions nationwide).

A.T.M. hardware is one key to delivering the next generation of
services, but software is the core. Most teller machines today run on
I.B.M.'s OS/2 operating system, which is difficult to upgrade with new
applications. Web-enabled A.T.M.'s are typically Pentium machines
running Windows NT, which can support standard Web technologies like
HTML, Java, C++ and MPEG video files. "It's basically a PC," said Mr.
Raymond of Bank of America, "except in the case of an A.T.M. it's
sitting on top of a safe."

Mr. Raymond said Bank of America planned to expand its current fleet of
200 Web-enabled A.T.M.'s, mostly in the South, to about 2,000 a year
from now. "Anything new we buy is Web-ready when installed," he said.
Wells Fargo is now upgrading all its hardware, Mr. Chlebowski said.
Other banks are less concrete: "We'll be moving in that direction in the
next couple of years," a Citibank spokesman said.

One possible speed bump is bandwidth. About 30 to 40 percent of A.T.M.'s
in the United States still run on 9,600-baud connections, according to
Ken Justice, a market researcher for Diebold, a leading A.T.M.
manufacturers. Banks must switch to faster connections to operate
Web-enabled A.T.M.'s in a "feature-rich way," he said.

With Internet-based connections, A.T.M. cameras will also provide more
sophisticated surveillance. Many teller machines currently record
videotapes that must be collected every 24 hours and delivered to a
central archive. Web-enabled A.T.M.'s will feed digital photos
instantaneously to a central database where security personnel can
monitor specific machines or every machine.

NCR, a leading A.T.M. vendor, is using its Advanced Concepts Lab to
develop services like downloading music and printing digital photos from
Web-enabled A.T.M.'s. But Tim Wiggins, a lab manager, concedes that the
appeal of such concepts has yet to be proved.

"Banks are not going to determine the future of anything," he said.
"It's going to be consumer acceptance."


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