Snub for cheap ATM

Banks shun machine because of network reliability fears

The drive to slash cash machine costs faltered this week after banks said they are unwilling to sacrifice network reliability for a new, cheaper technology.

High-street banks and building societies said they do not want to jeopardise their automated teller machine (ATM) reliability for a hybrid modem which connects ATMs to a bank?s mainframe.

The device, launched last week in the UK by network vendor TNS, dials up the mainframe when a network connection is required ? during a customer transaction for example. It avoids the need for a dedicated line.

Dedicated lines guarantee service, but are expensive because the connection is permanently open.

Nationwide Building Society, which is pioneering retina recognition ATM technology, said it was unlikely that it would use the modem. A spokesman said: ?ATMs must be very reliable and have a good standard of service, and that?s what we have at the moment.?

The TNS modem is used on 30,000 ATMs in the US. TNS managing director Ray Low said he is in talks with three UK high-street banks about the device, with a pilot planned for the first quarter of 1999.

The modem spoofs 20-year-old ATM protocols to convince the ATM there is a permanent network connection, without which the device falls over.

Banks typically refuse to say how much it costs to install ATMs, but Low said that the modem meant devices reach payback after 20,000 transactions, less than half the volume currently required.

He added that companies could now put ATMs in areas with smaller levels of customer traffic. Low forecast that this will enable organisations breaking into financial services, such as retailers, to deploy their own ATMs cheaply.

? Report by Gavin Clarke.