Diebold's Diehard Competitors

This post is syndicated at The Motley Fool Network - http://beta.fool.com/malayappan/2012/12/28/diebolds-diehard-competitors/20053/

A few months ago, Citibank (NYSE: C) quietly rolled out a new generation ATM (Automatic Teller Machine) in my city’s local retail location.  It was a cutting edge ATM, manufactured by   Nautilus Hyosung, a Korean-based manufacturer. According to this company’s website, they pride themselves on “effectively integrat[ing] its software development capabilities with its sound hardware manufacturing platforms with speed and flexibility.”  Well said and amply validated through an extremely intuitive experience that was offered to me at my very first attempt to use the new ATM.

A few months later, in contrast to Citibank’s rollout, my other bank, Webster Financial (NYSE:WBS), announced their new line of ATM’s with much fanfare and trumpet.  They even offered incentives for trying out the ATMs through sweepstakes. Their ATMs are manufactured by Diebold (NYSE: DBD) and purport to emulate the new age ATMs that are sprouting all over the country.

What exactly are the new generation ATM’s?  They are the ones that allow deposits of cash and checks without envelopes, spit out receipts with deposited check images, email you receipts if you ask for it and even let you create “profiles” so that you can conduct ATM transactions faster the next time!

Diebold and innovation

I have to admit that my experience with the Diebold ATM was not nearly as intuitive and seamless as the Hyosung ATM.  I make my living off technology and user experiences are important to me, and I had quite a difficult time with the Diebold ATM.  It wasn’t quite as much about the hardware as much as it was about the software, meaning the user interface was not quite as intuitive.

For starters, Diebold says that you can “stack” several checks and deposit them all at once.  However, the machine’s scanner does not recognize the presence of the checks and automatically start scanning them in unless of course, you press “continue.” On the other hand, the Hyosung machine instantly knows when you start to place a check and starts scanning it in immediately. The Hyosung machine offers to send you an email receipt (for those of us who are tree huggers), while the Diebold machine offers no such avenue.

There are other nifty features that the Diebold machine misses out on, but the bottom line is that there is no way to send them feedback on suggested improvements.

In their not-so-rosy latest third quarter financial results released on October 25, 2012, they caution investors, asking them not to rely on “forward looking statements.”  Here are a couple of those –

• competitive pressures, including pricing pressures and technological developments;
• acceptance of the company's product and technology introductions in the marketplace;

There you have it. While Diebold lowered their revenue expectations for the full year, citing different reasons, their greatest fear should be their lack of innovation or at least the failure to perfect it. Nimble competitors like Hyosung are snapping at their feet, while others like NCR Corporation (NYSE: NCR) are getting ready to eat Diebold’s lunch.

The NCR story

NCR is a direct competitor in the so-called Self Service, ATM and POS (Point of Sale) business.  That about covers an entire gamut of rapidly evolving, technologically advancing devices such as vending machines, ATM machines, and the payment devices that you  see at supermarkets. POS devices are what often carry the NCR name and “advertise” this company’s perceived ubiquitous presence among consumers.

I have seen recently installed NCR’s POS devices that are cutting edge and incorporate RFID(Radio Frequency Identification) readers which enable contactless payments using RFID key tags. Furthermore, NCR has announced the introduction of ATM’s that allow a customer toinitiate an ATM transaction on their smart mobile devices and complete the transaction at the ATM.  Imagine that.  That is a clever use of technology that is one step ahead of what I saw at the Hyosung ATM and far ahead of the Diebold ATM that I used.

The future of self service technology

The future of self-service technologies that encompass any device that allows customer interaction with minimal service provider interaction is bright.  Technology can only get smarter from here on out and the manufacturer with the best integrated hardware and software will win.  Hyosung and NCR appear to be on the right track while Diebold appears to be playing catch-up.