Magazine article Insight on the News

Super ATMS, Smart Cards and Deregulation Change Banking

Magazine article Insight on the News

Super ATMS, Smart Cards and Deregulation Change Banking

Article excerpt

Technology not only is changing the way we bank, it's changing the way we spend. Already ATMs are asking bank customers if they want to spend the money they're withdrawing -- even before it's dispensed!

Banking may never be the same. Though financial power continues to reside in the towering skyscrapers and traditional banking centers of Wall Street, the network that handles the electronic transfer of trillions of dollars is shifting across the Hudson River to--of all places--Secaucus, N.J.

Since the 1980s, the "Secaucus corridor" has become home to financial powerhouses such as Citibank, NYCE (a consortium of major New York banks) and the New York Clearing House (which settles transactions between institutions). Even Texas-based Electronic Data Systems, or EDS, runs 12,000 automated teller machines, or ATMs, all across the country from its center in Rochelle Park, N.J. Next year, the Federal Reserve Fedwire will relocate to New Jersey, taking with it $900 million worth of business in electronic fund transfers.

This year, the Secaucus corridor's daily flow of money will surpass $1 trillion, while New York's slips to $1.5 trillion (from more than $2 trillion at present). New Jersey will process more transactions -- about 3 billion per year -- than anywhere in the country.

Secaucus is one of four processing clusters for ATMs (the others are located in Cincinnati, Delaware and Milwaukee). The corridor also is emerging as a center for processing debit-card transactions as well.

Why Secaucus? For one thing, New Jersey has a separate power grid and phone system -- insurance against a computer crash knocking out the entire network in one fell swoop. The state already had a prospering telecommunications industry -- AT&T is the Garden State's largest employer -- and a large talent pool of programmers and software designers. When rents for office space fell during the recession several years ago, Secaucus became even more desirable as a place for banks and financial services to set up shop.

But just as the banking industry is being overhauled, so too is the humble ATM. No longer will the machines be limited to dispensing cash, accepting deposits and providing account information. According to Dale Dentilinger, senior vice president for business relations at EDS, ATMs would be better called ADMs, or automated delivery machines. Though such machines consist simply of a personal computer with a Pentium chip and a printer, "New services are being added on all the time," Dentilinger tells Insight.

Advanced ATMs already offer postage stamps (EDS takes a cut of 64 cents for a sheet of 18) and dispense phone cards. Some will offer Internet access as well. Customers will be able to use them to book a flight and buy tickets to sporting events and movies.

Further down the road, Dentilinger says, it should be possible to apply for a loan using an ATM, which instantaneously will be approved (or denied) by a credit bureau -- and the cash dispensed on site. "The terms and conditions will appear on the screen, and pressing yes will be the equivalent of an electronic signature," says Dentilinger.

Customers can expect to see two or three ATMs lined up next to one another, each providing a specific service. One drawback: Advanced ATMs will feature advertising -- even movie trailers. "We've been moving from the Industrial to the Information Age, but it hasn't touched a lot of consumers yet," Dentilinger adds. …

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