NCR is spelling out its vision for how it plans to separate into two companies: one focused on its retail, hospitality and digital banking business lines and the other on ATMs.
In a Form 10 registration statement it filed on Monday with the Securities and Exchange Commission, the Atlanta company named a slate of executives for the ATM-specific spinoff, NCR ATMCo, and detailed the stand-alone company's focus and road map. NCR
"Self-directed banking is a growing, secular trend that allows banking customers to transact seamlessly between various channels all for the same transaction," wrote Timothy Oliver, the new CEO of NCR ATMCo, in a letter to stockholders. "Our comprehensive solutions enable the acceleration of self-directed banking through ATM and ITM technology, including software, services, hardware and our proprietary Allpoint network. While we provide all our solutions on a modular basis, we have also assembled these capabilities into the market's first turnkey, end-to-end platform which we have branded 'ATM-as-a-Service.'"
As Oliver noted, NCR ATMCo will focus on delivering what it calls "ATM-as-a-service": outsourcing ATM, back-office functions, management, operations, compliance and more for a monthly fee. The growth strategy it outlined in the filing includes shifting more business from traditional ATMs to this contractual model; finding ways to increase transactions at its existing machines, such as dangling coupons, rewards and other incentives to cardholders; pursuing the "underpenetrated" retail channel; expanding relationships with fintechs and card issuers and strengthening its footprint overseas, focusing on high-cash jurisdictions such as Greece and Portugal.
"We are building an organization that will sustain NCR's market leadership and extend the success of our ATM-centric businesses well into the future," said Oliver in a press release on Monday.
ATM-as-a-service is growing in popularity, said Bob Meara, principal analyst in retail and corporate banking at Celent.
"What's attractive to financial institutions is they never have to worry about a capital expense or lift a finger to keep ATMs operational," he said. "They budget on an operating expense every month and their ATMs are taken care of."
The leaders of the new company will include Dan Antilley, designate chief security officer and cash operations; Patricia Watson as chief information and technology officer; and Stuart Mackinnon as chief operating officer. All three currently hold leadership positions at NCR.
In May, NCR announced that Oliver, its chief financial officer, would assume the role of CEO in the new company.
Alphv developers claimed responsibility for an attack that started last week against the payments and digital banking software maker. The ransomware is more sophisticated than many of its peers.
Meara speculates that the split is signaling a desire to be acquired. NCR declined to comment on this idea.
"As I read between the lines, NCR has made no secret about their interest in being purchased," he said. "It seems to me that this split is acknowledging that the ATM is not going to be as attractive of a business model as digital banking. By splitting it, they are making the digital banking company more sellable than when it had the baggage of the ATM business."
He notes that these two business lines, digital banking and ATMs, sell to different decision-makers at banks with separate budgets. Moreover, financial institutions tend to use a mix of ATM brands.
"The world has plenty of ATMs and apart from growth in emerging markets, there is not much growth opportunity left," he said. "I don't think [new transaction types] will generate a need for more ATMs on the planet than there already are."
