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Should financial institutions move ATM operating systems to the cloud?

Credit Union Times recently sought the views of KAL CEO, Aravinda Korala, as it explored the burning issue of moving ATM networks to the cloud.

Read why Mr Korala believes financial institutions need to approach such a move with caution..

Should ATM Operating Systems Float to the Cloud?

From the Credit Union Times, April 29

Many aspects of modern banking are undergoing a technological revolution, but in the ATM segment, a debate is raging overwhether new is actually better.

The controversy centers around whether it's time to move ATM operating systems to the cloud, and like the rest of the $335 billion enterprise software market, competition between cloud and on-premises software providers that make the country's 425,000 ATMs work is heating up.

One of the latest irons in the fire is NCR's Kalpana enterprise software platform. Launched on April 15, the thin-client technology allows users to service ATMs remotely and could reduce the cost of ownership by up to 40%, according to the company.

“We believe that there was really a need for a makeover of the entire ATM architecture to allow, number one, quicker introduction ofnew services in a way that didn't require us to visit physical ATMs to load new software,” Brian Bailey, vice president of software and branch transformation at NCR, said. “And then the other thing was, we wanted to make sure we were increasing security. This really allows us to do that in a much more protected way, by moving the application logic from the physical device, and the PC core within that device, to the cloud and to the enterprise.”

ATMs typically run on “thick-client” technology, which requires each ATM to have a PC core and an operating system, as well as applications that reside in the machine itself. “Thin-client” devices use mobile- and tablet-based technology, such as NCR's Android operating system,and the applications reside in the cloud.

“We don't have that ongoing cost of constant Windows upgrades that have become a real problem for the industry,” Bailey added. Microsoft ended support of Windows XP – which still runs on the vast majority of the nation's ATMs – on April 8, 2014, though it will continue to supply its Malicious Software Removal Tool until July 14 of this year.

“With no more PC core and a thin-client operating system, there are no more points of compromise,” he added.

But Aravinda Korala, CEO of UK-based ATM software maker KAL, said credit unions and other financial institutions should consider pumping the brakes a bit before moving their ATM operating systems to the cloud.

“All of that kind of wonderful scalability stuff that you have with an Amazon Cloud goes away a little bit because you have to do it yourself,” he explained.

And though cloud-based software might mitigate some kinds of fraud, Korala said it might also introduce new risks.

Internal mistakes also could have bigger consequences, he said. A mistake involving ATMs that run on more traditional software might bring down only 10 machines, he noted. The thin-client movement goes back several years, Korala noted, and the Windows XP issue did get people talking about whether or not there was a better way. NCR's move to an Android platform does address getting away from XP, Korala admitted, but questions still remain. ”You have pretty much the same issues about what happens if Android gets hacked and who's going to update that,” he said. Only 2% said moving ATMs to virtual private networks (VPNs) will have the greatest impact on the global ATM industry in the next five years, according to the survey; another 4% said it would be more technology and equipment to protect cardholder PINs; and 1% said it would be deployment of more Windows-based ATMs. However, 17% said security/fraud/data breaches are the ATM industry's top threat; another 9% said cost of ownership, 4% said technology advancement and costs, and 2% said lack of innovation.

“I think that the world is not convinced yet that thin client is the answer” Korala said.

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