The Green Sheet Online Edition
April 09, 2007 • Issue 07:04:01
A look ahead: ATMs and the next 10 years
Editor's Note: Tom Harper, who is founder and President of the ATM Industry Association and Publisher of ATM Marketplace, addressed ATMIA on Feb. 22 during its Conference East in Orlando, Fla. Following is a portion of Harper's speech.
Before he was assassinated in 1963, President John F. Kennedy left his country with a dream to reach the moon by the end of the decade. This historic milestone would establish the United States as the worldwide leader in the space race.
After the country recovered from mourning the death of that great president, do you think the mission to the moon slowed down without its champion? No way. It had its own life, independent of any leader. After all, the nation's pride and progress were at stake.
I believe ATMIA can and should launch an audacious goal for our industry. We certainly won't go to the moon, but I want to talk to you about a goal that will take our industry to new heights. It will cross cultures and bind financial institutions, independents and ATM businesses in the United States and around the world with common purpose.
There are two main pillars to this vision. First, ATMIA and its staff will put more emphasis on building ATMIA's infrastructure and culture.
Jim Collins' book Built to Last, which was first published 10 years ago, presents a groundbreaking concept: Collins says an organization's leaders should be clock builders, not time tellers. What he means is that most companies spend all their energy "telling time" rather than spending their time building better clocks, or building the organizations themselves.
The typical company focuses on its leader, products, short-term profits and ideas rather than emphasizing the form and function of the organization. Let me give you an example. George Westinghouse's greatest creation was the AC power system; Charles Coffin counts as his greatest creation the founding of General Electric Co.
Coffin didn't hesitate to move GE away from Edison's DC system to the superior AC one, which Westinghouse had already manufactured and sold. Coffin focused more on building a company rather than a single idea. Today GE is one of the largest and most valuable companies in the world, with more than $400 billion in annual revenue.
Westinghouse stands at roughly $2 billion. Not exactly fierce rivals these days.
One more example is found in an article published in 1973 about Dave Packard, co-founder of HP. In the article the reporter asks Packard what specific product decisions he considered to be most important to HP's growth.
Packard's response didn't include one single product decision. He answered entirely in terms of organizational decisions: developing an engineering team, stringent financial discipline, a profit-sharing program, personnel and management policies, the "HP Way," and so on.
The reporter rightfully headlined the article: "Hewlett Packard Chairman Built Company by Design, Calculator by Chance." The implication of all this for ATMIA is that it should employ more best-business practices. Our member benefits, conferences and published information should, of course, be top notch; but that will naturally flow out of a top-notch organization.
So let's give ATMIA's staff the best training money can buy. Let's make them more visible in the industry. Let's raise the quality of internal processes, compensation plans, performance appraisals and disaster planning. Let's make sure our technology and communications are state of the art.
What will this mean to you? An association that is stronger internally will exercise more influence on behalf of its members. Your business will grow under a broad protective umbrella. Our industry's security and fraud incidents will be minimized or prevented before they become media headlines. This will allow demand for ATMs to grow.
By the way, you can apply this clock-building concept to your own business right now. If you see your ultimate creation as your company, and don't think your greatest strength is a specific idea or good market timing, then you can persist toward becoming an enduring great organization.
If everything is riding on a concept or a unique product, be careful. Create an environment that includes the right people and can foster great products or services.
Even while ATMIA prioritizes its internal structure, it must adapt to our external environment. We're facing a future that is more dangerous and less sure. Since the political and economic landscape will continue to shift, ATMIA must be strong and nimble and encourage staff, the board and members to work with common purpose.
The association also needs to communicate effectively and take advantage of every opportunity to talk to our industry and consumers.
That takes us to the second pillar of this vision: ATMIA must reach out to the industry more effectively.
What does the industry have to say?
Last October we asked the industry _ primarily non-ATMIA members _ what they thought about the association. Why haven't more companies joined, we wondered, and are we really relevant in the marketplace? The results were enlightening, to say the least.
ATMIA conducted a survey and got 658 industry responses. Out of those, the top-ranking issue is ATM-related fraud and security. ATMIA addresses fraud and security through the Global ATM Security Alliance, the Cognito crime database, best-practices documents, security conferences and fraud alerts.
The second most-pressing issue, according to the survey, is creating profitable ATM business models, which, again, ATMIA addresses through committees, its "ATM Business Efficiency" document, online risk self-evaluation, influence on compliance guidelines and more.
But the problem is that most people in the industry simply aren't aware of what the association is doing.
We asked, "How effective is ATMIA at protecting and growing the industry?" The answer was pretty shocking: 63% of the survey's respondents say they don't know. If our mission is to advance the global proliferation of ATMs _ and it is _ the association needs to get the word out about our activities.
Even worse are respondents' answers to the next question: "What is the reason you haven't yet joined ATMIA?"
- I don't understand how my company would benefit _ 40%
- I didn't know it existed until now _ 20%
- It's too expensive _ 12%
- It doesn't do enough for my company _ 11%.
And, 60% of the survey's respondents say they need more information.
While those responses reflect only North America, responses from outside the United States don't differ much.
On the continent where ATMIA was founded, and has the most members, it still has a huge need to promote itself. Our marketing budget should double or triple. Our PR engine should crank up the horsepower. We should consider focusing full-time staff on this. The payoff on this investment would be immense.
So the biggest problem preventing ATMIA's growth is that we haven't effectively communicated our benefits to nonmembers. ATMIA needs to reach out to the media, publish commentaries, advertise and do whatever it takes to raise its awareness in the industry.
We also have a lot of work to do to communicate with our current members. While the association continues to publish our member newsletter, send out industry alerts, hold numerous conferences and stay involved in regulatory developments, it still has far to go in speaking to the industry at large about our activities.
I take much of the blame for this lack of communication, not only because I'm the association's President, but because I'm the publisher of ATM Marketplace.
I think all members should help get the word out, too.
This pillar of reaching out couples perfectly with the first one, which, remember, is our need to focus inside our organization. If we're strong on the inside and the outside and have the support of a large, vibrant member base, we'll be able to reach the new 10-year goal that I'd like to announce right now.
Our original mission statement was to advance the global proliferation of ATMs. Our new 10-year objective is a natural offshoot.
ATMIA's 10-year goal
I believe we should double the world's number of deployed ATMs by 2017 _ in essence, doubling the size of our industry.
Let's look at how the market has grown during its 40-year history. If you take the market's deployment in 10-year increments, a familiar trend emerges:
- 1967 to 1976: 20,000 deployments
- 1977 to 1986: 190,000 (850% increase)
- 1987 to 1996: 640,000 (237% increase)
- 1997 to 2006: 1.56 million (144% increase)
- 2007 to 2017: 2.4 million (Retail Banking Research Ltd.'s estimate for that year is a 54% increase.)
Our "stretch" goal for 2017 is 3.12 million. Instead of a 54% increase, our goal is a 100% increase, which represents a doubling of today's footprint. This also represents 720,000 machines over and above RBR's 2017 estimate.
We want to reverse the declining growth trend in recent years. But is that actually possible? Mike Hudson, General Manager of NCR EasyPoint LLC, says because of falling break-even points, there are more than enough potential ATM locations. He believes _ and I agree _ that in the United States alone there are thousands of new, viable off-premise sites.
Over the years, I've heard rumors of impending saturation points; but new technology always takes us to the next ceiling. How can we possibly predict the effect of future technology this far out?
With the early surcharge explosion pretty much over, we need to replace it with an equally strong ATM-deployment campaign. Let's say we accomplish that goal. What will it really mean for the market and consumers?
Here are some benefits:
- Financial institutions will grow by reaching more customers with cash and financial services.
- Retailers will profit from increased cash withdrawals in their store.
- The unbanked will enjoy convenient access to financial services.
- The ATM-replacement market will grow, which will fuel the growth of manufacturers, servicers, cash providers and every segment of our industry, which means more jobs worldwide.
- ATMIA's influence and membership will grow, allowing ATMIA to better serve the industry.
What can ATMIA do?
So what can be done to push this growth beyond normal market forces? ATMIA can stimulate deployment by educating government representatives and partnering with regional ATMIA boards.
ATMIA will talk to legislators about how the industry works and explain the economic benefits associated with deploying more machines. A key strategy will be to ask regional ATMIA boards to identify and attack the hot issues in their regions.
We also need to target the few operators out there who give us a bad name. We cannot let our industry's reputation suffer at the hands of a few who are skirting the laws.
ATMIA needs to assist smaller ISOs and deployers so that they can grow their estates and employ best practices and compliance. We'll teach them, through conferences and online seminars, how to grow their businesses. We'll introduce them to potential partners and suppliers.
Multiplying our market is our own trip to the moon. This will be a giant leap for the association, but a bigger step for our industry. The motto of the British Royal Air Force is Per ardua ad astra _ Latin for "Through struggles to the stars."
ATMIA will struggle to evangelize the world with ATMs, and there will be obstacles on the ground before we ever take off. But there were incredible challenges faced by the American astronauts, too. President Nixon had a speech ready in case they became stranded after landing on the moon. His disaster plan included notifying the "widows-to-be" before their husbands perished in the lunar vacuum.
Though the odds were against them, there was widespread hope and anticipation. Roughly a million people crowded the beaches and highways near the launch site, and more than 600 million watched it on TV, a record at the time. Nixon watched from the Oval Office as the lunar module landed with less than 30 seconds of fuel left.
The hope of the American people was rewarded when the astronauts walked where no man had walked before.
I'd like to challenge ATMIA's staff, board and members to take hold of the vision of industry growth. Why can't we double our market? We can double our market because we finally have enough resources and momentum.
But we still need bigger and better conferences to get the word out. ATMIA needs all members to commit time, industry contacts and other resources to the cause.
To help the industry get there, we will build up the association's infrastructure. Next, we'll strengthen our marketing and PR engines, and we'll launch an initiative to disseminate best practices to governments, ISOs and other deployers and operators.
Those efforts will stimulate growth over and above normal market forces.
Can you see the impact a doubling of the industry could have on your company? Could you sell parts or supplies on the Internet to foreign deployers, consult with ISOs in developing countries, capitalize on tourist ATM-use, sell your technology to multiple markets, invest in new overseas service providers, or set up a non-U.S. branch of your business?
Though the forces of globalization are introducing more and more competition, they're also opening up a new international playing field. The world is big. And our opportunities are bigger than we think.
Helen Keller said, "What would be worse than being born blind? To have sight without vision."
Let's keep our eyes on the horizon. Our industry has the potential to double in the next 10 years if we broaden our vision, focus our energy and work together.
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