NCR Corp. is joining rival ATM manufacturers and one of its suppliers in entering the cash-handling and cash-recycling market, which is taking off as the U.S. market for ATMs is maturing.
Bill Nuti, chairman and CEO of Dayton, Ohio-based NCR, told analysts in early December he expects the company to dominate the market.
"It's in our wheelhouse. We will be No. 1 in this market," Nuti claimed.
NCR, like rivals Diebold Inc. and Wincor Nixdorf AG, is using knowledge derived from manufacturing ATMs to develop products for banks, and it using its years of contacts with financial institutions to sell cash-recycling and cash-handling machines.
The machines count and dispense bank notes and coins. They also reduce costly bank-employee turnover, proponents say.
NCR's decision to enter this market is the result of a confluence of issues.
The most-important one concerns the slow growth and the increased competition NCR and its competitors are seeing in the U.S. market for ATMs, says Lee Manfred, partner with First Annapolis Consulting Inc. in Linthicum, Md.
"The ATM markets are maturing in the U.S., and NCR is leveraging its knowledge of ATM technology to enter another vertical market to grow revenues," Manfred says.
Nicole Sturgill, research director for delivery systems at TowerGroup Inc., a Needham, Mass.-based consulting firm, agrees.
"NCR doesn't have to reinvent the wheel [to enter this market]," she says.Cash-recycling and cash-handling systems have "passed the proof of concept stage with banks that have been testing the machines for the past 18 to 24 months," Sturgill says.Over the next four years, Sturgill expects U.S. banks to spend $8.4 billion automating their branches.
Of that amount, banks will spend 7% to 10% on teller-assist units, which include cash-dispense units and cash recyclers, she adds.Not everyone shares Sturgill's optimistic view.
Gil Luria, vice president of research for Wedbush Morgan Securities in Los Angeles, for example, says he does not expect a lot of branch growth in the United States and Western Europe.
Banks install the cash-recycling and cash-dispensing machines behind teller stations. Cash-recycling machines accept bank notes and coins bank customers deposit with tellers.
The machine counts the money and give the bank an accurate record of the amount bank customers have deposited with the financial institution.
Cash-dispensing machines dispense bank notes and coins to tellers to give to bank customers.
Banks consider both machines keys to reducing branch expenses because they help cut employee turnover.
Banks typically fire tellers who repeatedly do not provide the bank with an accurate count of deposits, Sturgill says.
Branch turnover is a costly expense. TowerGroup says 53% of part-time employees and 25% full-time employees leave branches annually.
"Cash recycling machines eliminate the need for several tellers to check each other's count for accuracy," Sturgill says.
Cash-recycling and cash-dispensing machines also give banks an accurate count of the types of bank notes they dispense to customers.
"The bank may think it dispenses X amount of 10s, 5s, 20s and 100s, but a cash-dispensing machine may show something different, which would reduce the amount of the cash a branch needs," Sturgill says.
In announcing its intentions, NCR, the world's largest ATM manufacturer based on 2007 shipments, is taking on Talaris Ltd., formerly De La Rue Cash Systems, the industry leader in the banknote-counting, banknote-recycling and coin-counting fields, observers say.
Talaris manufactures branch teller-automation products, desktop cash-handling products and ATM technology for original-equipment manufacturers, and it supplies internal mechanisms for NCR ATMs, Sue Foster, a Talaris spokesperson, tells ATM&Debit News.
Foster did not know what the internal mechanisms involved.
It is not unusual for a company to compete with one of its suppliers, Sturgill says.
Cash Systems has a long history in the ATM business.
The company installed the world's first ATM in 1967 at Barclays Bank in London. Basingstok, England-based Cash Systems founded the cash-recycling industry with the world's first machine in 1985.
Talaris, which has offices in 14 countries and has market-leading positions in Spain, Germany, France, the United Kingdom and North America, says it is capable of processing more than 500 million banknotes each day.
The Carlyle Group, a Washington, D.C-based investment firm, participated in a management buyout that led to the purchase of De La Rue's cash-handling and ATM technologies in August for $520 million.
In September, Carlyle Group named De La Rue's cash-handling business Talaris.
Besides competing with Talaris, NCR also will face off with rival Diebold, which is based in Canton, Ohio.
Competitors See The Same Market
Last summer, Washington Trust Co. of Providence, R.I., opened a branch in downtown Providence that housed Diebold's Express Cash Recycler, which dispenses cash and automatically counts and verifies customer deposits (ADN, 6/26/08) Paderborn, Germany-based Wincor Nixdorf, the world's second-largest ATM manufacturer based on 2007 shipments, sells cash-recycling and cash-dispensing machines in Europe, Sturgill says.
NCR signaled its intention to move into the cash-recycling, cash-handling and coin-counting markets in August when the manufacturer purchased NCI Ltd., a London-based company that develops teller-connectivity software for financial institutions. The software enables banks and credit unions to automate teller functions.
NCI has made and has marketed since 1996 Teller Cash Connectivity, a suite of software products that controls both teller cash recyclers and dispensers.
Before NCR bought NCI, De La Rue was listed on NCI's Web site as the exclusive distributor of the software.
"This acquisition will make it easier for NCR and its banking customers around the world to introduce and integrate branch-automation technologies that can transform branch productivity and the customer experience," Nuti said in a statement, noting the range of branch services includes ATMs. ATM