Smart­phones set to re­place cards at bank ma­chines

The Pak Banker - - COMPANIES/BOSS -

Here's an­other use for the smart­phone as it in­vades daily life: in place of your debit card at your bank cash ma­chine. The "card­less" au­to­matic teller ma­chine (ATM) is gain­ing ground in the US and around the world, with smart­phone tech­nol­ogy al­low­ing for speed­ier and more se­cure trans­ac­tions.

Dozens of US banks are in­stalling new ATMs or up­dat­ing ex­ist­ing ones to al­low cus­tomers to or­der cash on a mo­bile ap­pli­ca­tion and then scan a code to get their money with­out hav­ing to insert a bank card.

US bank­ing gi­ants Wells Fargo, Bank of Amer­ica and Chase are in the process of de­ploy­ing the new ATMs, as are a num­ber of re­gional banks and fi­nan­cial groups around the world. Mak­ers of ATMs and fi­nan­cial soft­ware groups are ramp­ing up to meet this de­mand.

"We think our model (us­ing smart­phones) re­duces a lot of vul­ner­a­bil­i­ties," said Doug Brown, who leads mo­bile tech­nol­ogy for FIS Global, a ma­jor provider of soft­ware and tech­nol­ogy for ATMs.

Brown said the FIS card­less sys­tem is be­ing used at some 2,000 ATMs op­er­ated by at least 28 banks in the United States "and we're look­ing to rapidly ex­pand that."

He said the sys­tem should be op­er­a­tional at some 80,000 ma­chines in North Amer­ica over the com­ing 18 months. And sim­i­lar changes are com­ing in other coun­tries, ac­cord­ing to Brown.

In ad­di­tion to speed­ing the trans­ac­tion time, the smart­phone-based sys­tem aims to curb the grow­ing prob­lem of "skim­ming" in which crim­i­nals steal the data on a card, of­ten by in­sert­ing devices into the ATM card slot.

By some es­ti­mates, skim­ming cost the global bank­ing in­dus­try some $2 bil­lion (Dh7.34 bil­lion) in 2015 and can lead to other kinds of fraud when card data is stolen.

"Con­sumers are aware of this, they re­ally un­der­stand and wel­come this," Brown said.

An­other se­cu­rity ben­e­fit, Brown said, is that au­then­ti­cat­ing on the hand­set re­duces the time spent at the ATM to around 10 sec­onds in­stead of the typ­i­cal 30 to 40 sec­onds

"The per­for­mance is kind shock­ing to some peo­ple, they al­most jump back at the in­stan­ta­neous re­sponse," Brown said. "But it pro­vides more phys­i­cal se­cu­rity be­cause they can make the trans­ac­tion faster."

Bank of Amer­ica spokes­woman Betty Riess said the group is "cur­rently de­vel­op­ing a new card­less ATM so­lu­tion" based on NFC or near field com­mu­ni­ca­tion tech­nol­ogy to al­low cus­tomers to au­then­ti­cate with­out the use of a card.

"We'll roll out this ca­pa­bil­ity in late Fe­bru­ary to as­so­ciates in se­lect ATMs in Sil­i­con Val­ley, San Fran­cisco, Char­lotte, New York and Bos­ton." Riess said. "It will be fol­lowed by a broader cus­tomer launch midyear."

Chase said it is plan­ning a sim­i­lar roll-out some­time this year.

"When we first roll this out, cus­tomers will be able to re­quest an ac­cess code through the Chase mo­bile app and en­ter it at the ATM to do their trans­ac­tions," said Chase spokesman Michael Fusco. "Later on, they will be able to use their dig­i­tal mo­bile wal­let to com­plete the trans­ac­tion at the ATM."

Wells Fargo is also on board, de­vel­op­ing ATMs that will al­low cus­tomers to use their smart­phones to ob­tain and eight-digit to­ken to au­tho­rise a cash with­drawal.

The Wells Fargo sys­tem will sup­port An­droid Pay, "and we'll con­tinue to eval­u­ate ad­di­tional wal­lets," said spokesman Kristopher Dahl. Chicago-based BMO Har­ris, an af­fil­i­ate of Bank of Mon­treal, be­gan us­ing smart­phone tech­nol­ogy at its 750 ATMs last March.

Some of the new tech­nolo­gies will re­quire only a soft­ware up­date to the ATM, while oth­ers will need new hard­ware.

ATM man­u­fac­turer Diebold is test­ing a "head­less" teller ma­chine, with­out a screen or key­pad, which dis­penses cash from in­ter­ac­tion on the smart­phone.

"What we are say­ing with this is for­get the card reader, for­get the PIN pad, we all have th­ese devices in our pock­ets," said Dave Kuchen­ski, Diebold's se­nior busi­ness de­vel­op­ment man­ager for new tech­nol­ogy.

Cus­tomers need only ver­ify their iden­tity, which can be done with the de­vice's fin­ger­print reader, or pos­si­bly with an iris scan­ner on the ATM.

While some ex­ist­ing Diebold ATMs can work with mo­bile ap­pli­ca­tions, Kuchen­ski said the new con­cept, in test­ing with Citibank and oth­ers, could pro­vide "a bet­ter user ex­pe­ri­ence."

"We don't have to walk through the same process which we have had since the ATM has ex­isted," he said. "If we're us­ing a mo­bile phone, we no longer have the need for a card, we no longer have a need for a re­ceipt prin­ter, we've de­ma­te­ri­alised a lot of the devices. Banks like this, be­cause it has fewer mov­ing parts, so it re­duces the to­tal cost of own­er­ship."

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