INDUSTRY INFORMATION REPORT (APRIL 2019)
CONTENT
1. Competitors 2018 Financial Results…………………….. 2
a.
b.
c.
d.
e.
Diebold Nixdorf……………………………………………………………….. 2
NCR…………………………………………………………………………………. 7
Glory……………………………………………………………………………….. 10
Nautilus Hyosung…………………………………………………………….. 13
Our conclusions on Competitor information…………………….. 14
2. Industry news……………………………………………………… 15
3. Regulatory updates…………………………………………….. 28
1
Diebold Nixdorf 2018 Annual Report summary
The following table represents information regarding DN sales for the years ended December 31 (in
millions):
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Eurasia Banking net sales decreased $103.2 due to lower product volume related to fewer product
deployments and projects, particularly in Thailand, Turkey, Indonesia, the Middle East and Australia. In
addition, services in India decreased as a result of a low-margin maintenance contract roll off. Net sales
declined from the Company’s strategic decision to reduce its product and services portfolio in India and
China as market conditions became less favorable. These decreases were partially offset by increased unit
replacements in Germany related to Windows 10 migrations.
Americas Banking net sales decreased $9.9, including a net unfavorable currency impact of $20.6
related to the Brazil real. Excluding currency, net sales increased $10.7 from higher software license
volume in Brazil, professional services volume in North America and higher product volume, particularly
in Mexico, Canada and Ecuador. These increases were partially offset by lower product volume in the
U.S. as well as low-profit maintenance contract base roll offs of two customers in North America and
$4.1 of lower electronic security revenue in Chile due to the business divestiture in September 2017.
Retail net sales increased $82.4 due to a large North America kiosk project as well as higher POS activity
in Central Eastern Europe, the U.K, France and Spain. These increases were partially offset by lower
product volume from the Eurasia non-core businesses and large prior year non-recurring POS and kiosk
activity in Germany for multiple customers as well as lower lottery equipment volume in Brazil.
Significant Highlights
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Hired Gerrard Schmid to serve as president and chief executive officer.
Named Jeffrey Rutherford as interim senior vice president, chief financial officer, and
subsequently appointed him to this role on a full-time basis.
Added Bruce Besanko and Ellen Costello to the Board of Directors.
Launched the DN Now transformation program which is comprised of multiple work streams
designed to relentlessly focus on our customers and improve operational excellence. This
program is targeting gross annualized savings of approximately $400 through 2021.
Raised $650.0 through a new term loan and revised the Company’s credit facility covenants. This
enhanced liquidity provides financial flexibility, facilitates acquiring the remaining shares of
Diebold Nixdorf AG and supports DN Now initiatives.
Partnered with Mastercard® on key technology and services agreements to strengthen the
Company's Connected Commerce offerings and further bridge physical and digital transactions.
Ranked as one of the Top 10 Technology Companies on the 2018 IDC Financial Insights FinTech
Rankings.
Won Windows 10 ATM product upgrades with several North America financial institutions,
including an agreement with a regional U.S. bank for more than 500 DN Vynamic software licenses
and a new managed services agreement.
Enabled the first integrated, digital kiosk in the Middle East in partnership with Emirates NBD.
Entered an agreement with Banco Bolivariano in Ecuador to implement the DN Vynamic Mobile
Banking suite.
Was identified as the largest manufacturer of ATMs by Retail Banking Research's report "Global
ATM Market and Forecasts to 2023.
Secured a global frame agreement, including North America, to provide kiosks and services for
one of the world's largest quick-service restaurants.
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Signed a $70.0, multi-year services contract covering about 1,000 Marks & Spencer stores in
Western Europe.
Secured a multiyear managed services agreement valued at $68.0 for new POS devices and
related software at a leading European home improvement retailer.
The business drivers of the Company's future performance include, but are not limited to:
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Demand for services on distributed IT assets such as ATMs, POS and SCO, including managed
services and professional services;
Timing of system upgrades and/or replacement cycles for ATMs, POS and SCO;
Demand for software products and professional services;
Demand for security products and services for the financial, retail and commercial sectors;
Demand for innovative technology in connection with the Company's Connected Commerce
strategy;
Integration of sales force, business processes, procurement, and internal IT systems;
Realization of cost reductions, which leverage the Company's global scale, reduce overlap and
improve operating efficiencies.
COMPANY INFORMATION
Diebold Nixdorf, Incorporated (collectively with its subsidiaries, the Company) is a world leader in enabling
Connected Commerce. The Company automates, digitizes and transforms the way people bank and shop.
The Company’s integrated solutions connect digital and physical channels conveniently, securely and
efficiently for millions of consumers every day. As an innovation partner for nearly all of the world's top
100 financial institutions and a majority of the top 25 global retailers, the Company delivers unparalleled
services and technology that power the daily operations and consumer experience of banks and retailers
around the world. The Company has a presence in more than 100 countries with approximately 23,000
employees worldwide.
Strategy
The Company seeks to continually enhance the consumer experience at bank and retail locations while
simultaneously streamlining cost structures and business processes through the smart integration of
hardware, software and services. The Company partners with other leading technology companies and
regularly refines its research and development (R&D) spend to support a better transaction experience
for consumers.
DN Now Transformation Activities
Commensurate with its strategy, the Company has evolved its multi-year transformation program called
DN Now to relentlessly focus on its customers and improve operational excellence. Key activities
underway include:
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Transitioning to a streamlined and customer-centric operating model
Implementing a services modernization plan which focuses on upgrading certain customer
touchpoints, automating incident reporting and response, and standardizing service offerings and
internal processes
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Streamlining the product range of automated teller machines (ATMs) and manufacturing
footprint
Improving working capital management through greater focus and efficiency of payables,
receivables and inventory
Reducing administrative expenses, including finance, information technology (IT) and real estate
Increasing sales productivity through improved coverage and compensation arrangements
Standardizing back-office processes to automate reporting and better manage risks
Optimizing the portfolio of businesses to improve overall profitability
These work streams are designed to improve the Company’s profitability and net leverage while
establishing a foundation for future growth. The gross annualized savings target for DN Now is
approximately $400 through 2021, of which $160 is anticipated to be realized during 2019. In order to
achieve these savings, the Company has and will continue to restructure the workforce, integrate and
optimize systems and processes, transition workloads to lower cost locations and consolidate real estate
holdings. By executing on these and other operational improvement activities, the Company expects to
increase customer intimacy and satisfaction, while providing career enrichment opportunities for
employees and enhancing value for shareholders.
CONNECTED COMMERCE SOLUTIONS
The Company’s operating structure is focused on its two customer segments — Banking and Retail.
Leveraging a broad portfolio of solutions, the Company offers customers the flexibility to purchase the
combination of services, software and systems that drive the most value to their business.
Banking
The Company provides integrated solutions for financial institutions of all sizes designed to help drive
operational efficiencies, differentiate the consumer experience, grow revenue and manage risk. Banking
operations are managed within two geographic regions. The Eurasia region includes the developed
economies of Western Europe as well as the emerging economies of Eastern Europe, Asia, the Middle East
and Africa. The Americas region encompasses the United States (U.S.), Canada, Mexico and Latin America.
For banking clients, services represents the largest operational component of the Company. Diebold
Nixdorf AllConnectSM Services was launched in 2018 to power the business operations of financial
institutions of all sizes. This as-a-service offering provides financial institutions with the capabilities and
technology needed to make physical distribution channels as agile, integrated, efficient and differentiated
as their digital counterparts by leveraging a data-driven Internet of Things (IoT) infrastructure. The
Company’s product-related services resolve incidents through remote service capabilities or an on-site
visit. The portfolio includes first and second line maintenance, preventive maintenance, “on-demand” and
total implementation services.
Managed services and outsourcing consists of managing the end-to-end business processes, technology
integration and day-today operation of the self-service channel and the bank branch. Our integrated
business solutions include self-service fleet management, branch life-cycle management and ATM as-aservice capabilities.
From a product perspective, the banking portfolio consists of cash recyclers and dispensers, intelligent
deposit terminals, teller automation and kiosk technologies, as well as physical security solutions. The
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Company assists financial institutions to increase the functionality, availability and security within their
ATM fleet.
The Company’s software encompasses front-end applications for consumer connection points as well as
back-end platforms which manage channel transactions, operations and integration. These hardwareagnostic software applications facilitate millions of transactions via ATMs, kiosks, and other self-service
devices, as well as via online and mobile digital channels.
In 2017, the Company introduced DN Vynamic™ Software, the first end-to-end Connected Commerce
software portfolio in the banking marketplace designed to simplify and enhance the consumer experience.
In addition, DN Vynamic suite's open application program interface (API) architecture is built to simplify
operations by eliminating the traditional focus on internal silos and enabling tomorrow's inter-connected
partnerships between financial institutions and payment providers. In addition, with a shared analytic and
transaction engine, the DN Vynamic platform can generate new insights to enhance operations across any
channel - putting consumer preferences, not the technology, at the heart of the experience.
An important enabler of the Company’s software offerings is the professional service employees who
provide systems integration, customization, project management and consulting. The Company's advisory
services team collaborates with customers to refine the end-user experience, improve business processes,
refine existing staffing models and deploy technology to automate both branches and stores.
COMPETITION
The Company competes with global, regional and local competitors to provide technology solutions for
financial institutions and retailers. The Company differentiates its offerings by providing a wide range of
innovative solutions that leverage innovations in advanced security, biometric authentication, mobile
connectivity, contactless transactions, cloud computing and IoT. Based upon independent industry
surveys from Retail Banking Research (RBR), the Company is a leading service provider and manufacturer
of self-service solutions across the globe.
Competitors in the self-service banking market include NCR, Nautilus Hyosung, GRG Banking Equipment,
Glory Global Solutions, Oki Data and Triton Systems, as well as a number of local manufacturing and
service providers such as Fujitsu and Hitachi-Omron in Asia Pacific (AP); Hantle/GenMega in North
America (NA); KEBA in Europe, Middle East and Africa (EMEA); and Perto in Latin America (LA). In Brazil,
the Company provides election systems, lottery terminals and product support to the Brazil government.
Competition in this market segment is based upon technology pre-qualification demonstrations.
In a number of markets, the Company sells to, but also competes with, independent ATM deployers such
as Cardtronics, Payment Alliance International and Euronet.
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NCR 2018 Annual Report summary, Q4 vs Q3 details
(Official public information from NCR web-site)
Company didn’t provide the detailed full 2018-year report, but on the web site there are quarterly
reports and brief full year summary:
Full year 2018 revenue of $6.41 billion was down 2% from 2017
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2018 Q4 vs Q3:
Hardware revenue was up 4% on a constant currency basis. ATM revenue increased 21% on a
constant currency basis primarily due to higher backlog conversion as we significantly ramped
production. SCO revenue decreased 16% on a constant currency basis due to the timing of
customer roll-outs. POS revenue decreased 13% on a constant currency basis in the quarter
compared to growth of 20% on a constant currency basis in the prior year, which benefited from
several large customer wins.
Software revenue was flat on a constant currency basis driven by lower software license and
software maintenance, partially offset by growth in cloud revenue.
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Breaking down as follows
Services revenue was up 5% on a constant currency basis driven by continued momentum in
managed service offerings and implementation services.
Restructuring and Transformation Initiatives
Our previously announced restructuring and transformation initiatives continue to progress on
track. In Services, our performance and profit improvement program continue to deliver revenue
growth and margin expansion. In Hardware, we are continuing the move to a more variable cost
structure by reducing the number of manufacturing plants and ramping up production with
contract manufacturers.
Full Year 2019 Outlook
In 2019, our revenue growth is expected to be approximately 1% to 2%.
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GLORY 2018 Annual Report summary
Summary of income (for the year, Millions of Yen):
Note: 227 Billion of Yen equals to 2 Billion of USD
ECONOMIC OVERVIEW
In the fiscal year ended March 31, 2018, the Japanese economy continued to show a gradual recovery,
as personal consumption picked up, owing to a steady improvement in the employment situation, and
capital investment increased against the backdrop of an improvement in corporate earnings. The global
economy also kept improving slowly but surely, reflecting such positive developments as continuing
recovery trends in the United States and Europe, and in Asia, a steadily improving Chinese economy.
BUSINESS OVERVIEW
Net Sales Net sales for the fiscal year under review totaled ¥227,361 million, up by 2.1% from the
previous fiscal year. Total net sales consisted of ¥159,683 million in net sales of finished products and
merchandise, which edged up by 0.6% year on year, and ¥67,677 million in sales of maintenance
services, which also increased by 5.9%. Overseas sales amounted to ¥106,758 million, up by 2.9% year
on year.
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OVERVIEW BY REPORTABLE SEGMENT
Financial Market
Net sales of this segment increased by 1.3% year on year to ¥53,970 million. Operating income, on the
other hand, dropped by 37.9% to ¥4,043 million, mainly due to the deterioration in the product mix.
Sales of coin and banknote recyclers for tellers were strong as we successfully captured replacement
demand. However, sales among small- and mediumsized financial outlets of this segment’s mainstay
products, open teller systems, were sluggish for the compact models, due to the high demand of the
previous fiscal year having run its course.
Retail and Transportation Market
Net sales of this segment increased by 1.3% year on year to ¥43,216 million. Operating income, as well,
edged up by 0.2% to ¥3,476 million. Although sales of multifunctional banknote changers were robust,
sales of sales proceeds deposit machines for the cash-in-transit market were slow. Sales of coin and
banknote recyclers for cashiers, the mainstay products of this segment, were maintained at the level of
the previous fiscal year.
Amusement Market
Net sales of this segment increased by 0.7% year on year to ¥20,570 million. Operating income soared
by 80.5% to ¥1,331 million. While sales of this segment’s mainstay products, including card systems,
were slow, sales of “Yudo,” the playing trend analysis system launched in the fiscal year under review,
were strong.
Overseas Market
Net sales of this segment grew by 2.9% year on year to ¥106,758 million. Operating income also rose by
12.8% to ¥11,167 million. Sales of banknote recyclers for financial institutions were favorable in the
United States, but sluggish in Europe. Instead, sales of sales proceeds deposit machines for the retail
industry in Europe were strong. Meanwhile in Asia, sales of banknote recyclers for financial institutions
were slow.
“Others” Segment
Aggregate net sales of the “Others” segment, the businesses of which are not reported as independent
reportable segments, were ¥2,845 million, up by 18.6% year on year. Operating loss of the segment was
¥403 million, increased from operating loss of ¥251.
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Nautilus Hyosung 2018 Annual Report
(2018 report wasn’t provided. As soon as it’s available it’ll be provided in the Report)
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OUR CONCLUSIONS ON COMPETITORS INFORMATION
After reviewing competitors yearly reports we can mention the following key factors which GRG Banking
should also pay attention to:
1. Companies seriously focus on sales of software and services which contribution to Total
Revenue amounts to 65-70%. We should also have in mind that margin level on SW and Services
usually much higher than on HW.
Current situation in GRG Banking shows that company doesn’t really focus on SW and Services (in
2018 SW – 4%, Services – 12%).
2. Competitors companies focus on extending portfolio and complex automation projects,
including Omni-channel SW and Branch Transformation solutions. For Branch Transformation
Diebold Nixdorf not only provide traditional list of HW+SW+integration, but they organized
special team (Product Application Team – PAS Team) which provides a lot of consultancy and
analytics before starting BT project. They also work together with bank’s architects to settle the
new branch design and layouts and when done DN takes upon itself all construction works of
new branch.
3. Both companies NCR and DN focus on optimizing their manufacturing facilities, sourcing
structures and internal operational processes. By means of this they can reach better cost
effectiveness of product offerings decreasing end user prices.
4. Both companies seriously go to outsourcing direction and XaaS model.
5. Companies focus on backlog reduction.
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LATEST INDUSTRY NEWS
TMD introduces integrated access management solution for ATMs, secure rooms, branch
TMD Security, a provider of ATM security and access management solutions, has announced the launch of Access
Management, which it describes as "the first integrated keyless access management solution for the ATM safe and
top box, secure room and branch."
According to a press release, TMD and its sister company TMS ATM Software partnered with leading providers of
certified lock technology to combine high-security locks with intelligent software, and encrypted one-time codes with
a mobile app instead of physical keys.
The solutions are based on R&D interviews with ATM deployers and service providers around the world that
highlighted the hidden costs and inefficiencies of old-fashioned ATM locks and manual processes.
Benefits of the TMD Security Access Management solution include:
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Elimination of need for physical keys.
A high-security mobile app that allows remote, real-time granting or removal of access.
Real-time one-time-codes generated according to predefined permissions.
High-security encryption and certification of messages between host, mobile app and certified lock.
Real-time audit trails that record time of lock opening and closure and user ID.
Remote management and control of schedules, privileges and more.
"Developing a 'game-changing' integrated access management solution is not easy," TMD CEO Cees Heuker of
Hoek said in the release. 'That is why the banking industry and ATM deployers have been using the same locks and
manual processes for the past 20 years. The impact on ATM availability and the hidden costs are significant but
someone is paying the bill. Our priority is to help to reduce operational costs for deployers, CITs and service
providers, improve ATM uptime and effectively protect the ATM and the cash inside it."
Resource: https://www.atmmarketplace.com/news/tmd-intros-integrated-access-management-solution-for-atm-secure-room-branch/
TOP BANKING TRENDS FOR 2019 AND HOW BANKS NEED TO PREPARE
What does 2019 have in store for banking? Mark Aldred, Head of International Sales at Auriga explores the key banking trends that
will shape the industry and how banks need to prepare.
BANKS WILL CONTINUE TO REVIEW THEIR BRANCH NETWORKS
Many banks have been reviewing their branch networks over the last five years. In 2019 banks will continue to review
their locations – relocating away from underperforming areas and into new spots of higher footfall and with more
demand for banking services, such as out of town shopping centres. Retail banks, including Lloyds and Halifax in the UK,
have already opened state-of-the-art branches in Manchester city centre and in central London. This trend of banks
investing in city centre flagships is set to continue, especially as such locations become more accessible as a result of
investment in smart cities and improved transport links.
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SHIFT TO BRANCHES AS DIGITAL HUBS
In 2018, we witnessed the shrinking of branch networks, as infrastructure costs, combined with a general decline in
usage of bank branches, prompted banks to consolidate. There will still be demand for bank branches in 2019 though –
according to data from Capgemini, 60.1% of customers rated bank branches as important. In 2019, banks will focus
investment into their remaining locations. In fact, branches are set to become ‘smarter’ than ever before and develop
into fully digital hubs. We will see banks deploying more in-branch technology that improves user experience, including
video banking and smarter use of in-branch tablets to improve service and sales. There has been a lot of discussion about
banks planning completely omnichannel, seamless experiences, however this year may be the year we start to see banks
achieve this. As customers shift to almost fully digital relationships with their banks, they will demand exceptional user
experiences that provide real value.
FROM COMPETITION TO COLLABORATION
Competition in the banking industry is already fierce, fuelled not only by the likes of new entrants like Monzo, Starling –
and more recently N26 – but also by traditional players stepping up their game by innovating and enhancing the customer
experience, challenging the challenger banks themselves. With banks still adapting to the changes set in motion by PSD2
next year though, competition will only intensify. This increasing competition is spurring banks to develop their offers in
order to differentiate themselves and drive growth. However, with customer expectations rising and demands
continuously changing, financial institutions are realising the benefits of working together to meet their goals. Through
collaboration, customers can get the best of both worlds, FinTechs can expand their offerings, and traditional banks can
maintain their share of the market and adopt new services into their existing portfolios. We’ve already started to see
this collaboration – Starling recently announced a collaboration with the Post Office to allow cash withdrawals, deposits,
and balance enquiries to retail and business clients and Monzo quickly followed using the infrastructure of PayPoint. This
leverages the customer experience and journey expertise that challenger banks have put at the centre of their offering,
combining it with the infrastructure presence of traditional players.
PROGRESS ON OPEN BANKING AND PSD2 WILL PICK UP
The Second Payment Services Directive (PSD2), which came into force in January 2018, is an opportunity for banks. They
may seek to monetise and share their customer data with third parties such as FinTechs and to enable collaboration to
create first-of-their kind offerings. While Open Banking and PSD2 have prompted banks to think about their offerings,
progress has been slow so far. The full range of potential threats and opportunities from Open Banking are yet to be
realised. This is especially true as the digital natives, who at age 18 are now opening their own bank accounts, try to
balance their demand for easy to use, integrated services (such as account integrators and budgeting apps) with concerns
around data privacy. Financial institutions will need to think creatively and capitalise on new technologies to offer the
right solutions in the right moment to their customers.
AI EXPERIMENTATION, NOT MAINSTREAM AI ROLLOUTS WILL BE REALITY
Development and deployment of AI in 2019 will broadly remain experimental. This is despite the heavy buzz around
artificial intelligence and how it will revolutionise banking we witnessed in 2018. More and more, banks are testing AI
for easily repeatable tasks, for example using chatbots to administer dialogue between the bank and its customers, and
this is resulting in great improvements to system efficiency and cost reduction. In fact, according to the World Retail
Banking Report 2018, while AI adoption is expected to lead to $1 trillion savings, it will take until 2030 by which time
operational expenses will have been reduced by 22% as a result. The continued gradual introduction – in a managed way
– of AI is something we are very likely to see. There is much to be excited about over the next 12 months within banking,
but also a growing number of challenges market players need to be aware of, especially with rapidly changing consumer
expectations of the ideal financial service experience. Banks must be willing to adapt, trial new technologies and
collaborate in order to succeed in what will prove to be another highly competitive and fast-moving year for the industry.
Source: https://nmgprod.s3.amazonaws.com/media/filer_public/63/df/63df0503-f289-47b1-891f-618c10338179/asset_file-800.pdf
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BRANCH TRNASFORMATION FOR FINANCIAL INSTITUTIONS
During the summer of 2018, ATM Marketplace surveyed 150 leading financial institutions (FIs) worldwide and
conducted detailed interviews with leading European and North American institutions and consultants to compile this
report on branch reconfiguration and omnichannel banking. In this study, we investigate the main causes of disruption
to the traditional branch banking model, and the distribution strategies banks are adopting — or planning to adopt — in
order to achieve greater efficiency while constantly improving the customer experience. A primary objective of this white
paper is to answer some of the most commonly asked questions within FIs today, including: How can advanced software
and hardware solutions help financial institutions to maximize branch processes, sales and customer experience
opportunities across a range of devices — i.e., assisted self-service; ATMs; digital signage; kiosks; smartphones and
tablets.
• Additionally, how can banks integrate physical and digital channels in order to achieve a truly omnichannel “phygital”
strategy?
• And finally, what do banks expect from service automation and how do they envision the bank branch of the future?
• Which are the most important technology investments for banks within the next years?
The world of banking continues to evolve toward a more customer-centric approach that includes a balance between
improved efficiencies and more personalization. This balance is rooted in the need to provide a personal experience
while leveraging technology to provide a superior customer experience. Another purpose of the research is to
understand changes in the self-service channel and the teller network that have resulted from branch transformation,
and to examine the dedicated role of advanced ATMs, known as “Assisted Self-service Devices” (ASDs) or “Assisted Selfservice Terminals” (ASSTs).
Study Observations
Branch Transformation as a Competitive Differentiator
No longer is the discussion about touch vs. technology, rather it’s now all about touch and technology. This approach
includes advances in branch-based technology working in parallel with those available in the latest versions of online
and mobile banking solutions. An increasing number of banks and other financial institutions have, or are considering to
have, a comprehensive branch transformation strategy that includes elements of traditional branch banking and digital
banking, while investing in more advanced functionalities and leveraging on the latest technologies such as Predictive
Intelligence. Predictive Intelligence is used to make predictions and forecasts to make well-founded and intelligent
decisions for the future as related to the customer and their banking experience, and assets in the internal banking
network.
Branch reconfiguration survey results
Current State: Branch and ATM Overview
Most of the respondents are with small-to-medium-sized FIs, with almost half (48 percent) operating 100 or fewer
branches. However, a sizable number – over a third (35 percent) – of FIs operate between 100 and 2,000 branches. ATM
inventories are a bit more evenly distributed. A little over a third (34 percent) of respondents say they have 100 or fewer
ATMs and then they will be presumably small rural or local banks, while more than a quarter (28 percent) are large banks
and have more than 2,000 ATMs; slightly over one-in-five (22 percent) have between 101 and 500 ATMs, and more than
one-in-six (14 percent) have between 501 and 2,000 ATMs. Of these ATMs, over half (55 percent) are simple and
traditional cash-withdrawal variants, with just 29 percent of the so-called “intelligent devices” allowing both cash-in and
cash-out transactions. Slightly under 8 percent are cash-in variants, suggesting a focus on small business deposits. Also,
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slightly over 8 percent use ATMs with cash recycling capabilities. It’s clear that most of FIs are still tied to a traditional
model of banking, and their idea for ATMs are still strictly related to an easy cash dispensing role and have not yet
imagine the possibilities offered by an explosion of self-servicing bank branch model.
Branch and Branch Reconfiguration Strategies
When asked about planned branch strategy over the next three years, many, if not most, indicated a desire to employ
newer processes and technology at their branches. These plans show that branch automation and transformation efforts
are increasingly being embraced. The anticipated results include a desire to leverage automation to drive greater
efficiencies and an improved customer experience. For example, almost three-quarters (71 percent) said that they want
to modernize and transform branch design, and 58 percent expect an increase in the number of assisted-service devices
and terminals, and over half (52 percent) plan increased cross-channel integration. At the same time, slightly over 21
percent (Chart 5) expect to close branches. Over 43 percent (Chart 6) of respondents say that branch closures will be
part of their strategy over the next three years.
Technologies to Welcome Branch Visitors
More than half (52%) of FIs have implemented new branch transformation solutions to welcome visitors within a branch.
When asked through which channels FIs have implemented welcoming services in the bank branches, about six-in-ten
FIs have deployed them using online banking and mobile app, with almost 40 percent installing kiosks. Many FIs have
not yet implemented welcome solutions but plan to adopt them within 3 years. Key objectives for FIs in adopting
welcome solutions are: • Offer customers a better in-branch experience (69 percent). • Better anticipate individual
customer’s need for services and products (66 percent). • Improve branch staff skills in customer interaction and
management (63 percent).
Assisted Service Strategies and Usage
Regarding assisted-service devices and terminals, almost half (47 percent) of respondents (see chart 9) do not currently
operate these devices. Of those that are deploying these devices, a little over 30 percent have 100 or less in their fleet.
This suggests expanded opportunities in this area for many FIs in the near future, with over two-thirds (69 percent)
indicating plans to introduce these devices in their locations over the next three years. When asked how assistance is
provided with assisted-service machines, almost 45 percent of respondents mentioned in-person with branch staff
monitoring terminals with tablets. In addition, a little over a fifth of FIs operate remotely via a two-way video link with
bank representatives, and a little over a third noted operating in both modes. Also, almost 70 percent of FIs indicated a
desire to introduce, or increase their usage of assisted devices. The vast majority of FIs offer basic functionality with their
assisted-service solutions, with over three-quarters offering balance and transactions inquiries, over half offering such
features as check deposits, cash (and sometimes coin) deposits, account transfers, and account and transaction
information services.
Channel Preferences
As expected ATMs and ASDs are preferred channels for accessing cash, more than tellers. Over eight-in-ten of
respondents prefer these methods to make such withdrawals. And even though most (68 percent) use digital banking
when on the go, over 20 percent prefer to check account balances, and just under one-in-five prefer to make a payment,
via these methods. Not surprisingly, those on-the-go customers showed a preference for using virtual/digital banking –
online and mobile banking – for getting updates on their accounts and account activity. Overall, six-in-ten FIs have
implemented online banking, with almost as many (58 percent) offering mobile apps, and almost 40 percent deploying
kiosks. Over two-thirds (68 percent) prefer online banking and mobile apps to check account balances and about the 76
percent of respondents transfer funds between accounts using virtual banking. Human touch through a teller is still
important whenever customers need to obtain consultancy about investment or need to open a bank account.
Self-Service-Related Software Technologies Emphasis
When asked about which self-service-related technologies FIs will focus on over the next three years, more than sevenin-ten noted cross-channel integration and integration with mobile devices that offer a wide variety of features and
services. For example, over one-in-five respondents prefer a self-service channel, such as an ATM, ASD or ASST to check
account balances and make payments, and show interest in such tasks as transferring funds, obtaining support, or -- of
course - making withdrawals (83 percent of respondents) via self-service devices (chart 14). Not surprisingly, the vast
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majority of respondents are choosing, or will increasingly choose, self-service channels over branch over the next three
years (charts 15 and 16). Also, over half of FIs (52 percent) have implemented new solutions to welcome visitors within
branches (chart 18). This reinforces the importance of omnichannel banking to these institutions. The next tier of
priorities, which account for roughly half of FI responses, include adaptation of new concepts for UIs, analytics-related
technologies, security-related issues, migration to a new operating system (e.g., Windows 10), and support for
alternative methods of identification. Looking ahead, about half of FIs plan to offer self-service functions such as account
transfers, balance and transactions inquiries, check deposits, cardless and contactless transactions, and PIN services,
such as changes and unlocks (Chart 18). Additionally, about four-in-ten respondents plan to offer information services,
P2P payments, targeted marketing campaigns, check cashing, and the use of tables for customer service interactions. In
addition, banks are keenly interested in big data, analytics, and business intelligence in their operations, and the value
they bring – both financially and in an improved customer experience.
Data and Analytics
Over six-in-ten (61 percent) of FIs currently use data and analytics software and services to obtain a comprehensive view
of banking customers’ wants and needs. Almost as many (58 percent) use forecasting capabilities available in such
solutions. In addition, over eight-in-ten (83 percent) FIs who did not yet use data analysis plan to implement analytics
and forecasting capabilities over the next three years. When asked why banks implement business intelligence and
analytics solutions, over three quarters (76 percent) say that these solutions offer a better understanding of customer
behaviors, half say that they offer a better assessment of costs and revenues, over four-in-ten note improved decisionmaking and reporting made available with data sharing, and over a third note improved monitoring of business services.
Integration, Security, and Most Important Technology Investments
Regarding the benefits of implementing APIs, over seven-in-ten (71 percent) point to the opportunity to offer new
products and services, over half say reduced time to market for such offerings, increased agility, and improved customer
service. Main concerns expressed by respondents related to API adoption by banks include data security (80 percent)
and customer privacy (68 percent). Other concerns noted include loss of control of customer data (37 percent), and
product cannibalization (36 percent). When asked about the most important technology investments for banks over the
next three years, almost three-quarters said big data analysis, over two-thirds noted BI, AI, and chatbots, and over sixin-ten referenced biometric authentication.
SURVEY RESULTS:
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Source: https://nmgprod.s3.amazonaws.com/media/filer_public/51/6d/516d51c7-e6e7-4126-bed8-8d83299a548c/auriga_guide_2019_final.pdf
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REGULATORY UPDATES
Unified Biometric Platform in Russia
The Unified Biometric System was launched in Russia on June 30. The system is a key component of remote
identification mechanism allowing citizens to receive financial services remotely. The system development was
initiated by the Central Bank of the Russian Federation and the Ministry of Digital Development,
Communications and Mass Media of the Russian Federation.
RTLabs is the key technological partner of the project. EBS identifies users by a combination of two parameters
– voice and face, allowing recognition of a living individual rather than simulation of his/her biometrics in the
digital channel. To date, the face and voice are the most common biometric parameters available for the massscale use.
To get registered in the Unified Biometric System, a citizen will only have to visit the bank once. The bank staff
will help him/her with the registration in the Unified Identification and Authentication System (ESIA) used to
access the Unified Public Services Portal (Gosuslugi.ru), if the citizen was not registered with it earlier. After
that, the assistant will take the user's biometric data – a photo image and voice profile – and upload them to
the Unified Biometric System. Once registered in the Unified Biometric System, the citizen can enjoy the
remote services of any bank connected to it. To do this, the client just needs to type in the login/password
used for ESIA and say a short verification utterance in front of the smartphone or computer camera. To be
identified remotely, the user should have access to the Internet and a smartphone, tablet or PC with a built-in
camera. No more equipment is required.
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The accuracy of biometric identification in the system is guaranteed by algorithms of leading Russian
developers of the biometrics software solutions winning prizes as a result of independent international tests.
Major Russian banks participated in the system development.
The remote customer identification in the financial sphere is regulated by Federal Law No. 482-FZ of December
31, 2017, which amends Federal Laws No. 115-FZ of 07.08.2001 “On Countering the Legalization of Illegal
Earnings (Money Laundering) and the Financing of terrorism” and No. 149-FZ of 27.07.2006 “On Information,
Information Technologies and Information Protection”.
In the future, the Unified Biometric System will become a national platform for citizens’ convenient and secure
access to public and commercial services. With the accumulation of data in the Unified Biometric System, the
scope of its application in various fields will be growing. The most promising areas include financial sector,
notaries, public and municipal services, healthcare, education, retail, e-commerce. The Uniform Biometric
System will facilitate access to digital services for those who live in hard-to-reach regions and people with
disabilities, reduce costs, and also improve the quality of such services.
The use of the Unified Biometric System is a way to reshape the relationships among the state, organizations
and the citizens.
Soruce: https://www.rtlabs.ru/en/about/news/v-rossii-zapushchena-edinaya-biometricheskaya-sistema-/
Starting from 2018 the technology was piloting in Sberbank and VTB (2 biggest banks in Russia), but now in
2019 it’s widely available in most big banks like Tinkoff, Rosbank, Postbank, Home Credit, Raiffeisenbank,
Sovkombank.
What does this mean for GRGBanking? With this trend we can actively promote unmanned branch
concept with VTM/STM inside and card dispense/print function. We also can offer biometric upgrades
(FV, FR, etc.) for already installed ATMs.
EMVCo publishes industry best practices for Consumer Device
Cardholder Verification Methods
EMVCo, the industry body responsible for advancing the use of EMV and its specifications, has announced that
it is working to promote confidence and consistency in the deployment of the consumer device cardholder
verification method by identifying and addressing specific security, functional and performance needs for
CDCVM.
Cardholder verification has traditionally been performed through consumer authentication on the merchant
system — for instance, via a PIN entered into a merchant device. However, the growing use of mobile devices
for payment transactions has resulted in consumer authentication more often being performed on the
consumer’s own device, a type of authentication known as CDCVM. (When multiple payment applications on
the device share the same CDCVM and associated result, it is referred to as Shared CDCVM.)
As CDCVM is very different to traditional CVM, EMVCo has developed a dedicated process to evaluate the
security of CDCVM solutions and has defined industry best practices to address functional and performance
considerations. These include:
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EMV CDCVM Security Requirements and Security Evaluation Process — These documents help to
ensure that CDCVM solutions maintain certain minimum levels of security in the solution asset (e.g.,
biometric ID or password) and delivery of authentication results, including mechanisms and
protections designed to withstand known attacks.
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EMV CDCVM Best Practices — provides defined guidelines for functional and performance behaviors
to promote a consistent user experience and global interoperability.
As part of its ongoing collaboration with the Fido Alliance, EMVCo shared a number of CDCVM use-cases for
payment which the FIDO Alliance took into consideration in developing its specification. CDCVM solution
providers are encouraged to evaluate the performance of their solutions using the FIDO Alliance Biometric
Certification program.
Source: https://www.openaccessgovernment.org/second-payment-services-directive-game-changing-regulation/41185/
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