Diebold and Wincor Nixdorf — which plan to merge under the name "Diebold Nixdorf" — were already in the midst of major projects to digitize bank branches and retail stores before the pressure from mobile devices led them to join forces to keep pace with innovation.

When it comes to getting new services in the market, “business as usual” will no longer cut it,  said Andy Mattes, president and CEO of Diebold, in addressing the pending acquisition of the German ATM maker. The $1.9 billion deal is expected to close by the summer of 2016.

Diebold will double its software engineer headcount, add deployment scale, broaden access to open development tools, standardize user interfaces and create a broad technology ecosystem that can work with different suppliers in the U.S., Europe and other markets.

The combined company will improve its ability to innovate through the faster deployment of mobile payments and "omnichannel" shopping and management services. Anything that succeeds with merchants can then be offered up to banks.

"Retailers can adopt mobile and other new technology because they aren't as heavily regulated as banks," Mattes said. "Retail can serve as a test bed before we roll out the new technology to financial institutions…the ATM of five years from now will be delivered 'as a service.' "

The North Canton, Ohio-based Diebold also stands to see its yearly addressable market grow to $60 billion as it combines its strength with that of Wincor Nixdorf in Europe.  "As much as the banking industry is global, it's also very local. Every country has its own set of interfaces, regulations and back end systems," Mattes said.

Both companies have been transitioning from hardware-based ATM providers to software-based self service companies. The Paderborn, Germany-based Wincor Nixdorf recently added Near Field Communication hardware to its ATMs. Diebold supports cardless ATMs and as has added more self-service technology through acquisition in the past year.

"Part of it is [Diebold] is trying to get ahead of the curve with NCR buying Digital Insight," said Ed O'Brien, director of the banking channels advisory service for Mercator. "Wincor is a large ATM provider, but is also doing a lot on the software side and working on branch reconfiguration."

As consumers load more of their financial lives onto smartphones—including financial services relationships, shopping apps and credit cards—there is more pressure on companies that traditionally serve these needs in other channels.

Driven by Apple and other tech companies, older fintech vendors are working to become more nimble in bringing new products to market.

MasterCard, for example, has been adding mobile technology for the past several years as a way to complement its payment offerings. First Data has broadened the scale of its digital technology to appeal to a more diverse range of merchants, and PayPal is using mobile technology as the foundation of its post-eBay strategy.

Diebold's clients are changing legacy branches and stores to accommodate the increasing demand for mobile functionality, 24-hour service and a cross-channel experience, Mattes said.

But combining two large companies and adding more engineers won't necessary enable fast and competitive technology development, according to Richard Crone, a payments consultant, who did say the deal did have benefits—Diebold's cardless ATM technology, for example, could serve Wincor Nixdorf, which has not been as active in its own development of cardless cash access.

"[Faster development] is a corporate culture that requires an adherence to agile development," Crone said of the programming technique that encourages fast-strike technology development over broad-based enterprise IT initiatives. The fast developing worlds of mobile wallets and mobile banking require immediate reactions in stores and branches.

Both Diebold and Wincor Nixdorf employ "state of the art" development techniques, Mattes said, adding that the scale of the combined companies will make a meaningful difference.

"If you sell to 10% of your installed base, it's different if that installed base is double the size," Mattes said.

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