News

Spain's kiosk armada

Kiosks will eventually be a major player in Spanish technology circles, according to kiosk executives in the country. But the industry has to deal with a variety of issues in order to achieve its potential.

May 30, 2002

Spain is famous throughout the world for its sunny beaches, flamenco dancers, bullfighters, and rich historical legacy. But in the 27 years since Generalissimo Francisco Franco's death ended nearly four decades of political and economic isolation, the country has become a modern European nation.

The country's ATM network of 47,000 machines is one of the world's largest and is a good example of how Spaniards have embraced new technology to enhance their daily affairs.

Kiosks, however, are only recently beginning to win acceptance among the Spanish public. Executives from international kiosk manufacturers believe it will take many years before kiosk technology is used on a massive scale in Spain.

"Today there's some 47,000 ATMs in Spain and it took a while to reach that figure -- something like 20 years," said Enrique Arrufat-Lucena, marketing director, Spain, for ATM and kiosk manufacturer Diebold Inc. (NYSE:DBD). "The public is not yet fully prepared for massive kiosk use."

NCR Corp. (NYSE:NCR) retail solutions general manager for Spain, Cesar Ortega, estimates there are 5,000 kiosks installed in Spain. He believes the number of kiosks will grow by between 10 percent and 15 percent over the next couple years. He said one explanation for the low number of kiosks in Spain is that manufacturers only began to install them a couple of years ago.

"In 1999, we began to install the first kiosks," said Ortega, who added that NCR will install 200 kiosks in Spain this year and plans to deploy another 400 in 2003.

Airline self-service check-in kiosks and cinema ticketing kiosks are among the kinds of deployments that are envisioned as killer applications in Spain. But the three sectors that offer the greatest promise for growth are banking, public information, and retail.

But with great promise also comes excruciating uncertainty. In banking, logistic issues have slowed kiosk growth. In retail, the public's desire for one-on-one public service is guiding the market. According to Spanish kiosk executives, the industry's development will depend upon how it reacts to these issues.

Breaking into the banking sector

Banks and other financial institutions, on a quest to migrate clients to more cost-efficient e-banking channels, are natural drivers for new technologies.

Spanish banks are no exemption to that international rule, So far, however, many banks have opted to add additional functions to their ATMs instead of adding kiosks.

"Kiosk use at the banks is very reduced here compared to ATM use," said Cristina Torrella, a banking analyst for rating agency Fitch Ratings. "As a massive distribution channel it is not very developed yet."

Size is an obstacle for installing more kiosks at banks. Many bank branches are very small. Therefore it has been difficult to install different machines, and many banks have opted to empower their ATMs with more functionality.

But with banks seeking ways to migrate even more services away from human tellers, an opening is being created for kiosk technology at Spanish banks.

"The kiosks in banking today, from the viewpoint of deployment figures, is like the ATMs 15 or 20 years ago," said Arrufat-Lucena, who estimates that there are currently between 500 and 1,000 kiosks installed at commercial and savings banks in Spain.

Added Wincor Nixdorf Spanish marketing director Gonzalo Suarez: "The second wave is coming now with growing interest and demand (in kiosks at banks)."

Suarez said that Wincor Nixdorf has several kiosk projects in the study or pilot stages with Spanish banks, but did not go into detail.

Arrufat-Lucena expressed similar thoughts regarding Diebold's plans, noting that banks want to evaluate the public's reaction to new technology before deciding on major rollouts.

"Most of the projects with the banks are at the pilot stage," he said. "The banks want to see how it works at five, 10, or 20 branches first."

For banks, the bottom line is the bottom line. Showing that kiosks can perform complementary functions cheaper than the ATM will move the sector forward, Arrufat-Lucena said.

"The kiosks are a complement to the ATM to perform mainly non-cash transactions, which through the ATM would be more expensive to do," he said.

Complementary services that kiosks can provide Spanish bank customers include information on consumer loans, investment funds, and mortgage loans, along with the printing of financial documents.

Growing up in public

Spain's public administration sector is an area where kiosk manufacturers predict high-growth potential, with projects already in the rollout phase.

NCR has installed kiosks at Spain ministry for administrative divisions and at the government social security agency as a convenient way of accessing public information. Ortega did not offer specifics on the project, but said the focus is on streamlining the flow of information.

"The Spanish government has a high number of employees and that number is not supposed to increase further," he said. "Kiosks are likely to provide more of the services to the public."

Despite concerns that Spanish retail customers put one-one-one personal service ahead of technological advances, kiosk manufacturers such as NCR are optimistic that scenes such as this will become common in Spain.

Wincor Nixdorf is currently working with central and local government officials on several kiosk projects. Suarez would not go into detail, but said the government sector could draw parallels to the banking sector when considering kiosks.

"The public administration sees a great opportunity in improving their service," Suarez said. "The kiosks at the banks provide the clients with information 24 hours a day, seven days a week -- so why don't we repeat the same in the public administration."

Arrufat-Lucena pinpointed universities and public buildings as hot-button areas for kiosk development.

"At the universities the acceptance is easier because the students are more familiar with the Internet, know how to navigate already, and it's very convenient for them to pay their tuition through transfers using the kiosks," he said. "At the town-houses, people use the kiosks to print out different certificates."

Spanish kiosk consulting firm Cytsa is working with Spanish highway authorities to install information kiosks. Located at gas stations, the kiosks would provide the public with real-time information on highway traffic, including accidents and traffic congestion on the roads. Jose Maria Gonzalez, Cytsa technical director, said the project is still at the pilot stage, with only two or three kiosks in place.

"We're going step by step and there is no launch date (for a rollout) set yet," Gonzalez said.

A retail lag

The Spanish retail sector is still lagging behind other European countries in using kiosks to promote their products.

Competition in the Spanish retail sector, rather than serving as a trigger for kiosk development, is actually an obstacle to kiosk deployment. Retail chains are so focused on gaining market share and providing the customer with personal services that kiosk development has become a low priority.

"Kiosks have still not become a big success yet at the retail stores because people still want to be attended by a person," Arrufat-Lucena said.

Arrufat-Lucena said the kiosk industry will have to accept this and be patient as consumers become more hospitable to kiosks.

"Maybe this change of habit (at retail stores) could take a bit more time in a Latin country like Spain, where the personal relationship is very important, than in, let's say, the Nordic countries, where usually different kinds of new technology, like the Internet, have won rapid acceptance," he said.

Suarez said kiosks are most useful for retailers that sell products that cost a lot and take up valuable space.

"By installing a kiosk, a retail store can have one product as a showcase for the client and the rest of the (product) catalog in the kiosk if the client wants to see more details or models," he said.

Over at NCR, Ortega said the company is talking to record stores and record companies about offering customers music through kiosks. The advantage would be the kiosk's capacity to store a huge number of record titles. He said there should be a pilot out before year's end, but offered no further specifics.