Others Take Bank Turf, But Banks Aren't Finding New Markets: Observations From Wincor World

I was struck by the sense that everyone at Wincor World was finding new lines of business, but not the banks, particularly the U.S. banks (and maybe the 100 journalists! who, along with 7,000 business representatives attended the seventh , annual user conference of Wincor Nixdorf, in Paderborn, Germany, in late January).For ease of reference, I want to call Wincor Nixdorf an ATM manufacturer, but even as it has grown share in that market it is increasingly branching into software and consultancy, applications for stores, and even, into the bizarrely entitled business of "reverse vending machines," that is machines to recycle bottles.

Similarly, its retail customers are on the march into former bank turf. Witness the announcement at the show that Wincor Nixdorf can take over much of the processing of bankcard transactions and even card issuance for stores, so, as the release says, "retailers are no longer tied to a specific bank." Tracy Kitten, editor of www.atmmarketplace.com, Louisville, KY, noted in conversation with BS&T that some casinos have already cut out merchant acquirers by doing there own bankcard processing.

Even more striking was the meeting with Francisco Lopez, a financial consultant from the UK, who spoke of how retailers there, such as Sainsbury's, the supermarket chain, have displaced bank ATMs in favor of their own Branded-branded ATMs. Lopez, CEO of Intelligent Currency Solutions, London, says retailers reassessed the traditional arrangement whereby they took cash all day and supplied it to banks, which habitually give out cash. Now, the likes of Sainsbury's saves itself the cost of securing cash in transit while getting the branding and revenue opportunities of being the direct supplier of cash to the consumer.

Banks are looking to see how they might use their branches to sell products rather than handle cash, (as in the case we reported of Banca Popolare de Milano)but few new product lines were in evidence at the show.

A basic tenet of capitalism is the need to constantly expand to new markets. One, those now unbanked, showed hope in the projects of several non-U.S. banks now offering cash dispensing service from ATMs even to those without ATM cards. In these nascent applications, by banks such as Greece's Piraeus Bank (Athens; $69.7 billion in assets) secure payment instructions are issued from the sender's mobile phone to the recipient's.

There is always a question of how far banks should stray from what we understand to be banking. In fact William Seidman, former chairman of the Resolution Trust Corp., ., the government body that bought distressed properties after the savings & loan crisis of the early nineties, said in an address at a summit on TARP last year, that part of what got thrifts into trouble during the S&L crisis of the early nineties was that regulators encouraged them to find new forms of revenue. One owned 38 golf courses when the RTC took it over, Seidman said.

Still, the pace of change of modern life makes it almost a survival requirement to reinvent oneself. For example, Wincor Nixdorf, clearly branching into new endeavors, has tripled in size since it separated from Siemens in 1999, gone from 12th to second-biggest ATM supplier in the world (in 2008) and now is that rare technology provider that is both profitable and hiring, on top of it 9,500 employees worldwide.

Was it coincidence that the theme of the big party at the user conference was fifties' nostalgia-hankering for a simpler time when everyone knew their role? Ulrich Nolte, a Wincor Nixdorf spokesman told BS&T that the theme was not picked in reaction to the financial crisis: "It was decided a long time ago, back in the summer [2008]". Even then, it was becoming obvious that the world we knew was quite changed, making it tempting to wish for the way we were.