Diebold Looks To Take ATM Management to the Cloud

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ATM maker Diebold Inc. is looking for a few good financial-institution partners to test so-called virtual ATMs. A virtual ATM is a machine that essentially has had its brains removed and is controlled from a central source.

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Diebold this week is displaying a prototype of what it calls the “world’s first virtualized ATM” at a trade show in Las Vegas sponsored by VMware Inc., a Palo Alto, Calif.-based technology company specializing in virtualization that developed the prototype with Diebold. North Canton, Ohio-based Diebold also plans to announce a new ATM that uses biometric and near-field communication (NFC) technologies.

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ATMs today contain operating software, device drivers, and specific applications. Although more complicated, virtualization with ATMs is somewhat akin to a central computer running a network of PCs. The physical components of a single server, not the end terminal, manage customer transactions such as cash withdrawals, deposits, balance checks, and account transfers. “We’re [taking] the applications that are used on the terminal and putting them in the data center,” says Paul Mercina, Diebold’s director of global software and services product management. The central computer also oversees testing, failure recovery, and other management operations.

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The advantages of virtualization, according to Mercina, include reduced unit expenses and greater efficiency in managing ATM fleets. The efficiencies come from better use of existing computer resources as well as quicker implementation of application updates and changes in data-protection protocols and related security operations. Mercina wouldn’t give numbers about the cost of virtual ATMs, but says, “We think there are going to be significant savings.”

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Diebold is recruiting an undisclosed number of financial institutions for proof-of-concept testing. The company has several different operational models to try out, including one in which the financial institution as ATM owner performs the centralized functions and another in which Diebold handles them on an outsourced basis. Diebold hasn’t set a start or end date for the testing, but, assuming things go well, virtualized ATMs might appear in the marketplace sooner rather than later. “The concept is pretty far along,” says Mercina. “We’re ready to start now.”

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In addition to virtualization, Diebold is demonstrating biometrics and NFC technology at the conference for an upcoming product announcement. The specific biometric technology is thumbprints, though the company would give no details until it issues a news release later this week. NFC, meanwhile, is a chip-based technology that can process payments as well as manage numerous other customer-facing functions such as loyalty programs and non-payment accounts. Many observers see NFC as the backbone of mobile payments and the successor to magnetic-stripe payment cards. Players ranging from the payment card networks and processors to Google and a host of startups are all testing NFC.