U.S. TECHNOLOGY LEADS... WHILE THE WORLD FOLLOWS
Asia's Implementation Leads While the U.S. Follows

I haven't received an email newsletter from Business 2.0's 'Future Boy' in a while, but it sure was timely. I posted an entry on how U.S. cellphones lag behind Korea (& Japan) earlier today and now I get this article below that marvels, "The coolest and perhaps most far-reaching demonstration I see at Dundee, though, is of a technology that is still in the R&D phase. An NCR researcher takes out a Nokia (NOK) phone that's been outfitted with a radio frequency identification (RFID) chip and swipes it over a pad on an ATM, which transfers money wirelessly from the account to the phone. Now the phone can act as an electronic wallet and be used to buy products from vending machines or retail outlets also equipped with RFID readers."

Excuse me? Where has Schonfeld been this whole time? I actually had to double-check to see if the article was written in 2002. It's not exactly the same technology, but mobile commerce has been implemented in Korea for over a year now where your cellphone acts as an ATM card.

And yes, Nokia is not a U.S. company, so my header is misleading but sometimes I just like to write those types of lines. And yes, mobile technology and use also is ahead in Europe, especially since the Internet isn't as widely prevalent and utilized as in the U.S.


Not Your Father's ATM
Automated teller machines are about to get a dramatic upgrade.

Business 2.0
By Erick Schonfeld
December 19, 2003

The upper half of Timmy's body is projected on the frosted-glass sliding door leading into NCR's (NCR) advanced technology demo center in Dundee, Scotland. She is wearing a tight blue blouse and has exaggeratedly full lips. Timmy greets me by name, pauses, looks down as if reading from a script, and flicks her hair. She is an avatar -- a computer-generated character. Her mannerisms and robotic voice are still a bit crude, but that won't keep Timmy from coming soon to an ATM screen near you.

There she will greet you by name and deliver a personalized marketing message (perhaps an offer to increase your home equity line of credit). Or she may demonstrate how to use one of the ATM's many new features, such as the machine's ability to accept a wad of bills or a check without an envelope.

Timmy is the face of the new ATM. A confluence of regulatory, technological, and competitive trends is building toward a wholesale upgrade of the nation's ATM networks. The most significant of these is a law passed in October called the Check Clearing for the 21st Century Act, or Check 21, which will allow the digital image of a check to have the same legal standing as the original paper version. That means that instead of depositing checks in an envelope, you can feed them directly into the ATM, where their images will be captured. And instead of waiting three days for the checks to clear because they have to be unloaded from the ATM at night and shipped to a processing center, you can have them approved as fast as the network can carry the image. Thus the banks will get to digitize what remains one of the most labor-intensive parts of their business.

Both NCR and its main competitor, Diebold, offer ATMs with such abilities. But as banks upgrade or replace their current ATMs to take advantage of Check 21, these ATM vendors hope that the banks will also add other new features. For instance, it makes little sense to get rid of envelopes for check deposits but still require them for cash deposits. So newer ATMs come with a separate slot that accepts bunches of notes as well. The sensors and software inside the ATM can accommodate multiple denominations and spot counterfeits.

ATMs are increasingly being used as a communications and marketing channel as well. As ATMs become more complicated to use, more avatars like Timmy might be popping up to give onscreen tutorials for new features. Not only can Timmy help instruct you to properly unfold your bills and deposit them faceup, but she can try to sign you up for a new credit card as well, or alert you to mortgage refinancing opportunities when the rates are low. Text-to-speech software running on the PC inside the ATM (it uses a modified version of Windows that is more crash-proof and more secure) can help Timmy personalize her message specifically to you depending on what the bank knows about your account.

The problem with all of this, of course, is that I am going to like Timmy only to the extent that she helps me out with a transaction I am having trouble with or gives me an offer that I actually care about. Encountering a computer-generated teller at the ATM might be novel at first, but it will quickly become tiresome if Timmy starts making it harder for me to get to my cash. One of the key advantages of going to an ATM is its speed and convenience. I don't want to have to sit through an advertisement every time I go to the ATM. So banks would be wise to use Timmy (and other ATM marketing schemes) sparingly. Even if such marketing is successful, and I find Timmy helpful instead of annoying, the person behind me in line might not appreciate the fact that I am tying up the ATM. Despite its promise, turning the ATM network into an effective marketing channel will be tricky, to say the least.

The coolest and perhaps most far-reaching demonstration I see at Dundee, though, is of a technology that is still in the R&D phase. An NCR researcher takes out a Nokia (NOK) phone that's been outfitted with a radio frequency identification (RFID) chip and swipes it over a pad on an ATM, which transfers money wirelessly from the account to the phone. Now the phone can act as an electronic wallet and be used to buy products from vending machines or retail outlets also equipped with RFID readers. Who needs cash?