The Green Sheet Online Edition
April 23, 2007 • Issue 07:04:02
In the words of John Shepherd-Barron, the ATM's creator
This story was originally published on ATMmarketplace.com, March. 13, 2007; reprinted with permission. © 2007 NetWorld Alliance LLC. All rights reserved.Editor's note: John Shepherd-Barron addressed the ATM Industry Association on Feb. 22 during its Conference East in Orlando, Fla. Following is a portion of his speech.
I am going to tell you the story of an acorn that grew into a mighty oak. It all began in a casual, lighthearted yet serious way in early spring 1965. Caroline and I lived in the country, but my bank was in London.
Therefore, I had [made] check-cashing arrangements with the local branch _ open 9:30 a.m. to 12:30 p.m. on Saturdays. I turned up one day at 12:31 p.m. to get money for the weekend. Instead, I had to ask my local garage to cash my check.
That night, lying in my bath, I thought there must be some way in which I could get at my own money out of hours. As the water cooled, I thought of the chocolate-bar vending machine once common on railway-station platforms.
You would put a penny in the slot, pull the handle, and one chocolate bar would be delivered at the bottom of the machine in a drawer.
Following this thought through, I mentally put together a stack of, say, 10 currency notes, each contained in a wrapper and loaded vertically in the vault casing.
The pack of money would be dispensed from the same drawer once the check had been machine-read.
The input should logically be a check because it could carry security ingredients and a method of automatically identifying the check owner, plus the necessary audit trail. Each customer would have his own memory number _ PIN _ and as I could remember my six-figure Army number, I reckoned on a six-figure PIN.
I tried this on Caroline the next morning, but she said she doubted whether she would be able to remember more than four numbers: That is how four became the world standard. All rocket science.
I knew about check printing, one of De La Rue's (my employer's) businesses. And I also had experience using "security ingredients" in tokens or, indeed, checks.
This material was Carbon 14, a soft beta radioactive emitter _ quite safe unless swallowed in huge quantities.
That was enough thinking for the weekend.
On Monday morning I called together our small team in De La Rue Instruments, as it was then called. I was the CEO. I posed the problem of round-the-clock cash delivery through the bank wall, off-line, threw in my ideas, and said, "Let's meet again on Wednesday."
Sketches on backs of envelopes made it look as if we could make a fairly simple device, if only we could control machine-readable codes and security ingredients.
On Friday, I was wearing my other hat as Chairman of Europe's first armored truck company, Security Express _ 100% owned by De La Rue. I was at one of our regular lunch parties for the Chief General Managers of the London Clearing Banks.
This Friday it was at Barclays Bank, for whom we carried all their money around 2,000 branches. At the time, they were the world's fourth-largest bank.
Over a second dry martini, I buttonholed my guest, Harold Darvill, and asked him to give me 90 seconds while I explained my embryonic idea.
Our group Financial Controller was standing by and said later that it took 85 seconds before Harold turned on me and said that if I could do that, he would buy it.
On Monday afternoon, the deputy CEO of the bank telephoned and said he wanted to come and see me in 20 minutes. He arrived in the bank's Rolls Royce.
I remember we had trouble finding a parking space for it outside our small office.
He said he would not leave until we signed a letter of intent to develop and supply six [ATM] prototypes, followed by 250 cash dispensers in batches of 50. The specification price was to be agreed with the bank's O&M [operations and maintenance] department.
Can you imagine _ from an idea on Saturday night to an opening contract with one of the biggest banks in the world nine days later?
The first ATM
As the project grew, we brought in more people and finally delivered the world's first operational ATM to the Enfield branch in North London of Barclays Bank.
On June 27, 1967, I remember trying to coach the Deputy Chairman of the bank how to press his four-figure PIN. He had obviously never pressed any button of anything in his life.
We finally bogused it from behind. In the event, everything worked just fine for the BBC evening news cameras. I remember having a drink with the well-known commentator Michael Sullivan afterwards.
Being a British inauguration, it was low-key compared with Tokyo, where I remember we installed our first machine on the Ginza [Mitsui Bank], and opened Japan's first ATM in the early evening to a crowd of 10,000, bringing the Ginza to a halt.
The 15-story-high neon signs read, "Get Your Cash Here Now." The Japanese public had convinced themselves that it was free money for the first 100 punters.
Coming to America
The U.S. part of the acorn story started here in Florida in February 1969, when I was the first foreigner to be asked to address the American Bankers' Association automation conference in Miami.
I gave a 15-minute presentation on the Barclays De La Rue cash system, to polite applause _ no questions, and only 12 brochures taken away from the 2,000 provided (one for each of the 2,000 attendees).
The general view in the bar was, "Who needs money out of hours?"
Back in London six weeks later, an unknown voice telephoned from the airport, said he was Head of Operations at First Pennsylvania Bank in Philadelphia, and he wanted to see me urgently, as his new Chairman, John Bunting, a marketing man new to banking, told him to buy six of "whatever those things are that the Englishman talked about in Miami."
Not a very flattering story, but it got us off the ground in the United States. After we installed them, and Bunting got his marketing benefit _ a good name and more customers _ the heavens fell in.
Banks and their suppliers, such as NCR, IBM, Burroughs [Adding Machine Co.], Docutel and Fujitsu, all scrambled to get going. At this stage, De La Rue sensibly concentrated on the OEM route as suppliers of mechanical note-handling systems to the trade. The pioneering days were over.
We were greatly helped by the desire of Citibank, led by John Reed, to set the correct ATM specification for them to use internally and also promote to their corresponding banks across the U.S. To this end, they set up TTI [Transaction Technology Inc.] in San Francisco, where we introduced them to Diebold Inc. [Earl Wearstler].
The three of us, working together, came up with the most popular ATM design, assembled and installed by Diebold. From De La Rue's point of view, by 1982, over 70% of all the ATMs in America used our currency-handling devices made in Portsmouth, England.
It is interesting to note that when Citibank [Citigroup Inc.] decides to take a hand in shaping a technology-driven marketplace, it can have a real impact.
Just watch the impact that Citibank's arrangement with Vodaphone to electronically transmit funds via mobile telephones will have in the unbanked area of Africa, later on in the developing world.
I don't think we yet appreciate the impact mobile telephones are likely to have on the technical world of banking.
[But] enough of the heavy stuff.
Quite apart from Florida being the first place in the U.S. even to hear about ATMs, Caroline and I lived in Manhattan and had a home in Long Island for some eight years while I was working for De La Rue: first bringing British ideas to America and taking American-business ideas back to Europe, such as armored trucking and FedEx-type overnight-parcel services, based on the U.K. network.
We both had a marvelous time. She obtained a degree at New York University and worked as a volunteer at Sloan Kettering cancer hospital, finally becoming Chairman of its charity shop.
I played tennis at the Wall Street Racquet Club every week. We were subscribers to the New York symphony and spent as many holidays as possible exploring your wonderful country, as well as making many special and lifelong American friends.
One of our closest [friends], who taught us both how to fish for striped bass in Long Island Sound, is here tonight and effected my introduction to Dan Maggin, Chairman of Diebold.
I would like to leave you with two small vignettes of my American experience. De La Rue is now nearly 200 years old and was the first printer of postage stamps in the world: penny blacks, Cape of Good Hope triangulars _ all familiar to any collectors among you.
In 1862, we backed the wrong side in your Civil War and printed all the stamps for the Confederates. We delivered them, along with a bill for Â£16,000, which was never paid. They were the only [U.S.] postage stamps ever printed outside America.
One hundred years later, our archivist came across the bill and the original die and printing plate buried in the company vault.
As America could not possibly afford to pay a 100-year-old bill at 10% compound interest, we made a gesture of it and presented everything as a present to America _ an emotional moment I assure you. It is still in the Smithsonian Institution today.
My final vignette is how I dealt with a problem and U.S. customs at Kennedy Airport.
When we shipped in the bonds we printed for the New York Stock Exchange, U.S. customs, as was their right, would take their time before examining the steel-lined cases containing $5 million bearer bonds in each.
Richard Nixon had just lost the governorship race in California and came to New York in order to make some money as a lawyer to back his run for the presidency.
He joined a firm called Mudge, Rose and added on his name. I hired him as our international legal adviser in return for his agreement to fix New York customs through his contacts in Washington.
Everything worked fine. Later on that year, he came to London, and we had him for lunch at De La Rue's entertaining house in Grosvenor Square.
He could spare us three hours to discuss our problem and America's, in general.
Before lunch, he asked our butler not to have any calls put through until 3:15 p.m. Precisely at 3:15 p.m., the butler, Diemer by name, came in with glasses of brandy for the four of us.
Nixon asked if there were any calls. Diemer replied he wouldn't put one gentleman through who had rung three times, getting increasingly annoyed.
"Who was that?" asked Nixon.
"A gentleman called Eisenhower," Diemer said.
Nixon fell off his chair laughing, went to an anteroom, talked to Eisenhower, came back and said they both agreed only a British butler could stop the President of the United States from talking to whom he wanted when he wanted.
I have now taken you from the acorn delicately planted in Miami in 1968 to the healthy flourishing oak tree represented by all of you at this massive ATMIA meeting, where together you are doing $14 billion a year of business.
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