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This is where ATMs are headed

37 Transactions on an ATM

In the U.S., we generally use the automated teller machine (ATM) for five standard transactions: withdrawal, deposit, account transfer, balance inquiry and, on occasion, statement printing. That transaction set has remained fairly constant since the birth of the ATM channel some 30 years ago. In other nations, however, the ATM is a true self-service fulfillment device that helps deliver a much broader transaction set.

In Australia, for example, Bank of Queensland has transitioned its ATMs from an OS/2 platform to a Windows-based system that enables the bank to deliver marketing messages. Cardholders from competing banks, for example, can be offered an introductory low interest rate on a new Bank of Queensland credit card. While U.S. banks are still experimenting with such programs, Bank of Queensland has deployed this functionality since 2004.

In Singapore, meanwhile, ATMs enable more than 35 different transaction types! Enter any major street ATM atrium or bank branch and you will likely face a line of ATMs offering a variety of transactions. To avoid interfering with the speed of the various transaction sets, these ATMs will be designated specifically for certain functions; some will offer traditional withdrawal or deposit, for example, while others will provide transactions not yet even contemplated in the U.S.

For example, if you want to purchase a car in Singapore, you must enter a lottery process that enables you to bid on the car — and you can submit your bid only through an ATM. You can also renew your driver’s license at the ATM, add time to your mobile phone or even purchase stock. Overseas Chinese Banking Corporation (OCBC) used the ATM channel exclusively to sell shares for an initial public offering (IPO) by telecom provider Singtel. It was the biggest IPO in the history of the Singapore Stock Exchange. Stocks and bonds have been sold on ATMs in Singapore since the mid-1990s.

While Securities and Exchange Commission rules may prevent such transactions in the U.S., the Singaporean experience demonstrates that ATM functionality can extend far beyond the five basic transactions we’re familiar with. The U.S. has more than 1,300 ATMs per 1 million people, the world’s highest density. That’s a vast network of self-service devices to be tapped.

Signatures Automatically Verified

Fraud prevention is another area in which overseas banks are deploying innovative technologies. Consider the automatic signature verification system installed by Union National Bank (UNB), headquartered in Abu Dhabi in the United Arab Emirates (UAE).

While the UAE does not experience the same volume of checks as the United States, average check values are much higher, which generates greater risk from forgery in the check processing stream. Standard banking procedures in the UAE include physical examination and signature comparison of 100% of the checks transacted.

The UNB, one of the leading banks in the UAE, is implementing a program to reduce this risk by becoming the first bank in the Gulf region to use automatic signature verification. Previously, UNB staff needed to visually compare every check signature to a scanned signature card in their database. The new system will automatically compare the signature on the check image to the signature in this database. Based on pre-determined tolerances and thresholds, exceptions will be reported immediately to UNB researchers for investigation.

The verification system analyzes two different aspects of an individual’s signature — the specific features of the static image and the specific features of the process of signing, i.e., the dynamic nature of the signature. The first type of application looks at a two-dimensional static image resulting from the action of signing. The second tracks motions during the process of signing.

U.S. financial institutions can take advantage of this image-based process despite the large number of checks written and processed domestically. In many areas outside of the U.S., it is the banks’ responsibility to assure that the signature on the check is valid. The U.S. has relied on the customer review process to ensure the validity of checks.

However, with the reality of identity theft and some very recent announcements that consumers will no longer be held responsible for the losses sustained as a result of identity theft, signature verification would be a natural extension to the process of assuring the validity of transactions. The technology has advanced and is scalable to process volume.

Image-based Deposit-taking

When it comes to image-based, self-service deposit adoption, U.S. financial institutions are just now rolling out their systems. Meanwhile, countries such as the UAE, Kuwait, Saudi Arabia and Egypt are already leading the world in the deployment of automated deposit technology for the ATM. These nations have well over 600 image-accepting deposit units up and running, enabling customers to deposit cash or checks directly into the ATM without using envelopes.

While this technology can be added to existing Windows-based ATMs, Dubai Islamic Bank in the UAE is also deploying ATMs designed specifically as deposit-taking terminals. These units can be integrated as part of an end-
to-end check processing solution any place where full, image-based check clearing is implemented.

This is an excellent example of ATM image-based technology performing in the marketplace. And it works whether the market is a high, low or even “no check” environment. In many countries outside of the U.S., checks are simply not used. Cash deposits to the ATM, rather than check deposits, are much more the norm. In fact, some Asian markets offer hourly interest, so it is common for consumers to deposit cash back into their accounts via the ATM at the end of the day.