As ATMs Do More, Financial Institutions Require Sophisticated Solutions

The PaymentsJournal Podcast

The ATM industry has undergone a dynamic shift that has taken automated teller machines far beyond cash dispensation. As the number of bank branches has declined, both banks and consumers expect ATMs to provide a wide array of services that were once only offered at a teller’s counter.

In response to the increased demand for ATM services, financial services company NCR recently split into two separate entities—NCR Atleos and NCR Voyix—with NCR Atleos overseeing the company’s substantial ATM ecosystem. Shortly thereafter, NCR Atleos reached an agreement with BHMI to resell the Concourse Financial Software Suite® as part of its software portfolio.

In a recent PaymentsJournal podcast, Robert Johnston, Product Marketing Director at NCR Atleos, Casey Scheer, Director of Marketing at BHMI, and Elisa Tavilla, Director of Debit at Javelin Strategy & Research, discussed the NCR Atleos/BHMI partnership and its impact on a shifting ATM landscape.

Mirroring Functionality

In addition to the services of a brick-and-mortar bank, consumers increasingly expect ATMs to mirror the functionality of the digital banking environment. Some banks have reached the point where they can replicate their entire mobile banking experience on their ATMs.

“Even as payment and banking behaviors have shifted, ATMs have stayed relevant,” Tavilla said. “About three-quarters of respondents in Javelin’s annual North American Payments Insights Survey said that ease of finding and accessing an ATM significantly affects their satisfaction with their bank.”

Meeting these rising expectations is easier said than done—it requires creating connectivity to systems beyond conventional ATM rails. For example, to give consumers access to all their accounts, the ATM must connect to a bank’s core banking system.

Platforms like Authentic from NCR Atleos can serve as the hub that connects core banking systems, other services within the bank, and even third-party services provided by companies like fintechs.

The Front-End

Authentic is part of NCR Atleos’ ATM Management Platform (AMP) which offers a cloud-based suite of ATM management modules that includes the entire software stack required to operate an ATM. This includes the customer-facing application within the ATM, as well as cash management, device management, and security management software.

A cloud-based solution, Authentic gives banks a high-performance transaction processing and payment settlement solution that’s scalable. It’s also agile, with productivity tools which allow for rapid adoption of new services and products.

“Many of the traditional companies used to embed an ATM terminal handler within their product and now they’re stepping back from that,” Johnston said. “The Authentic platform provides one that’s not just a replacement; it’s a completely new level of technology for that function. We’ve also launched a new card management system based on Authentic that gets us closer to an end-to-end processing environment.”

The Back Office

The functionality of a platform like Authentic is substantially enhanced when paired with a back office processing software solution like BHMI’s Concourse Financial Software Suite. In this model, once a transaction is authorized by a consumer, it flows into Authentic for authorization.

Once authorized, the transaction is immediately loaded into the Concourse transaction repository, along with any corresponding data from card networks like Visa and Mastercard. Concourse operates on a continuous-processing architecture, so it begins processing as soon as this data arrives in the system.

This includes automatic reconciliation of transactions from disparate data sources, the assessment of fees and commissions based on transaction data, and the creation of settlement distributions and funds movement instructions. Additionally, it manages the entire workflow for chargebacks and disputes.

To give an example, when a customer makes a withdrawal from an ATM, the transaction is authorized by Authentic within seconds. By the time the customer walks away from the ATM, Concourse has already loaded the data from Authentic and determined the settlement impact of the transaction.

Concourse identifies which businesses are to be debited and credited, along with the amounts to be settled for each. It then determines which settlement account and distribution should be used and it creates the funds movement instructions.

“The continuous processing in Concourse is a huge advantage for financial services companies because it ensures they meet the strict service-level agreements and reporting requirements they have with their clients,” Scheer said. “It also gives companies a much-needed real-time view of their transaction data, so they can see the effects on their financial position within seconds of a transaction being authorized.”

In addition, the platform has a configurable rules engine, which gives organizations the ability to make alterations within the system without ever modifying code. That could include altering equivalency checks for reconciliation, changing a settlement distribution, adding a new fee, or modifying the workflow for managing disputes.

Three Segments

Increasingly sophisticated technology solutions in the field have had a dramatic impact on the ATM industry. NCR Atleos has evolved to address three main segments: self-service ATMs, ATM-as-a-service, and retail ATM networks.

The self-service segment includes the ATM hardware and the range of software services that support it. While ATM hardware might mostly look the same, it is changing, with an increasing uptake of cash recycling technology. Meanwhile, the software side has not only become more sophisticated, but it has also shifted to a subscription and SaaS (Software as a Service) model.

ATM-as-a-service is a relatively new concept, but as the demands on financial institutions have increased, more banks are adopting it. It allows them to focus on their core activities while leaving their ATM estate to be run by a trusted partner.

“Many banks have partners that run their entire ATM fleet for them, and the stability and predictability of the reoccurring revenue model suits them,” Johnston said. “They like the pace at which new updates and products can be deployed, which wasn’t possible under the traditional capital purchase and perpetual license models.”

The NCR Atleos retail ATM networks are a powerful differentiator, especially for smaller banks and credit unions. After signing up with a network, a bank that previously had a regional chain of ATMs can now have national reach.

Overcoming Processing Bottlenecks

As the ATM industry moves forward, there will be an increasing need for solutions that can deliver the experience that financial institutions and customers demand. One of the biggest issues with current technology is that many front-end authorization systems hit a processing bottleneck in the back office, because most back office systems are batch-oriented and require code revisions when changes are needed.

“That’s not the case with Authentic and Concourse. Concourse’s continuous-processing and rules-based architecture can even keep up with a high-throughput platform like Authentic,” Scheer said. “In a nutshell, combining Concourse with Authentic means that financial institutions can get an integrated, end-to-end payment processing solution.”

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