TD punches the right numbers with new ABM deployment

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Faced with the need to deposit several cheques during a single transaction on a bank machine, most people often find themselves scrambling to calculate the total amount as the line of other customers steadily grows behind them.

Thanks to an overhaul of its automated banking machine (ABM) network, clients of TD Bank Financial Group don’t need to answer anymore math skill testing questions under pressure.

The new TD bank machines, also called Green Machines, incorporate a deposit calculator that could be useful for customers that have to deposit several cheques during a single transaction.

This convenient feature, however, is just one of the benefits that customers of the Toronto-based bank are reaping from a $420 million deal to hand over day-to-day operation and maintenance of its 2,500 ABMs across the country to a consortium led by Hewlett-Packard Canada Co (HP).

“Our deal with HP allows us to transfer operational risks to our outsourced partner and free staff to concentrate on serving our customers,” said Kevin Mathews, assistant vice-president, AMB services for TD.

The new AMBs went live in June 2006, but the first phase of the project was completed in January of this year.

“This has greatly simplified our life,” said Mathews of the seven-year agreement, which was signed back in 2004.

Under the first phase of the project, the consortium replaced TD’s bank machines with new units equipped with enhanced security and customer interface features as well as the ability to accommodate the Interactive Financial eXchange (IFX).

IFX is an emerging standard for open and interoperable online financial services and data exchange.

Other members of the consortium include Diebold Inc., an ABM manufacturer based in Canton, Oh; ACI Worldwide, an electronic payment software developer; Phoenix Interactive Design, a software developer based in London, Ont.; Intria Items, a business and cheque processing house headquartered in Mississauga, Ont.; and the Canadian arm of Group 4 Securicor, a British security company.

Diebold provided the ABM units and handles asset management and software support. ACI supplied core switching applications and maintenance; Phoenix developed a Microsoft-based ABM application; Intria oversees cash management and forecasting services while Sucuricor manages transportation of cash and AMB consumerables.

Bank machines are an integral part of a bank’s customer contact network. A survey by Financial Insights, a division of consultancy firm IDC Canada Ltd., showed that in 2005 ABMs accounted for 40 per cent of banking transactions in the country. Transactions accomplished through tellers accounted for 30 per cent and Internet banking made up for 16 per cent.

“Superficially, at least, TD could appear to be increasing its risk by giving a service provider a big chunk of customer-facing business to manage in the bank’s interest,” said IDC analyst Margaret Tanaszi.

She said reducing risk was the key theme in this agreement and TD “would not have been interested in it otherwise.”

To this end, apart from managing the day-to-day operation of the network and providing IT management, the deal also included “executive-level review and reporting of solution performance.”

Colleen Else, assistant vice-president, technology solutions, TD, said several key concerns drove the bank to replace its more than 30-year-old ABM network:

• Upgrading an aging infrastructure to increase reliability, robustness and customer service

• Meet compliance requirements of related services and human rights legislation provisions

• Reduce the bank’s cost in the ABM business

• Build better security and redundancy into the ABM network

Part of the restructuring, Else said, involved migrating the network from an IBM Operating System/2 to a single configuration terminal design using Microsoft Windows XP “which is well embraced by the industry and clients.”

She said HP also deployed multilayer security features that include integrated public key infrastructure for financial transactions; dynamic key regeneration, software firewalls and antivirus alert mechanism and encrypted signing delivery features.

For clients, the change meant more user friendly features, for instance; Green Machines are now wheel chair accessible and have outlets for the visually impaired to plug in earphones for aided transactions, according to Suzanne Gagilese, director of new business development, outsourcing services, HP.

The machines offer a choice of five languages and can “remember” user banking habits. “For instance the ABMs can remember the amounts you usually withdraw. The next time you use the machine, it will ask you if you want to take out the same amount,” said Gagilese.

A lthough the feature is not yet in use, she said, Green Machines have the ability to process smart card transactions.

Various industries have reported mixed results on their outsourcing adventures but financial institutions are turning to the model with an increasing regularity, reports IDC.

For instance, the Laurentian Bank of Canada, headquartered in Quebec retained an outsourcing service provider to perform business process such as payroll and provide technology such as wide area network service a few years ago, according to Joel Martin, vice-president, enterprise software, IDC Canada.

He said the 10-year project with international outsourcing firm CGI Group Inc. involved over $300 million.

In 2004 alone, Martin said, Canadian financial institutions spent $1.8 billion on outsourcing services. IDC estimates the sector will account for 28 per cent of the total market by 2008.

Mathews would not say how much the deal with HP saved TD in dollars or human resources.

He said the new system could be further enhanced to meet future needs.

Additional services being eyed included: check imaging capability and the sale of various products through the Green Machines.

In the U.S. some bank machines are able to capture cheque images to speed up processing and other banks are selling various financial products and even phone cards through their ABMs, said Mathews.

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