Citibank, which operates the nation's eighth-largest bank-owned ATM network, next week will begin replacing most of its ATMs in a bid to improve customer service.

The announcement, coming after an inquiry by ATM&Debit News, reinforces Citi's reputation as a rebel in the white-shoe bank ATM industry.

Citi, the world's largest bank in terms of assets, is buying an undisclosed number of ATMs from Nautilus Hyosung America Inc., a company primarily known as a manufacturer of off-premise ATM/cash dispensers found in convenience stores and fast-food restaurants. Nautilus Hyosung's biggest-selling ATM is the Mini-Bank 1500, a popular cash dispenser.

"Citibank is the first big bank to try a lower-tier vendor in a core role," says Leon Majors, president of Phoenix ESP Payments Research Group, a Salisbury, Md.-based company that compiles data on ATMs.

Besides Nautilus Hyosung, Citibank is purchasing ATMs from NCR Corp. and Diebold Inc., two Ohio-based manufacturers that regularly supply ATMs to large banks.

The new machines will replace 2,000 ATMs Citi manufactured in-house, Robert Julavits, a Citi spokesperson, tells ATM&Debit News.

Citi's ATM network includes 3,300 machines. The bank previously had purchased 1,300 ATMs from NCR and Diebold.

Citibank, which is based in New York, has a reputation as a rebel in the ATM industry because of its history of manufacturing its own ATMs. That independence made the bank the most-likely candidate to buy ATMs from Nautilus Hyosung, observers say.

The financial institution buys modules, such as a printer, from various ATM manufacturers, including NCR and Diebold, before assembling its own ATMs, Julavits agrees.

The deal is considered a major agreement, if not a landmark, because large financial institutions usually have given most, if not all, of their business to Diebold, NCR or Wincor Nixdorf International GmbH, the world's three largest ATM manufacturers.

The Citibank deal brings a fourth player into the U.S. financial-institutions market, observers say. Other off-premise ATM manufacturers, including Newark, Calif.- based Tranax Technologies Inc. and Long Beach, Miss.-based Triton Systems of Delaware Inc., also are marketing the machines to financial institutions.

Nautilus Hyosung is confident about supplying ATMs to financial institutions. As a result of its agreement with Citi, Nautilus Hyosung for the last year and a half has been interviewing candidates for vice president of financial institutions, a new position, ATM&Debit News has learned.

The deal with Citi was a hot topic among attendees last week at Nautilus Hyosung's second annual Users' Conference at the Gaylord Texan Resort and Convention Center in Grapevine, Texas.

Nautilus Hyosung, NCR and Diebold executives refused to confirm or deny the agreements, but Julavits wrote in an e-mail message that Citi replaced three of its homemade ATMs in January as part of a test.

Nautilus Hyosung is selling its model 7600D, a drive-up ATM, and its model 7600T, a walk-up ATM, to Citi branches in Long Island, N.Y.

Both machines accept bulk notes and take deposits made with envelopes. Technicians, however, can upgrade the ATMs to accept envelope-free deposits. Citi wants to improve customers' ATM experience, observers say. I

t was not clear what ATM models NCR and Diebold are supplying to Citi. "

While our current ATMs have served our customers very well, the new ATMs bring a number of advantages, including a better and more efficient customer experience, an easier maintenance process, and the ability to upgrade quickly to cuttingedge software and services," the e-mail message from Julavits said.

One of Nautilus Hyosung's customers who knows about the contract says the agreement involves a large number of ATMs for Nautilus Hyosung, but he declined to say how many.

Nautilus Hyosung is based in Coppell, Texas, where it operates a distribution facility. Hyosung Corp., a $7.7 billion Seoul, South Korea-based industrial company, owns Nautilus Hyosung. Hyosung makes its ATMs in South Korea.

NCR is based in Dayton, Ohio, and Diebold has headquarters in North Canton, Ohio.

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