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Kiosks and ATM Conference Wrap -- A View from Europe on Self-service

Craig Keefner, publisher of kiosks.org, checks in with this report from London.

May 21, 2004

LONDON -- Great conference.

This was the first conference in which Kiosk and ATM people actually shared the stage and shared their mutual hopes and fears. Both industries have been struggling in many ways, and looking ahead the prospects seem to fade in and out like moths in the firelight.

Day One had me, Craig Keefner, Mister Kiosks.Org, in the chairperson seat and I got to introduce some extremely interesting speakers from both sides of the fence.

My first intro was for Karl Shields of LINK Interchange Networks. Very respected in the community, Karl went right for the throat citing reducing costs as a considerable factor for increased profitability. It was the first time I heard Linux come up with ATMs (and more than once). He covered ideas for increasing transactions and raising charging (but nixed by regulations) and ended up proposing the idea of pooling as the best idea. Bottom line he sees significant tension continuing in the UK market, the high footfall areas are saturated and the search for additional value added services.

Oh, and cash is still king...

Gunnar Enroth of BANQIT was next and this guy was one heck of a speaker. Remember the Dutch guy in the Mel Gibson movies that said "diplomatic immunity"? And while Gunnar is pronounced Goo-nar, he sure seems to emulate a gunner (machine gun in hand). Gunnar does not characterize his company as providing ATMs. His company provides self-serve equipment. He noted that 50-70 percent of all payments in Europe as by cash. He noted that 50-70 percent of all cash withdrawals are by ATMs. He talked about bill payments and transfers. He said better to cut down the time required to get cash. The best idea out of all it is: Focus on Cash. He loves the new ATM pictogram. He has no time with banks handling cash logistics.

He was very persuasive... and yes, cash is king.

Next up was this guy from Kiosks.org. He said his estimate of the market for direct revenue in 2002 is $430 million, $500 million in 2003 and $585 million in 2004. He talked about the need to see the kiosk as part of a multi-channel strategy. He went through the unbanked and under-banked statistics (ethnic and income tiered). He talked about the battle between the hypermarts (Target and Wal-mart) and the C-stores and the grocery stores. He talked about smart cards and Target (10 million cardholders and $4 billion in receivables). RFID, voice recognition, biometrics and photo kiosk market (minilabs and digital imaging station growth stats). Northampton and the EMV trials for Visa and the contactless card trial in Orlando.

He was pretty boring in my book. But then, I was the speaker.

Next up was Francie Mendelsohn of Summit Research. "The Future is Bright" was her tone and she talked about the recovering industry. Receipts, coupons, loyalty, food ordering, product info and gift registry were highlights in retail. Digital photo kiosks and Circle K (Info Touch). Conclusions were increasing activity, business case and staff acceptance in general.

Great talk Francie. Many commented how they found your talk very useful.

Nigel Mills of Cardpoint gave a real nice talk on the state of ISOs in the UK. It was the most positive of all the presentations by the ATMers (yeah, yeah, I know how you guys hate that label...). Cardpoint has 500 machines and they are£13,000 each in cost to install/operate. LINK predicts up to 20,000 machines in the UK in next two years.

Another ATM guy, Peter Jones, talked first about ATMs as a service, then went to the real point, which was ATMs as a business. He expects the ATM segment to contribute but not to be a profit segment.

DAY TWO:

Rested and refreshed, Francie was the chairman for day two.

First up was Andrew Wood of Marconi and he went through the British Telecom deployment in detail and laid it all out as a best case, one I agree with.

Guy Wolfenden of Cityspace was up next and talked about the 200 terminals that are out. Francie and I talked later and were surprised to learn that NEC and Clear Channel are funding the effort.

Guy Browes of Jobpoints was next. Guy is a member of the Association and works closely with another member, Neoproducts (and Mike Smith) who designed/produced the units. 99.8 percent uptime so far. These units are going all over the place and have tremendous success. Over one million jobs a year placed. They are even going into prisons (one with some Jeffrey guy that Guy mentioned.). These units are super-transaction heavy and I gathered from Guy's terrific presentation that now they are beginning to feel it on the back-end (terabytes of data). You never know how scalable a solution is until you really push it and this is really being pushed. So far scalability has been terrific.

The next speaker was David Birch, director of Consult Hyperion. This guy is one very, very smart fellow. I have his notes and some additional material from him out on Kiosks.org. The subject is smart cards. The big mistake early on is to think of these things as cards. They are computers. Remote, smart and learning computers attached to a personality. Customers love contactless cards (much more so than contact). He talked about Orlando and the PayPass and the contactless card trial, which he is consulting on (see related article on kiosks.org). He spoke on cost. It's a magnitude lower for contactless cards.

He spoke on E-Envoy. Something you have, something you are and something you would like. The simplest example of how well the Brittany Spears site recognizes and treats effectively, and how painful and long it is with his bank online.

This guy went through a ton of stuff. He is most highly recommended by me.

If I thought it couldn't get any better, on came Dominic Hirsch of Retail Banking Research, Ltd. Dominic laid out in excruciating detail the ATM market (fyi* the RBR reports are available from ATMmarketplace.com). One fact that came through clear is the credibility of the methodology that RBR insists on. 1.23 million ATMs now and 1.54 million by 2007 is one bottom line that Dominic delivered. He also emphasized the slowing growth curve, highlighted eastern Europe, and the shift from new units to replacement units. Costs are the inhibitor to growth (opportunity?). Interestingly to me, during the animated Q&A I did learn that 50 percent of the units installed in Europe are communicating over dialup.

Really nice job Dominic and very much recommended!

David Sutcliffe of eFunds spoke and despite some initial snafus in audio, got us all invigorated with a talk on new technologies and services for ATMs. After reiterating some RBR research numbers, David went to deposits. This was a focus point. He went onto Banco Inbursa as a case study, which included 120 NCR Personas 72 sidecars. He went over check truncation and he covered advertising value adds.

Nice talk David!

Next up for me was Waqar Qureshi of Visa International. I spent a lot of time talking to Waqar before the talk and was not disappointed in the initial fraud reduction savings or the subsequent section on Value Added Services such as rewards, promotions, coupons, authentication, access control, and ticketing that the new smart cards enable for dynamic one-to-one marketing. Is it all smoke and mirrors (and Visa just shifting liability all to the merchants...) or will the trials prove it so.

I hope.

Our final speaker was Andy Green of British Telecom. Rather than the consummate reiteration of known facts, Andy took us to the next level and disclosed some very interesting new developments in the BT project. The first item of note was the very strong emphasis on government services and references to regulations mandating access. OK. Then he downscaled the deployment from 28,000 to 20,000. Another curve... Finally (like any great opera singer, and yes, thanks for the great dinner at Sarastros!) Andy delivered the final coup de grace with the disclosure of new developments in the areas of corporate sales, "sponsored terminals," wireless hotspots, and a litany of new services. I would not be surprised to see these folks in the photo kiosk market the way they talked.

Wow. Lots to think about and I have only skimmed the surface here (more on kiosks.org).

All in all, a great conference and a historic conference in many ways, with very knowledgeable speakers from the Kiosk and ATM industries giving a coordinated best guess on how things will all work out. Supplementary materials, additional research and exclusive commentary from these speakers is available on kiosks.org.

Now if only someone would please pass me a beer in this pub....

Cheers

Craig

Craig Keefner is publisher of kiosks.org, the premier source of kiosk and self-service information. Craig may be reached at craig@kiosks.org

[Editor's note: Info Touch Technologies became Tio Networks in April 2006.]