COMMERCE NOW

Summary On this special episode of COMMERCE NOW, Steve Kremer, Director of Sales in the Payments division at Diebold Nixdorf, and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group, sat down with PaymentsJournal to discuss the most popular payment method, both in the United States and globally: Debit.  Listen in for a  discussion of why modernizing debit payments is crucial in both the banking and retail sectors. Related Content:  https://www.dieboldnixdorf.com/en-us/banking/insights/blog/get-your-message-out https://www.dieboldnixdorf.com/-/media/diebold/files/banking/insights/qa-faq/mindshare-payments-innovation.pdf Related Links: https://www.paymentsjournal.com/the-time-to-revitalize-debit-rails-is-now/ LinkedIn Profiles - Steve Kremer Sarah Grotta Transcription:  Speaker 1: On this special episode of COMMERCE NOW, DN Steve Creamer, Director of Sales in the Payments Division joins the PaymentsJournal's, Ryan Mac, for a discussion on why modernizing debit payments is crucial in both the banking and retail sectors. Speaker 2: Welcome to the PaymentsJournal Podcast. In here is your host, Ryan Mac Ryan: Welcome to the PaymentsJournal Podcast, I'm your host Ryan Mac. Now, debit is the most popular form of payment in the US and globally and it is influenced by the growing popularity of digital payments and preferences of millennials. Now, it is projected that debit transactions will continue to grow and remain the highest transaction type of consumer payment. Now, modernizing these payment systems will become table stakes. And solutions that have reusable technology that can support multiple channels are key when implemented in phases, especially when starting with one that has the high rewards and low risks, AKA debit. To unpack this further, I'm joined by Steve Creamer, who is the Director of Sales for the Payments Division at Diebold Nixdorf and Sarah Grotta who is the Director of the Debit and Alternative Products Advisory Service at Mercator Advisor Group. So, there's certainly a lot of information to unpack on today's episode. Ryan: So, without any further delays, let's start the show. So, Steve and Sarah, it's an absolute pleasure to have you on today's episode. And I'm really excited to talk about our subject to hear today that's really focusing around debit because of all of the interesting news and statistics that we've started to see come out of just the debit side of the paintings' ecosystem here. Now, to get our conversation started here today, we've got this fantastic chart provided to us by Mercator Advisor Group that's taking a look at MasterCard and Visa Debit and prepaid volumes versus credit and charge card volumes in the United States. So, Steven, if you could, maybe you could kind of unpack this chart for our audience here today and maybe pull out some of the kind of the key highlights or what you find interesting of what this data is representing. Steve: Thanks, Ryan. In seeing this data, I really had to pause for a moment and let this information sink in. It certainly is very interesting that in United States, the dollar amount spent with debit cards increased by 14% in 2020, and also that debit card transactions continued to outpace credit cards two to one, the terms of number of transactions. We may all have our own personal bias on preference between debit and credit and some of us may have a preference for using credit over debit for certain types of transactions, but we need to be careful not to our own views, to administer relevance of the data on the continued strong debit usage. Steve: Did the impact of the pandemic and stimulus money have some impact on increase of debit usage in 2020? I think it did, but I also think that the pandemic also accelerated the consumer migration to digital payment channels and debit is still the most popular form of retail payment, and it's not going away at any time soon. Once you really look at the information that Sarah summarized so well, it really makes a lot of sense, especially when including the influence of younger generations that are growing in importance and how debit is leveraged on a global basis. Close to 83% of younger consumers use a debit card and not credit and that's understandable at their age. Many may have not had the ability to obtain credit, and they also seen or heard so many negative stories about how credit card debt that they formulate a consumer behavior outside of credit usage. Steve: Given the high percentage use of debit now, and with the ever-growing payment e-commerce options, we can really see why debit usage continues to grow. An important note is that the continued popular debit is by no means unique to United States. For instance, in India, I think there are 900 million debit cards versus only 55 million credit cards. And in Europe it varies by country, but debit continues to make a very, very strong showing. From a consumer convenience standpoint, we can see the advantages of using debit over other payment rails. And then finally for the retailer, there are real economic advantages of debit based processing solutions as debit interchange fees are typically much lower than for credit cards. I think at this point, it probably be good to turn over to Sarah and allow her to provide some additional insights into her report. Sarah: Yeah. Thanks so much for that. And really, I liked your overview, particularly the comparison with other countries. Certainly, I think the US is somewhat unique in its history, its legacy of being very credit card-focused that isn't necessarily the case around the world. And certainly, things like the economics play into that. The fact that particularly in the US, we really, really love those credit card rewards. So, it was kind of interesting, I agree, I think this was really pushed by the pandemic when we saw the debit card volumes for the first time tip over in above the credit card numbers. And let me clarify, looking at this chart, that we are looking at debit card purchases. We did make some calculations to extract some of the debit push payments, right? So, that would be MasterCard send or Visa Direct. Sarah: So, we're really looking at something closer to an apples-apples comparison of just debit card purchases from MasterCard and Visa in comparison to what's happening on the credit card side. So, I think as we look forward and as we start to see purchasing habits maybe coming back to something that looked a little bit more like pre-pandemic patterns, so more things like purchases for eating out purchases, for travel in particular, I think that we'll start to see the credit card numbers start to come back up again. But I do think for many of the reasons that you pointed out Steve, I think that we will still continue to see very, very strong debit card growth for the foreseeable future. Ryan: Steven and Sarah, thank you so much for that. Now, to kind of just recap a lot of what was said there, obviously historically, in the US we have seen debit cards outpace credit in terms of transaction volumes. But also, then as we were kind of pointing out, in 2020, we did see that percentage gap changed dramatically with debit card volume seeing that 14% growth over 2019 numbers. Now, Steven, as you pointed out, I think that there's a fair amount of that double digit growth was related and due to the pandemic. And as Sarah kind of stated there at the end that she foresees this growth in debit being a continuing trend. But beyond the pandemic, are there other reasons that you could kind of sight or maybe glean to, of why it is that debit may remain a preferred payment method of choice for consumers? Steve: Yeah. Ryan, I think that's a great question. And in that, I think it's always important to keep the customer experience in the forefront. And the thing about debit is that it's a 24/7 always-on experience. Consumers expect to seamlessly get cash out of, if they're using an ATM or if they're making a purchase, they expect it to be approved right away. And that's true if it's in-person or if it's a debit being used online. As noted in Sarah's report, 40% of debit transactions, I think in US were made in a card-not-present mode. So, consumers want to make sure their cards and data are safe and that they can quickly pay for what they want. But what we're hearing from our customers, both banks and retailers, but primarily the banks, are that the debit networks are being challenged with new payment types and they're spending a lot of time and money on the overall upkeep and maintenance of their debit networks. Steve: As you know, the debit system has been around since the early 1970s and many of the systems that are used to process these cards have really not changed since, or if they have, it's been for band aid updates for their old technology. Legacy debit payment platforms were designed to quickly and securely approve and process of payment or withdrawal, which has always been authenticated with a card. The future payments is not so straightforward. The method of authentication may be different based on the channel, for example, tokens, biometrics, things like that. And the funding could combine payment methods including 'buy now pay later', or other variations. Modernizing this payment infrastructure, and not necessarily just the debit side, is really the key for banks to remain relevant. Steve: Diebold Nixdorf has been a global leader in the processing of debit-based solutions for the last 40 years. And now we're leveraging this experience with our Vynamics payment solution. Vynamics payments is a modern system that it's built using cloud-native technology and microservices architecture that allows banks and processors to not only improve their debit channel, but quickly and efficiently handle other newer payment types and innovations like request to pay and buy now pay later. Which is where we see things moving, will help kind of perpetuate the predominance of debit going forward. Just time out. I'll turn it back over to Sarah for her insights on that same question. Sarah: Yeah. I think that the whole idea of core and payment modernization is really very interesting. And sort of tying that back to debit, it is kind of interesting even though to your point, debit has been around for a really long time. There are still things that we can do as an industry to improve that user-experience, that kind of dovetails into the ideas and concepts around modernizing the infrastructure. So, I talk to issuers about things like making sure that they can digitally issue debit cards as an example, so that they could really make that seamless transition for immediate account acquisition or provide a really great experience should a debit card ever get lost or stolen, or for whatever reason needs to be replaced. So, I think that's a very interesting part of the payment ecosystem right now, is sort of the intersection of things like debit cards and more modern infrastructure. Ryan: Yeah. So, I think that it's really interesting. And one of the keywords that I kind of hear a lot is that the modernization side of things here, and obviously as we continue to look as Sarah pointed out to kind of add enhancements to kind of really improve that consumer experience here. And then Steven, at the end of your commentary, you had broadened up a little bit about your organization, Diebold Nixdorf here, and how it's kind of going through a little bit of modernization here and what it's doing to help their consumers. So, I want to dive into that a little bit more because I think it's certainly fine to talk about it at a high level, but I really kind of want to get into some specifics. And with your insight into the industry, maybe you can give us a few more examples of what you're seeing that your customers are doing to revitalize kind of their debit rails, so to speak. Steve: Yeah, that's a great point, Ryan. Thank you for asking. Really when, when Diebold Nixdorf set out to develop our next generation payments platform, we try to approach payments with a fresh perspective. We ask where would it make the biggest impact and provide the greatest opportunities for our clients? And as you ask, as an example, we recently began a multi-year, multi-phase implementation with a top 10 US bank. This bank is using Vynamic payments to deliver substantial TCO benefits to their organization. They are currently using our terminal software as well as our device handling in the Vynamic's platform for approximately 16,000 ATM's. And the bank has also started to deliver on their roadmap to provide switching and cloud processing as the next phase in their migration to Vynamic payments. Steve: And by doing this, they're taking a modular multi-phase approach and we have successfully maximized their greatest opportunity, which in their case started with the debit rails. And now, we have laid a foundation to scale for the future. In the age of technology, limitations on handling the current demand of transactions and the expense for trying to keep it up-to-date has oftentimes made the debit network the best place to start. And at Diebold Nixdorf, our cloud-native microservices architecture has enabled new functionality, such as handling the card-not-present transactions and digital wallet-based transactions. Steve: We also add the ability to reuse certain components or services such as authorization, routing, and authentication, that provides a single platform that can easily transition to credit or real-time payments or other payment rails. It's truly a build once but use often design that will reduce over-operational costs and pre-speeder market for alternative payment methods. And I'll turn over to Sarah for her perspective on that. Sarah: Yeah, actually, I think I've got another question for you given those comments, if you don't mind. I hear a lot of financial institutions in particular, talking about the need to modernize their technology infrastructure so that they can be more responsive, particularly at the user-experience layer, thinking about things like breaking down silos to better manage data and better manage data for fraud. But when financial institutions are thinking about modernizing their infrastructure, do you see that payments is often an instigator for a lot of these modernization demands or the idea that financial institution wants to move forward with a modernization project? Steve: Sarah, I think it does. And I know I threw on this term 'build once, use often' is kind of a code word for modernization, and it does sound simple enough to build once and use often. However, really the benefits are very, very powerful and widespread. As we talked about with mobile and contact-less payments, continuing to grow and support for QR codes, digital currencies, request to pay and peer to peer payment applications are added, many larger banks are opting to build separate in-house silos to process these new payment types. And given the large number of dedicated channels that are required to process this vast array of payments, it quickly becomes a very complex undertaking that generates significant cost to support. Steve: Meanwhile, smaller banks are tackling the same challenge by outsourcing services to vendors. While this may work in a short term, it too, can become very expensive and really stifles differentiation and creates barriers to innovation with this 'build once, use often' as the goal to consolidate these single use channels by deploying a payments platform, it is built with the microservice architecture and API connectivity. These platforms really do enable banks to realize the desired end state of building once, but using across multiple payment rails. And to be a bit more specific, if a bank's priority is to start with the modernization of their debit platform, which is part of our topic today, and by the way, often is a logical place to start given that 1st Generation debit payment platforms are quite cumbersome and channel specific. Steve: And really these older debit platforms are edging closer to critical [Inaudible], and effectively the end of life. There are many ways that 'build once, use often' methodology yields significant benefits to the deploying institution. And some examples of that is to add credit to the same system that's used for debit, the settlement and clearing services can really be reused. Another example is in the fraud area where fraud mitigation and some of the limiting safeguards can be implemented once and then used often across multiple channels. Steve: So, with Vynamic payments, we're able to later on the promise of 'build once, use often'. And Diebold Nixdorf is really kind of moving digital payments processing to a new era, introducing an open APIs integrating with best of breed FinTech solutions across banking and retail, and really delivering seamless customer-centric journeys on a state of the art platform. So, quite simply, it is a great time to speak with Diebold Nixdorf about the future of retail payments. Ryan: Excellent Steven, I think that was absolutely fantastic. And I think we'll end it there on that note. Oh, so, Steven, Sarah, thank you so much for taking the time today for speaking to us about the debit rail here and also the very interesting consumer changes that we've seen in the industry of the debit versus credit. And I hope to have you both back on the podcast real soon. Steve: Pleasure. Sarah: Thanks Ryan.

Summary On this episode of COMMERCE NOW Jens Audenaert, SVP/GM of Payments at Diebold Nixdorf, and Tim Sloane, VP of Payments Innovation at Mercator Advisory Group sat down with PaymentsJournal to discuss the current trends in the banking industry and how traditional banks can use these trends to remain relevant in an industry full of new technology. Related Content:  https://www.dieboldnixdorf.com/en-us/banking/insights/blog/blurring-the-line-between-transaction-and-payment  https://www.dieboldnixdorf.com/-/media/diebold/files/banking/insights/qa-faq/mindshare_cryptocurrency.pdf Related Links: https://www.paymentsjournal.com/traditional-banks-are-getting-a-digital-makeover/ LinkedIn Profiles - Jens Audenaert Tim Sloane Transcription:  Speaker 1:                        On this special episode of Commerce Now, DN's Jens Audenaert, SVP and GM of payments, joins Payment Journal's Ryan Mack to discuss how traditional banks are being forced to adapt in order to remain relevant in an industry full of new technology. Speaker 2:                        [00:00:30] Welcome to the Payments Journal podcast. And here is your host, Ryan Mack. Ryan Mack:                      Welcome to the Payments Journal podcast. I'm your host, Ryan Mack.                                            Increasingly we're seeing the payment become implicit in the transactions of all kinds of services. To be explicit, the payment is being made invisible. You can get a ride, a coffee, and a lot more, without pulling out your cash or a credit card.                                            As more and more services start to offer their [00:01:00] own payment schemes to ease friction for consumers, introduce loyalty, lower costs, and generate additional revenue streams, traditional banks, processors, and card issuers are being reduced or even eliminated. This trend heralds the tipping point in the ongoing struggle for banks and issuers to remain relevant. The new business model being forced upon the traditional banking stalwarts is making them rethink everything from time to market, to which emerging payment methods to accept.                                            As payments become more frictionless, the banking industry struggles [00:01:30] with how to cultivate and maintain customer loyalty. Consumers can choose from multiple payment alternatives, even when their bank doesn't offer it as a service. So to unpack this topic in further detail, I have Jens Audenaert, who is the SVP and GM of payments at Diebold Nixdorf, and Tim Sloane, the VP of payments innovation at Mercator Advisor Group.                                            There's certainly a lot to unpack on today's episode, so without any further delays, let's start the show.                                            So Jens and Tim, it's an absolute pleasure to have you on today's episode, where [00:02:00] we're taking a deep dive into an important question that's going on in the industry, and one that I don't think I would've ever thought that I would have had to ask here, and it's banks maintaining relevancy in this new payments landscape.                                            So Jens, I want to start with you for the first question. So taking a look at the payments industry, what are some of the key trends that you're seeing in banking and payments today? Jens Audenaert:              Sure. And first of all, thanks Ryan for having me on the podcast, Tim, it's great to be here with you.                                            I think when we think [00:02:30] about trends in the payment space, there's obviously a lot of them, but one of the key trends that we've been seeing for a number of years now is really the dramatic rise of digital payment vehicles and the associated transaction volumes. And like many things digital, that's been accelerated in the last 18 months because of the COVID pandemic. We've seen contactless transaction volumes go through the roof. But again, it's been an underlying foundational trend that we've seen for a number of years.                                            And a lot of it has to with [00:03:00] consumer expectations, really. If you think about how people buy goods and services these days in many instances, you don't even think about the payment anymore. You can buy a coffee through an app, you can get a car service through an app. And so consumers have really started to expect these very seamless, integrated payment experiences.                                            And I think that's very relevant for retail banks, because a lot of those experiences are being delivered by fintech, by neo-banks. And [00:03:30] so for retail banks, they really have to think through, how do we remain relevant when a consumer doesn't really necessarily associate their card or their primary bank with that payment transaction? That's obviously a threat to retail banks, but it's also an enormous opportunity for them to think through, how do we adapt in a way that we can actually offer these additional services to our consumers? Tim Sloane:                      I totally agree with that. As payments become invisible and merchants want to make [00:04:00] payments invisible, you see the card on file volume starting to move to an environment where automatic acceptance is done. You also have voice payments taking place in an increasingly large environment, where they talk to their Amazon Alexa or their Google speaker, and they're asking for something to be delivered, it's delivered automatically, and the payment becomes invisible. So [00:04:30] how a financial institution can drive itself to be top of wallet in those environments is critical. And that's what's happening now. Further off, we see things shifting to IOT type payments where it's entirely automated and decisions are being made by the machine. Ryan Mack:                      Yeah. And one thing to kind of point to there. I mean, Tim, you brought up in terms of invisible payments, and I certainly think that that is a very interesting component of this as well too. But every time I hear the term invisible [00:05:00] payments, I also think invisible brands as well too. Which, to Jens, you were talking about there as well too, kind of from a financial institution perspective. And it is okay, well, how do we ensure that our brand still remains relevant to our audience and our clients and our members today? So the next question then that I've got for you, Jens, if I could start with you, is how do you think banks will really maintain their stickiness with the consumers when the trend is really kind of moving away from, as we were talking about there, even being associated with the payment [00:05:30] part of it? Jens Audenaert:              Yeah, it's a great question. And Tim, I loved how you phrased that as well.                                            I think for a bank it's really around, when you think about remaining relevant, it's making sure that you're actually funding and processing those transactions for your consumers. And so it's really staying abreast and keeping up with the innovation that's expected of the banks.                                            And sadly, if you think about the ever increasing rate of change in the space, if banks look internally, many banks are actually realizing that they have a decades old infrastructure, [00:06:00] old code, very monolithic, millions of lines of code, and it's really, really hard to adapt to the trends in the market. And so I think this is where banks really have to think around what's the infrastructure that I need so that I can very easily adapt to the changes that we see in the market and that I can actually meet consumer expectations. And that's really hard with the old technology.                                            So this is where having technology that can be deployed in the cloud, if it's microservices, [00:06:30] architecture enabled and API first, things that are really easy to adapt, that's really what's going to be important here. At the end of the day, it's about being able to test and design and deploy new services for your consumers in a matter of weeks or months. And many retail banks today, that could be a process that takes over a year. And so it's really that agility that banks have to work on and have to look at when they think about modernizing their technology infrastructure. Tim Sloane:                      I totally agree with you. If you take [00:07:00] a look at what it costs, when Uber was on the rise, you saw Capital One, Discover, Amex, offering $20 or more if a consumer would put their card into that mobile app. And that's a significant amount of money that they're trying to use marketing dollars to become top of wallet. But that's not sustainable. Those cards are going to churn, not just at the end of the card life, but when [00:07:30] lost, stolen, or something else happens and the card has to be replaced. And so if they haven't moved to a tokenized infrastructure that enables that card on file to remain active, despite the physical card having been broached, you're in trouble. If you're not providing services that better guide the consumer as to what cards are on file and how much they're spending, then you're going to be usurped by a financial institution that [00:08:00] has that capability. So there's a lot of ways they've got to sharpen their game. Ryan Mack:                      Yeah, I certainly have to agree with that there in terms of just the top of wallet conversation that we're having here. And the importance, I really kind of feel within the next year or so, that you're going to see a lot of financial institutions question about, just because of all these new technologies that are coming into play and the new ways that people are able to pay, again, to kind of the point we were putting out there earlier of just, it becomes a little bit more, the payment becomes more [00:08:30] invisible. But having that top of wallet status, obviously, like I said, it's going to be very important. But then Jens, to the point that you were making though, in terms of kind of the millions of lines of code and the infrastructure changes that need to happen here, do you really think then that banks are now ready to make this change to modern technology for their payment solutions? Jens Audenaert:              I think it's more a question of willingness over readiness. So I think that whether it's CIOs or business operatives at retail banks, they see the trends that we're talking [00:09:00] about. They obviously understand some of the operational benefits of maybe having a cloud native infrastructure over a hardware, on prem infrastructure that's going to be much more costly. They get all of that. But at the end of the day, payments is very core to what a bank does and so switching out your payments platform is a very risky endeavor. And so that's where some banks have been waiting.                                            Now I do think Ryan, to your point, that that is going to change in the near future. And we've talked about some [00:09:30] of the reasons why. But first of all, I do believe, and we do see, that the change, the pace of change, is increasing. And so it's becoming as a result, harder and harder for banks to stay up with what's expecting, both from market and consumer expectations. Also from regulatory requirements, with that old infrastructure.                                            But I think the second reason is what Tim was talking about. You really want to be top of wallet, and so the competitive pressure [00:10:00] is also increasing. There are fintechs, there are neo-banks, that are delivering these delightful more seamless payment experiences. And so now is the time for traditional retail banks to really make sure that they don't have their lunch eaten.                                            And then lastly, I would say because it is a risky endeavor, I think some banks were taking a wait and see approach, and we are seeing large retail banks now really embracing a cloud strategy and really modernizing their technology [00:10:30] infrastructure, and doing it very successfully so with great results to show for it. And so I do believe that there's going to be many banks now following suit. Tim Sloane:                      So, we see a huge trend in the payment processing space where those payment processors are moving to a payment as a service model, and are using Visa Direct, MasterCard Spend to be able to send funds directly to an account in close to real time, and provisioning wallets [00:11:00] in close to real time as well. And so the bar is being set pretty high and financial institutions have to really start to consider the way they're processing payments now and recognize that consumer expectations for the way money moves is changing as well. Ryan Mack:                      Yeah. If I could, when we're taking a look at modern payments and payments infrastructure, a few key words come to mind. So we've got obviously [00:11:30] like leveraging cloud, modern technology stacks, microservice architecture, APIs, things like that. But Jens, from your perspective, what does a payment solution need to really be innovative nowadays? Jens Audenaert:              Yeah, that's a great question because you used all the buzzwords, and you hear them all the time. But it can't be technology for technology's sake. So, I think we talked a little bit about some of the operational benefits, but for me what makes a payment [00:12:00] solution innovative is really that it's future-proof. There is a lot of things that are changing in the world of payments, and so you can pretty much put a solution in place, a payments platform in place that can cater to what we see today, but the world is changing and it's changing fast.                                            And so if you think about what processing a payment means, it's authenticating the consumer, it's routing a transaction, it's then authorizing it. You have to be able to do all of these things in a number of ways and adapt [00:12:30] to what's expected.                                            Authenticating used to be a pin code, or maybe just an online ID and a password. But what about biometrics? What about, Tim mentioned tokenization. You really have to be able to allow any kind of authentication, to route any different way. If you think about open banking and the opportunities that that creates for banks to maybe route outside of the traditional international schemes. Accepting new modalities [00:13:00] and new ways of payments. What about crypto? What about peer to peer?                                            I think that's, for me, what an innovative payment solution is about. It's really allowing banks to adapt quickly to what we're seeing in the market today, but also what's yet to come. And so that's what things like an API first architecture, microservices architecture, will allow banks to do. Tim, would love your thoughts on that too. Tim Sloane:                      I'm totally with you. I mean, you can't underestimate how much payments are changing [00:13:30] right now. We have PayPal who's enabled crypto. Visa announced a billion dollars crypto spent at the point of sale over their network. We have been consulting with financial institutions that are looking at custodial services to help consumers buy, hold and sell crypto. And you have the US government that is shortly going to be announcing their position on central bank digital [00:14:00] currencies. And that doesn't look like it's off more than a couple of years where that could significantly change what's going on. Facebook is also introducing their new currency DM real soon. So there's so much in play right now. Not to mention, faster payments, pay by bank. There are so many new ways to pay it's kind of mind boggling. Jens Audenaert:              Yeah. See, you can't really prepare for everything, but what you want in your solution is a solution [00:14:30] that can adapt to what is to come. Tim Sloane:                      Absolutely. Ryan Mack:                      Yeah, so speaking of that Jens, if we can, from your perspective, what does a roadmap really look like? Because we covered a lot of ground here and we're kind of like, look, there is a lot of change that's coming and that's already started to begin here. So then, where does an individual really start as they look at all of this change? Where would you say, okay, here's kind of the beginning part and then you can slowly kind of ramp up from there? I'd love to get your thoughts. Jens Audenaert:              Yeah. I mean, that is what we're doing at [00:15:00] Diebold Nixdorf with some of the banks that are on our payments platform, is really making that a seamless transition for them. And that really starts with having the right technology infrastructure in place that allows you, piece by piece, to really move pieces of your overall payment infrastructure onto a new platform that is much more flexible, that is much more adaptable.                                            So that's the beauty of a modern architecture that is microservices based. You can really think of [00:15:30] functionality piece by functionality piece and slowly but surely migrate over to a new system. And very quickly as you test, move back and forth between your existing infrastructure and what you are moving towards. So, part of the appeal of new technology is also that there is a very attractive migration path for banks that really decreases the risk to move over. Tim Sloane:                      Our research indicates that while there's been a significant increase in trust in the cloud and that more financial [00:16:00] institutions are considering it, I'll admit that not enough have gotten there. That they really have to investigate and understand how far the cloud has gone, and how many configurations there are that let them control it and manage it effectively and secure it. That if they actually did that they would start to realize, now's the time. They can't be holding onto that infrastructure with all of the changes [00:16:30] that are ahead, unless they're ready to make a huge investment into that payments processing platform. And most financial institutions can't afford it. Ryan Mack:                      Yeah. For a final question before we wrap up, and I think you kind of alluded to this in your last response, but I really want to make sure that the point is driven across for our audience here. So why then is Diebold Nixdorf venturing into the payment space? And what makes your approach different? Jens Audenaert:              Yeah. We're obviously new to this space, but Diebold Nixdorf has been around [00:17:00] for a long time and really understands the banking and the retail world, both through our hardware and our software businesses. I think based on our relationship with banks, based on our existing businesses, we really understood the pain point that banks are facing. And honestly, part of what's the issue here is that you have a mature industry that's not moving forward, it's almost kind of reinventing and disrupting itself. So we saw the pain point [00:17:30] and we're looking to address it in how banks really replace some of their old infrastructure with a very modern technology solution that very few letters in the market are really pursuing today or offering to their retail bank customers. So that's what we're trying to do here at Diebold Nixdorf. it's an exciting new growth opportunity for us. And we are live with a number of banks that are seeing great results so far. Tim Sloane:                      It's great to have such a trusted name helping to move payments along at this very exciting time. [00:18:00] Welcome to the party. Jens Audenaert:              Well, thank you, Tim. Ryan Mack:                      Excellent. Well, I think we'll end it there. So again, Tim, thank you so much for taking the time today for speaking about banks maintaining the relevancy in this new payments landscape, and I hope to have you both back on the podcast real soon. Jens Audenaert:              It was a pleasure. Thank you. Tim Sloane:                      Thanks, Ryan. Thanks, Jens.

Summary: In this episode of COMMERCE NOW, Anja Popp and Bill Inzeo help you get to know your shopper types and offer the right customer journey. Related Content:  https://www.dieboldnixdorf.com/-/media/diebold/files/retail/insights/mindshare-shopper-journey.pdf Related Links: https://retailexperience.store/ LinkedIn Profiles - Anja Popp Transcription: 

Summary: In this special episode of COMMERCE NOW, Elliot Maras, editor from Kiosk Marketplace and Matt Redwood, Director of Advanced Self-Service Solutions at Diebold Nixdorf discuss the continuation of innovation in retail self-service and how self-service can offer a better customer experience. Related Content:  https://www.dieboldnixdorf.com/en-us/retail/solutions/self-service/innovation Related Links: Kiosk Marketplace.com - https://www.kioskmarketplace.com/podcasts/expert-offers-insight-on-how-self-service-improves-the-customer-journey/ Retail Customer Experience.com - https://www.kioskmarketplace.com/podcasts/expert-offers-insight-on-how-self-service-improves-the-customer-journey/ LinkedIn Profiles - Matt Redwood Elliot Maras Transcription:   

Summary: In this special episode of COMMERCE NOW, we dive into the 25 year partnership Diebold Nixdorf has with America First Credit Union. Manish Choudhary the Sr. Vice President, Software for DN talks about how important connected commerce remains for banks and credit Unions. Related Content:  https://www.dieboldnixdorf.com/en-us/banking/portfolio/software/payments Transcription:

Summary: In this Special Podcast Zebra Technologies and Diebold Nixdorf come together to discuss how retail is being disrupted on multiple fronts while trying to meet demanding consumer expectations. Retailers need to simultaneously transform their it landscape ensure high availability, align well-orchestrated staff processes and offer the ultimate consumer experience across all channels all while trying to keep profitable. Retailers are investing in mobility solutions to ensure satisfying and safe consumers and staff journeys. Related Content:  https://retailexperience.store/ Related Links: LinkedIn Profiles - Jerry Langfitt Philippe Dauphin Mark Thomson DieboldNixdorf.com Zebra Technologies Transcription:  Jerry Langfitt (00:16): Hello everyone. Thank you for joining us today. I'd like to welcome. Today's guest Philippe Dauphin VP global retail solutions from Diebold Nixdorf. Philippe Dauphin (00:25): Thanks Jerry and thanks for the invite I am happy to be here. Jerry Langfitt (00:29): And also from Zebra Technologies, Europe, Mark Thomson, director, retail, and hospitality. Thank you for joining us today, Mark Mark Thomson (00:36): Jerry. Thanks for the welcome thanks for having me. I am very happy to be here to talk about where retail is right now. Jerry Langfitt (00:45): Great. Let's dive right in. Retail is being disrupted on multiple fronts while trying to meet demanding consumer expectations. Retailers need to simultaneously transform their IT landscape ensure high availability, align well-orchestrated staff processes and offer the ultimate consumer experience across all channels all while trying to keep profitable. Retailers are investing in mobility solutions to ensure satisfying and safe consumers and staff journeys. Philippe let's dive in. What are the latest trends you see happening in the retail industry? Philippe Dauphin (01:20): Yeah, I see three major trends. I'm not sure that they are new, there were there but, but they are more of use since the COVID. The first trend is really this necessity, you know, to combine the online and the offline. So we just cannot go ahead having silos if they want to be really consumer centric. This is a major, the first trend. The second one, to create some new consumer journeys and adapt. The third trend, there is a huge opportunity to digitalize some staff journey’s to bring more efficiency and in this context mobility will definitely be important. Jerry Langfitt (02:06): That's really interesting. Philippe, Mark, what do you think? Mark Thomson (02:10): Well, I can't help but agree with Philippe. And I think for me, the main driver of change actually is the consumer retailers need to be very clear about the expectations and the relationship that they have with their target customers and how those are changing. And, and it's the customer very much. Now that is demanding changes in the way that we allow them to shop. I guess technology is also an important factor here because is in a sense enabling that change, that could be anything from mobile technology, changing the way retailers get access to information. So customers, but also the ability for us as shoppers to get online and to have access to online and e-commerce shopping. So technology and customer behavior, both converging to dry some change. And Phillip is right. COVID has certainly accelerated that. But most of this is, is changed. That was already happening prior to COVID; COVID is just shine a spotlight on it. Jerry Langfitt (03:12): That's a great perspective Mark. Now, from the retailer's perspective, how do you see them embracing this transformation? What are the steps they're taking? How are they reacting to this? Mark Thomson (03:22): It's a good question because they are they're reacting differently. They're not all reacting in the same way. It's a, it's an industry like, like any others as an all industry is that there are pioneers and there are laggards. However, when you get a, a worldwide change or shock to the system, like COVID over the last 12 to 18 months, what happens is some of those laggards, unfortunately fall by the wayside because COVID and the pandemic took no prisoners. But what we're saying for the more pioneering retailers is what they're doing is they're actually accelerating transformation strategies. And some of them the best in my opinion, are the ones where they're involving not just the IT teams, because transformation doesn't start with IT. It actually starts with the whole business. And they're involving people from multiple departments from IT, HR loss prevention, as well as store operations and things like, I guess an example might be project to empower staff in the store with more access to technology or that that involves store operations. It clearly involves IT. There's potential for it to evolve HR in terms of the information that staff might have access to, etc. So what were certainly seeing and the conversations we're having with retailers is increasingly they're involving multiple teams and departments within the retailer. And I think that can only be a positive thing. Jerry Langfitt (04:52): It definitely is going to take a village to change that kind of culture. And within the retailer to serve the consumers better. Philippe, What do you see retailers doing? Philippe Dauphin (05:02): Yeah, I would agree with what thought wasn't mentioned by Mark, because at the end of the day, all retailers have very good IT departments because they want to evaluate different technologies, implement them. And so on the purchasing department to purchase at the right price. But what is sometimes missing is really to start by focusing again on the journey’s, because technology should not be the goal. It's just a way to which goal and the goal is to improve this consumer journeys. I give you an example recently, for instance, discussing with retailers, whether it be able to the COVID time to give us some technologies around the self-service checkout, you know, the low, for instance, to control the checkout via a mobile device, but the application for these two applications, one is to have a no-touch approach instead of touching the screen, you can control it from your smartphone as an example, or second usage. You can set up for handicap people, but again, technology is the easy part, the most complicated part, and the focus in that you should be on the consumer journeys or on the stature. Jerry Langfitt (06:20): That's an interesting perspective, Philippe. Thank you. So let's talk about the mobility technology. How do you think the industry is going to be disrupted by this arc? What do you think? Mark Thomson (06:31): I think when it comes to mobility in particular, I think we're reaching a level of maturity that it's going to drive change by itself. Probably getting close to a tipping point for mobile technology and retail from, from two sides. Certainly I guess from a consumer side, mobile technology smart mobile technology has been around for 12 or 13 years already. And it's now in the hands of virtually everyone, all of us carry our mobile phones with us. So we're all used to using mobile technology, not just for one thing, whether it's calling or sending text messages, the mobile device is really our point of access to information or point of access to booking flights as well as shopping online. And that ease of use is now being leveraged by retailers to start to connect staff, to enable them to perform tasks faster, communicate with colleagues and to answer customer questions in real time, so impacting the customer experience as well. And I think that simplicity that way of thinking about mobile technology and apps rather than software programs is really driving a change within a retail store that allows retailers to react to some of these challenges that they're facing in a very different way. But it also at the same time, as well as driving productivity and improving operations, it also everything that you do now is creating a digital audit, increasing the amount of data available from the store and what's happening in the store, which then in turn allows retailers to identify further opportunities to improve their processes within the store and optimize their businesses. So really, I guess all of these things coming together means that mobile technology is beginning to act as a to transformation catalyst by itself. Jerry Langfitt (08:27): Hmm. Yeah. Mobility is really coming and making a thing. Go ahead, Philippe. I was going to ask what you think of that. Philippe Dauphin (08:33): Yeah. I would complement the answer in the following way... You know, mobility's already there for years for the consumer and if you're taking the online business of the retailers, I think that fully understood this is fully implemented except ticking the box when it comes to the interactions in the store, it out I've started to experiment some seeing, which was attractive to implement, bring your own device. But we have limited that limited success of this one. So let's start understanding or so that implementing professional mobile devices for this makes sense. Yeah. And I strongly believe that this will become one more popular and when it comes to staff journeys, I think there is a huge potential there because we have several conversations with very large, retailers in Europe and abroad, and several of them want to implement a universal terminal, make sure that all employees are equipped , yeah. That they communicate, they manage that efficiency, that different tasks. Retailers should really make sure that, that the right applications that they'd have right ecosystem and that they have all the platform to manage this platforms and that is a key challenge to really benefit from this potential disruption. Jerry Langfitt (10:04): Mark were recently did a shopper study and found that 73% of associates feel they're more effective at helping shoppers. If equipped with mobile technology, you had mentioned a little bit about that with talking to associates and have an access, but what do you think really is the root cause or reason why associates feel that way? Mark Thomson (10:23): It almost goes back to my previous answer in the sense that as individuals we've been using smart technology, mobile devices for at least 12, 13 years or so now, and that survey certainly found that staff felt frustrated at the lack of technology when they actually came to work in the store, customers simply wanted to know more about products, et cetera, and staff were unable to answer their questions without going to a point of sale system, which is just not right. So giving staff access to this information via a mobile device, seemed logical and sensible to staff for years. Finally, as retailers start to understand this and start to deploy mobile technology on a much wider basis and the, the technologies behind it, such as Android as an operating system makes that easier. And we create an app based mentality. Now we see this change finally happening, and we see the, I guess, the satisfaction levels of staff improving as they feel much more equipped to do their job better in front of the customers. Jerry Langfitt (11:32): One would think that's true just because millennials and gen Z and whatever you want to call them were born with a phone in their hand. I think it's not necessarily just a preference they're going to have to serve and be ready to serve the next generation of what they're used to. Philippe a question for you, because talking about this, it really made me think of something. If retailers mobile technology to every associate one would think that would create new operational challenges. How should a retailer react to those challenges and try and manage expectations and four prepare themselves for success? Philippe Dauphin (12:07): So is this really a crucial point? And let me take some example, Many retailers who have already have something like 30 to 40,000 mobile devices in their stores and their plan to increase this number the next two years, maybe two, three years to 250 or 300,000. So think about this one would retailer for instance, consider to manage a huge inventory of 300,000 products without managing the inventory. The answer is no. So it should be the same here. If you go to this magnitude of handheld devices, the cube is not the rotation of the inventory in this context, but it's more to manage the availability of the devices and the right sizing. Because if you don't manage them, you need to purchase maybe more to make sure that these devices are available for the staff. So it's a key challenge. So where about some solutions, one of them, which is what we call the manage mobility platform to manage the outer life that second, but this is crucial. So the question is not to go on, to go or not go with Mobility. The question is how you grow. Jerry Langfitt (13:25): Yeah. You really need to support it. I think you had said a great point that you really need to focus on the consumer journey and not focus on the technology, how best to serve the consumer, but with that comes infrastructure ramifications. So you really need to make sure you're ready to support it because the worst thing you can provide is a poor journey for a staff or a poor journey for the consumer. That's a great place to close. Thanks, Mark. And Philippe really appreciate you sharing your insights and thoughts on how critical mobile strategies benefit retailers and consumers. And thanks to you. Our listeners for tuning into this episode of commerce. COMMERCE NOW. You'll find the link in our show notes. Thank you for listening.  

Summary: In this episode of COMMERCE NOW we discuss how retailers need, now more than ever before, more modular and flexible software, services and systems when selecting their self-service partners. Related Content:  Modularity Whitepaper  Related Links: LinkedIn Profiles - Jerry Langfitt Matt Redwood DieboldNixdorf.com Transcription: Jerry Langfitt (00:16): Hi everyone. Thank you for joining us today. I would like to welcome today's guest Matt Redwood, who leads our advanced self-service global solutions at people Diebold Nixdorf. Welcome Matt, and thanks for joining me today. Matt Redwood (00:27): Hey Jerry. Thanks for having me always good to speak to you. Jerry Langfitt (00:30): Now let's start off at a 50,000 foot view of what's going on in retail. There's certainly experienced a hyper compressed and instantaneous change in consumer behavior, of course, caused by the pandemic. This ended up being a massive shock to their operation and it infrastructure. The quick fixes have now turned into long terms needs and rubber banded and duct tape journeys. Now have to last longer, be more scalable and continue to evolve. As consumer sentiment continues to change, regardless of what's going on in everyone's health systems in their countries, retailers need to react with the same speed as the customer. This is more than just putting up plexiglass barriers. They have to really rethink many of their current consumer journeys while adding new ones immediately. What do you think retailers are experienced and learned about what their legacy systems and current infrastructure both can and unfortunately cannot do. Matt Redwood (01:23): Absolutely. So it's a great question, Jerry. So generally trends in retail happen over a period of time. It's an evolutionary step. If you take the shift to convenience store shopping as an example, that's a trend that's happened over multiple years. I think what retailers have really experienced in the last 12 to 18 months is a revolutionary step. That's been forced by the global pandemic. And what that's done is it's exposed the weakness in their infrastructure, the weakness in their current store, operating best practices and ultimately the technology that enables that. And it's really forced retailers to think very, very differently, not only about the strategy of the day, but also how they can build in flexibility for tomorrow. God willing that another pandemic doesn't happen, but this could be the start of a very volatile stage where they're retail, where retailers really have to change on the fly constantly to changing demands either from a legal standpoint or from a customer driven demand aspect. So they need that flexibility. They need that scalability, and ultimately they need the ability to change extremely quickly and to react to any demands that are effectively flipped in upon them. Jerry Langfitt (02:42): Now, one thing I don't understand is how did we get here? What got us to this point of difficult to change and the mobility of some it processes? Matt Redwood (02:53): Oh, so I think that's just honestly legacy it. So I'll ask VP of retail cause at a washing business where you buy the hardware, you buy the software, you buy the services for that particular application in isolation, from everything else and the legacy. It was a very good example of that type of infrastructure, where you had maybe a supplier who specialize in self service and now they want to kiosk another one at point of sale. And you always had these isolated solutions that existed on their own and there was no interconnectivity. So it was very difficult for retailers to really piece together. I had different customer journeys or react to new customer journeys because they either had to make changes across each touch point, which was costly, expensive and took time. Well, there just wasn't the flexibility in the infrastructure to be able to do it and really modularity and a need for openness has been driven out of this pandemic, modularity the ability to be arranged or fit it together in a variety of ways is the dictionary definition. Openness is openness. And it's the combination of these two factors. The retailers are really looking forward to make sure that they don't fall into that. Jerry Langfitt (04:06): What got us to this point of difficulty to change and the immobility built into it processes. Okay. Matt Redwood (04:12): I think honestly it was just his legacy technology. The technology environment with particularly within big retailers is a very complex one. If you think about, you've got a hard way, you've got software, you've got ecosystem, you've got services, even taking the hardware in isolation, you have different components with different life cycles. You have different stuff like compatibility. And on top of that, I think we've had a legacy situation where suppliers in the industry have created solutions in isolation and RSVP Highland limit it. The dishwasher situation. You have one provider of a piece of hardware with a piece of software and services to run it. I'm not saying closed loop system. And what it means is that retailers are almost forced to take different touchpoints with different solutions and implement them into their environment. And these solutions would also almost operate in complete isolation to everything else in the store. Matt Redwood (05:11): So not only does that build in complexity and in flexibility, because if you make a change on one, you have to replicate changes across multiple touch points. It's very complex to manage very costly to manage. And ultimately you're not getting that level of flexibility. I mean, two very positive things to come out of this pandemic is the retailers have really understood that actually what they need is modularity and they need openness on the Southwest side to be able to take more control of their own destiny in terms of what functionality they have, what roadmap they want to drive and ultimately what experience they want to implement in their stores and what modular hardware do they need to be able to support that. And I think we tended to really focus now instead of having these in isolation is to have an ecosystem of technologies or touch points within their stools or talking to each other. That means that they can move in a great degree of flexibility they can have at the LT and responding to trending trends or requirements that may be happening in the market. I don't want to bet they're not boxed into a corner as they've been. Jerry Langfitt (06:19): Yeah, it's funny. You should say that Matt, because despite the pandemic we saw progressive retailers evolving even before 2020 S Watson Tesco and others were already looking at new journeys and building greater flexibility into their operations and it processes, what do these progressive retailers see and how did they react? What did they do different? Matt Redwood (06:39): I mean, ultimately that shift that those retailers took, which was, I guess, proactive ahead has become dynamic. I know that they will see the pandemic catheter, but they, they witnessed the fact that retail technology is a very complex environment and it's only going to get more complex. And if you look at the landscape of self-service over the last 10 to 15 years, we've gone from really an environment where you might have point of sale and one type of self-service device within your stool. But now they have a whole plethora of options available to them from point of sale, to multiple different stuff, service touchpoints to us, mobility as well as the influence, the online is now happening. And they recognize these early movers recognize the need for flexibility in order to be able to react and obviously take advantage of as many of these touch points within their schools. Matt Redwood (07:30): And the shift that these retailers made really enabled them to pivot very, very quickly to be able to cherry pick the right solutions for that store today, knowing that as trends change, I may need to update and flex that model to react to future trends and that fully baked in that flexibility. So retailers that really took advantage of a modular touchpoint approach from an open software approach, but a pandemic finally not easier. It would be able to pivot and operations and react quickly to the changing trends or legal aspects that were inflicted on them during the pandemic. Jerry Langfitt (08:10): So it sounds like a lot of the retailers want to blaze their own path and be the master of their own roadmaps. How can a retailer like that? What kind of demands should they be giving their technology partners, Matt Redwood (08:22): Ultimately it's flexibility. And this trend of, of openness and modularity it's been spoken about for many years, but I don't think many technology providers have really enabled retailers have that controlling flexibility until now. You know, I'm very proud of Diebold Nixdorf as one of the first in the industry to really open up that platform and to really allow return is much more control, much more flexibility. And I want you to ultimately future proof themselves against any upcoming trends. It gives them more control to give them more and ultimately destiny of what experience they want to deliver in their stores. And it really is the convergence of everything that we've been booking over the last couple of years and tell them multichannel and different customer journeys. Technology has always been the disabler. And now we're really saying that all of those rules have been stripped back and we've got a very flexible, very open, very modular environment, which really gives retailers what they've been asking for for years, which is flexibility. Jerry Langfitt (09:23): Well, and I think that's one of the key points I've seen with retailers. Their decision-making processes getting much more complex because they are saddled with legacy it infrastructure, and they are concerned that any decision they make will just create the next inflexibility. So I think each retailer needs to buy into someone that has that kind of modularity. So it's like, look, I'm buying into a philosophy that says this partner will be with me later and they'll keep evolving too. It leads to, you know, let's flip the script a little bit and ask, what is the retail technology partners and providers done both wrong and right in our industry, Matt Redwood (10:05): I didn't necessarily think that there's a Roman a right, that cause it's all relevant to time and situation at that particular moment. But as I said previously, it has been this trend where technology providers have been, I guess, very wooden in terms of locking down the systems so that they're very closed. You have to buy the hardware, the software, the services, the innovation from one particular supply what's starting to change. And it's very much the ethos of the board next door is you provide a platform, a platform for that retailer to invest in, and then they can build their own technology touchpoints. Within that stool. We definitely combinations of hardware, software services, and innovation, and ultimately build the right in-store experience that they want within that store. And I think that's key. Sometimes we get too focused on the technology and less so on what we're trying to actually achieve here. Matt Redwood (11:00): What we're trying to achieve is the best in-store experience for the end consumer. And we use the technology to drive that it shouldn't be the inverse of that, which way are hamstrung by the technology. And therefore that dictate what type of consumer experience we should walk on. What, because you are experienced to retailers want to achieve in that stores, what is the right technology for them now, but also where do they see that consumer experience moving to in three to five years time and ensuring that they have the flexibility within that platform in order to Fletch change, evolve our offering over a period of time to get to ultimately where they want to go? Jerry Langfitt (11:38): No, I was actually going to say, you had said the best possible experience, and I wanted to add a time element to that the best possible customer experience for today for today's consumer. And one thing that's evolving, consumer trends and habits, but the other thing is, is the separation of consumers into their own journey of what each person needs in their particular mission that they're doing in their retail environment. So I might, I might have a quick trip or I just need to grab something fast, two items that I forgot, or I might be taking a longer trip. This is no longer one consumer that shops one way the same consumer can shop many different ways. And you're constantly going to have a changing need within today. Matt Redwood (12:19): Yeah, absolutely. I mean, ultimately if you look at your eye, it may be the same consumer that's shopping in multiple different ways, but ultimately there may be five, six, seven, 10 different customer journeys that a retailer has to deal with within their store. And rather than forcing those consumers to shop in a particular way, it's really about giving a consumers, the flexibility and the choice to shop in the way that they want to within that store, giving them the empowerment to shop that particular brand, that particular school at that particular time of the day and what experience they want, as you say, it may be the same consumer that shops on a weekend that may spend an hour in the store browsing with their family because they're picking up that weekly drop where they've gone shopping for the day and maybe the same consumers are like Tuesday, lunchtime, the coffee into the store and pick up a coffee or a sandwich to go same consumer, but very different consumer journeys and therefore very different expectations of what a good consumer experience look like. Matt Redwood (13:20): What we've seen during the pandemic is, is the road versus a lot of that flexibility and diverse arrange of consumer experience. So what we've really seen with the restriction of movement as a result of the pandemic is the consumers that may be interacting with a brand multiple times during a week of being forced to only shop maybe once a week or once every two weeks because of the social distancing rules on that, you know, the rules around staying at home. That's the flexibility that retailers have really had to combat over the last 12 to 18 months, moving from an environment where they're trying to be as flexible as possible to enable the best consumer journeys and multiple consumer journeys, always back to the shopping journeys of 10 years ago, where consumers would only go to a supermarket. Once every two weeks we'd buy a large amount of items. And that would be the only interaction with those consumers. Not saying that that is going to be the trend that extends into the future, but that shift almost overnight has been very difficult for a lot of retailers to contend with. And that's where ultimately they need to build that flexibility into that, into their infrastructure. Jerry Langfitt (14:26): One thing though that happened, happens to an it company or their department is that it departments hate complexity. That just once I have 10 different journeys, I have now have to contend with tracking and keeping 10 different technologies up. I mean, what can an it director do to try and simplify or minimize? Cause the journeys are going to stay. The consumers want this ops needs it. Everyone knows they have to do it. So what can an it department do to try and minimize the complexity they have to manage? Matt Redwood (15:01): So the complexity doesn't necessarily come from the number of different consumer journeys. It comes from the number of pieces of technology that enable those consumer journeys that may operate in isolation. If you've got to replicate changes across multiple platforms, multiple solutions, not only does it take time and money and resource to implement even the simplest of changes because you're having to replicate it. It's a very complex environment, very, very easy to get them wrong. And that's where we're really shifting, seeing the shift to requirements of retailers to have a platform based approach, open API APIs and an architecture so that they don't have to replicate those changes over multiple. It just happens. They make the change once and it's been applicable for all touch points within that store. So it's almost, it's not a restriction with the amount of customer journeys, but it's a centralization of the technology to enable those customer journeys in a more sustainable and easier to manage way. Jerry Langfitt (15:59): Yeah, it sounds like if they tried to do it the old way, which was each technology being separate, it would be complex, but if they try and implement in a much more progressive and newer way using modularity that way more tech is similar, but still supporting multiple journeys. That way that should reduce the complexity that they're they have to do. Matt Redwood (16:23): The other element is that retail technology is not going to get any simpler. If anything is going to get much more complex and much more diverse. And I don't say that as a negative, but if you look at the competition between retailers now take the grocery industry as an example, hugely competitive, hugely competitive space, where everyone is failing to get the consumer's attention and ultimately business. On the flip side, you're seeing brand loyalty at an all time low because the competition is so tight consumers know that if they have a bad experience with one particular brand or one particular store, they go next door, they go down the street and they can get as competitive as an offering, but maybe a better experience. Well maybe a, you know, more fulfilling journey within the store. So retail is a really, really good, a tough situation. They're battling each other for competitiveness, but they've also got to deal with the reduction of brand loyalty. Matt Redwood (17:20): So they have to focus on what can they do to enhance their in store experience and how can they differentiate that brand. And multi-levels it ultimately is going to result in is a lot of retailers taking bets and moving in different directions to try and differentiate themselves. And back to the openness question as why openness is so key retailers are going to want to take innovations or technology on the market and integrate it into their own ecosystem to create that own ecosystem of technology is going to enable the customer journeys and experience, but they want investors that will hopefully be different from their competitors and therefore able to differentiate themselves Jerry Langfitt (17:59): Well, they, and they need to make sure those are sustainable. They make a change and they get it right once and they can't just get it right once they have to keep it going always on and make sure that the customer always gets that great experience every time. So it's, it's going to be a challenge, but I think like you had said, building their needs onto a platform mentality is going to be the way forward. Matt Redwood (18:26): I mean, a great, a great example of that is really cash. So I felt like we've been talking about the demise of cash for years and years and years now, but ultimately what we're seeing is the long tail of cash. And even during the pandemic, when there was nervousness around, you know, safety and hygiene, and suddenly we saw a big, big drop off in the amount of consumers that you're willing to pay by cash, it didn't disappear. And actually we're now seeing cash utilization start to increase. Again, it may never go back to the level of it was, and we may be how accelerated the delays of cash, but it's still left. So what are retailers supposed to do to make sure that they can serve consumers today that want to pay by cash? Knowing that cash may disappear in three, five, 10 years, whatever the time period is. Matt Redwood (19:18): So they have to really look up the experience, the operations and the requirements that they require in the store today, as well as building the flexibility that that can shift and change tomorrow. And so a modular hardware platform is really important. How do we deliver the right experience today with the right combination of technology modules, but have the flexibility built within that, that can flex and change to support the customer journeys of tomorrow without throwing that investment away. And that's really, really crucial bit. How can we prolong the return on investment made in a piece of technology without completely throwing away every time a consumer trends Jerry Langfitt (19:57): That is absolutely correct. And it's going to be a difficult for the retailers, but they need to learn this new philosophy of being way more flexible. But thanks, Matt. I think that's a good place to close. Really appreciate your sharing, your thoughts and how critical modularity and building greater flexibility into retailers it and operational strategies and how it benefits retailers themselves and consumers. And thanks to you. Our listeners for tuning into this episode of COMMERCE NOW to download a free copy of the white paper on modularity mentioned during our discussion, please visit the dieboldnixdorf.com/self-service solution.

Summary: In this special episode of COMMERCE NOW we team up wiht APIs Unplugged podcast to discuss using APIs to succeed as an incumbent in a disrupted fintech space. Related Content:  The API Evolution: We’ve Reached Critical Mass APIs UnPlugged Podcast Related Links: LinkedIn Profiles - Bruce Diesel Matt McLarty Transcription:

Summary: In this episode of COMMERCE NOW we discuss fuel and convenience and how things have changed and continue to change and what fuel and convenience retailers need to do to keep up with these changes. Related Content:  What are your Shopper's Thinking? Nielsen Survey: Retail Personas Related Links: LinkedIn Profiles - Jerry Langfitt Reint Jan Holterman DieboldNixdorf.com Transcription:  

Summary: In this special episode, COMMERCE NOW teams up with Kiosk Marketplace to discuss Self-Service Kiosks and how they are quickly becoming ubiquitous with museums and airports using them for years and McDonald’s successful push in the QSRs industry. Now add the convergence of consumer preference for self-service, COVID related avoidance of human to human interaction and retailers automating tasks to free staff for more involved duties and you have self-service kiosks truly hitting its stride.  Related Content:  Video: QSR drives Seamless Checkout  QSR Infographic K-TWO Kiosk: Offer Customers a Transformed In-Store Experience Related Links: LinkedIn Profiles- Carl Von Sydow Elliot Maras  DieboldNixdorf.com KioskMarketplace.com Transcription: Elliot Maras:                       00:16                     Welcome to Kiosks and the Self-Service Consumer Journey. I'm Elliot Maras, the editor of Kiosk Marketplace. Joining me today is Carl von Sydow, director of Self-Service for the Americas at Diebold Nixdorf. Self-Service Kiosks are quickly becoming ubiquitous while museums and airports have been using them for several years. In the last two years, McDonald's has made a big splash with kiosks in the QSR industry. Many other restaurants and retailers have since come on board. When you add the convergence of consumer preference for self-service, COVID related avoidance of human to human interaction and retailers automating tasks to free staff for more involved duties, self-service kiosks are truly hitting their stride. Retailers from a wide variety of industries are looking harder at self-service. Dave & Buster's for example, is using kiosks to power up playing cards and food ordering. IKEA uses kiosks in their bistros for food ordering and grocery retailers.                                                                                 The always open proverbial essential retailers are expanding food courts and leveraging kiosks in their food journeys. 2020 was a challenging year for everyone, but the kiosks have played a big role in meeting the need for safety. COVID-19 has heightened demand for self-service as a way to improve customer safety. While much of the technology that went into action had already been developed prior to COVID-19, the technology found new use as customers scrambled to improve their safety. The pace of kiosk introductions has never been faster than it is today, with no end in sight. All indications point to self-service kiosks playing a bigger role than ever going forward. Carl, why did we see an increase in kiosk journeys over the past year? Carl von Sydow:                02:08                     Hi, Elliot. Nice to meet you and a very good introduction to the topic. You covered a lot of good areas there. And some of them you mentioned already is the answer to that question. We have had kiosks all over the place for quite a lot of years in airports and museums as we said, but what I feel right now is that the concept of a kiosk is merging with the traditional self-checkout solution that we have seen primarily within grocery retailers. But these two are now merging together, offering new, much more exciting combinations and form factors et cetera for self service. And then we have the drivers, like you mentioned, we have experienced the last 14 months with COVID, which has really pushed self-service to the front of a lot of retailers mind. Elliot Maras:                       03:11                     Tell me why are new retailers in different industries looking more closely at self-service kiosks? Carl von Sydow:                03:18                     Yeah. We have several examples, you mentioned two of them, Dave & Buster's, IKEA, we have several different grocery customers as well. The business model is not only self-checkouts anymore for traditional grocery retailer. They want to add more different customer journeys. It's all about addressing different customer journeys. We use that word quite often in our daily work. Nowadays, it starts with the customer journey and within a customer demography for a typical story, you can have several different subgroups and you need to identify what different subgroups do you have perhaps in your business and try to find the best customer journeys for that little subgroup to make them come to your store or restaurant or whatever it is more often than elsewhere.                                                                                 And the mix between kiosks and self-service and form factors offer this opportunity now in a completely different way than before. You mentioned IKEA. IKEA is adding so many different customer journeys now for self-service with kiosks, not only in the bistro, but elsewhere, there are a lot of exciting projects going on there. Just identify groups of customers and that customer journey and then find the right solution for them and then implement it. So it's somehow... It is driven by customer journey expectations, customer expect higher variety of customer journeys when they go to the store, but also by technology. We have the technology now to offer different customer journeys and form factors. So it's a combination I would say that drives a lot of retailers into this area now. Elliot Maras:                       05:16                     Well, speaking of technology Carl, what new innovations do you see enhancing kiosks? Carl von Sydow:                05:24                     Yeah. That's also very interesting question. A lot of... Since we start with the fact that we are sort of merging kiosks to tradition kiosks with some kind of self-service, self-checkout with perhaps payment, identifying products or ordering products on the screen, we are adding technologies like RFID for fashion retailers or reading different barcode types in a different way than before. Identifying the customer traditionally is done with loyalty cards or programs like that. But now we can also add, with the help of our mobile companies that has pushed face recognition into every man's telephone right now, mobile phones. So adding face recognition as a tool for verifying age, for age restricted item, that is a great enhancing of the kiosk/self-service solution because otherwise, age verification drives staff intervention and take... Increase the time of your customer journey. You want to eliminate all these pain points and if you can find technology that makes that customer journey easier and faster for the customer, it's also a great thing.                                                                                 Another area is for QSR ordering. Imagine that you are a mother and you have three kids and you go to your local or your preferred QSR restaurant. Instead of ordering the same and go through the whole order every time, with the different meals for the kids and all that, with face recognition connected to a loyalty program where we have approved that you can do this, you can have the kiosk identifying you as a customer, "Welcome back. Do you want to use the same order as you did last time?" And then we have the whole order for the family already there and you just press OK. A lot of these things is to make the customer journey faster. A lot of these things are coming strongly now. Elliot Maras:                       07:39                     That's a lot of different technologies, that you're up to speed on. But tell me, what self-service innovations has your company introduced in the last year? Carl von Sydow:                07:51                     Yeah, the pace of development for self-service have raised. I would say the last few years, but even more so the last 24 months, as I said, we have seen this merger between the traditional kiosk to self-service. And just recently, a few weeks ago, we launched our new completely new portfolio of self-service. Which range now from the traditional baskets to bag with grocery self-checkout, with everything that goes with it to a 32-inch kiosk-like-self-service station that you can dress exactly as you want. It could be a self checkout in a grocery store, food ordering kiosk, or you have all these different form factors in the same portfolio, same software platform, everything is run by the same technology. And we are also adding, apart from that modularity and flexibility, we have taken a step away. Traditionally kiosk and in moreso self-checkout have been pretty locked in when it comes to software and solution. You have to buy our software, if you buy our hardware, we have taken a step away from that. So we have a much more open approach now to our customers.                                                                                 We have different software strategies. You can go full on with all our software package or suites, you can go hardware only and you can also go the middle way, where we will offer some of these traditional functions as modules with APIs. So the customer can decide whatever form then they want to use themselves, and then we can help them. They don't need to develop all these self-service specific modules like produce recognition, age verification, security scales, cash management, all these are separate modules that we can offer our customers as a separate software module with APIs. So, that's a big shift from only a few years ago.                                                                                 We are selling self-checkouts in high numbers. We also know about frictionless shopping. Of course, that is a very interesting area. We are monitoring it. We are looking into it, but we don't have anything really in the pipeline right now because it's a little bit too early. As we see it, retailers are asking for a solution that works today... I mean technology is quite expensive to do with frictionless self-service. So just in short, those are some of the innovations that we have just recently launched. And we'll continue to launch new innovations this year. Elliot Maras:                       10:49                     From a short-term perspective what customer verticals do you see expanding the most in self-serving? Carl von Sydow:                10:58                     Our experience over the last six, 12 months, especially here in the U.S., there have been a little bit ahead of us in Europe, but right now we get a lot of interests from fashion retailers that is definitely growing and also convenience stores, C-stores. Again, coming back to the possibility with a little bit different form factors of self-checkouts or cell service stations than before, a traditional basket bags self-checkout doesn't fit in a small C-store environment. But now with kiosks/self-checkout in one, C-stores all of a sudden see this as a great opportunity for them. So we have a lot of C-stores customers looking for self-service in their small stores right now. So that's two very easy identifiable verticals that are looking at self-service much more than only two years ago. Elliot Maras:                       12:04                     Well, tell me, Carl, what are your final thoughts today on the kiosk market? Carl von Sydow:                12:10                     Again, I'm coming back to the customer journey. We try not to just sell technology or to show the customers, "Here, we have the products, which one do you want?" We try to go a little bit deeper and understanding what the customer need. Why do you need? Why do you see this need? What do you want to offer your customers? What customer journeys do you have? And we call all that store advisory service. So we go in and try to help the customer identify exactly what they need, the mix of self-service solutions that would fit their needs the best. And then come to the point here, you have different technology solutions that would fit your customer journey. So by identifying and working with the journeys, you will have a much better implementation of your solutions. And that will grow more and more. It's all about customer journey.                                                                                 It's not so much technology, first it's customer journeys. That is one big thing. And what I also expect to see on the kiosk market is even more alternatives of form factors of kiosks, outdoor kiosks, indoor kiosks and other features that we can add. The alternatives and options are limitless. More or less, the technology goes so fast, but yeah, those are a few things that I would expect to see on the kiosk market the next two years, perhaps? Elliot Maras:                       13:47                     Carl, thank you. Thank you so much for your input. Clearly, this is an exciting time in the kiosk industry. This has been Kiosks and The Self-Service Consumer Journey. Thank you all for joining us.  

Summary: Consumers and retail staff alike expect an always-on retail environment with always available self-service. In this podcast, we will discuss what retailers can do to provide always-on availability in a complex retail world. Related Links: Lynn Beattie LinkedIn Profile Jerry Langfitt LinkedIn Profile Related Content: Driving Availability in a Complex Retail Environment Whitepaper Diebold Nixdorf.com/Availability Transcription: Jerry Langfitt:                    00:15                     Hello everyone, thank you for joining us today. I would like to welcome today's guest, Lynn Beattie, who leads our Retail Strategy at Diebold Nixdorf. Welcome Lynn, thanks for joining me today. Lynn Beattie:                     00:25                     Hi Jerry, it's a pleasure to be here. Jerry Langfitt:                    00:28                     Today's consumers' behavior is shifting in two important ways. They're increasingly more reluctant to stand in lines to check out, and showing a greater desire to be in control of their retail experience. Now add a viral outbreak into the mix and you see consumers wanting quicker, safer, more socially distant retail experiences. This has driven retailers to provide more self-service consumer journeys. And with these self-service journeys, retailers must put a greater focus to be always on and always available. Lynn, how important is availability when it comes to a self-service consumer journey? Lynn Beattie:                     01:01                     Jerry, I think it's hugely important that they're available. What we've seen in the last few years is a definite shift towards putting more and more technology into the hands of the consumer. And as you say, this is very often to support self-service journeys. So I'm thinking about technology in store, thinking about things like kiosks, self-service checkouts, handsets that maybe support customers with journeys like [inaudible 00:01:28] checkout, scan as you go type shopping experiences. And if these devices and these touch points don't work, they frustrate the entire experience in the store. So I think retailers have to be hugely cognizant that it is very important in terms of their brand and in terms of the experience the customer has in the store, that these journeys are available and always on. Jerry Langfitt:                    01:52                     Now, doesn't it mean that criticality that happens is a self-service, by definition, the consumer's alone? So no longer is a staffer at a POS and knows there's a problem and can cover up. I mean, the consumer themselves will be the first to experience the error. Lynn Beattie:                     02:08                     That's it exactly. If you have a lane, say on a self-service checkout, that has gone and died, the consumer, firstly, in their interaction with the lane can find it a very, very frustrating experience if they cannot complete their checkout transaction. But also then it's another lane that's not available for other consumers that are queuing. And I think that in itself is a source of frustration. And I think what we're seeing is that there isn't a member of staff that's always there that can help the consumer then complete their transaction or, in some ways, even fix the issue for the customer. So it is even more frustrating for customers when self-service devices don't work then maybe other technology that's in the store. Jerry Langfitt:                    02:50                     And I found brand loyalty in retail is razor thin. You have a consumer that can quickly walk across the street and make decision to leave someone else and go to a different experience. Or if you have a bad experience, I'm quickly going to remember, I'm not going to go to that one. So that razor thin brand loyalty makes things even more critical. Banking, it takes a lot to change your banks, but when it comes to retail, I can switch in an instant, and I will. So that's another point that makes this so important for retailers to pay attention to this. Lynn Beattie:                     03:24                     I think that's right. And I think, as you say, you may get immediate feedback. The customer may just walk straight out your store, but the customer may also though stay in the store, complete that transaction and then leave your store and not come back, and switch their loyalty to another retailer. Jerry Langfitt:                    03:42                     Well, I will admit my wife has left a basket full of groceries after being pissed off. So I usually look at her as one of my customers and say, okay, look, we have to have this right, because you can get that frustrated. And that definitely leaves a mark.                                                                                 Lynn, in this day and age, some retailers mistakenly think adding a self-service journey is simply a hardware and software install. That's one guaranteed method to experience the aforementioned razor thin threshold for brand loyalty. To me a satisfying self-service journey takes a strategy, including technology, staff, process and the right business partner with the infrastructure to keep your journeys always on, always available. It's more than just a transaction. It's the whole experience. What can a retailer do looking at all these different pieces of the puzzle to make the right strategy? Lynn Beattie:                     04:29                     I think what retailers need to do is think about where the points of friction are for their customers in their stores and think about how they can alleviate those points of friction. And that might be with self-service, or it might be maybe with other technologies, or it may even be by supporting them with more personal service from a member of staff. But I think starting with really understanding the journey and understanding where there are points of friction is probably the best point for retailers to start from. Jerry Langfitt:                    05:03                     So preparing for availability, service reaction time, table-stakes must have quality service infrastructure to handle the immediate needs of the retailer. This has been available for years and must be dialed in to serve at a moment's notice. However, this is fairly reactive. What kind of service can someone really put together to make sure that they're being more proactive? What's involved with making sure something is more managed, and remotely, and can be more proactive? Lynn Beattie:                     05:30                     I think historically, I think service and maintenance used to be done in a break-fix model. So when something broke, the model was that you would quickly be able to fix it, quickly be able to resolve the issue. And I think the shift that is happening is more towards a model whereby an almost constant availability is guaranteed. So to move to the 99 point whatever percent availability, and that's largely been driven by, as you say, having more and more touch points in store that support the customer directly. So self-service touch points. And with these touch points, what really needs to be done is that there is far more remote monitoring and far more remote maintenance of them. Because as you say, there's often not a member of staff there to fix the issue, and therefore you have to be able to monitor remotely.                                                                                 But there's no point in just monitoring remotely. You have to be able to take action when you identify that there is a problem. So that means, for example, being able to deploy software onto devices, or to be able to update configuration, or to be able to direct a member of staff, if it's to do something basic, like for example, change a printer roll. But it can also be maybe more complex things so that if there is a problem using that remote monitoring to identify exactly what the problem is, so that you can dispatch an engineer that has the right skill set to fix the issue with the right parts and to have the planning and the foresight to be able to ensure that the engineer is close enough to the particular instance, to be able to respond quickly. Jerry Langfitt:                    07:06                     This seems like from ages gone by, like you had said, it was always a reaction time basis. And like I said, with hardware and software install, you actually have to have the infrastructure, not just the business partner, but the infrastructure internally to connect all devices and then give access to an outside company, securely and properly, to use that data. Because, I think you said, if the data comes in, there's not a lot you can do with it, but maybe with a correlation engine or AI to think what's going to be next? I've always seen these types of parameters broken and then the device goes down. Can we get more proactive and be able to see problems coming before they happen? Lynn Beattie:                     07:48                     Absolutely. And I think there's some really exciting developments happening using technology, using AI, using machine learning that is allowing us in a far more complex technology environment to be able to identify issues before they even happen. And I think there's a more specialist technology that often retailers themselves maybe don't want to develop in order to do that, and therefore they are looking for partners that have got that depth of expertise and they're able to invest in models that really bring in a best of breed approach, as it were, to maintenance and to availability. Jerry Langfitt:                    08:25                     Well, something like this, the staff still is a big part of this. Self-service you can get the impression that no staff is involved, ever. And I think that's a misnomer. I think there has to be properly trained staff and properly supported staff to make sure those self-service journeys go without a hitch. What can a retailer do to properly prepare their own staff, and support them, to make these a great experience for the consumer? Lynn Beattie:                     08:50                     Absolutely. I think in our experience very often retailers use self-service to improve the customer experience in the store crucially to free up staff so that they can go and do high value activities, like interacting with the customer. I think staff are absolutely essential to make sure that the overall experience in the store, including self-service, works as well as the customer would expect and gives them a really great customer experience. I mean, there are absolutely things that need to be done in terms of maintenance on self-service machines. I've mentioned something as basic as just changing, say, a printer roll, and there's some other functions like that that staff can absolutely help and support. But I think the key thing is to ensure with these things that it never detracts from the core role and the really value adding role of a member of staff in a store, which is about helping customers and supporting customers. Jerry Langfitt:                    09:44                     A great way for a retailer to further support and make something transparent, I think, is maybe leverage mobile devices, staff's mobile devices, internally, to be able to provide them with the same information a technician might have. They might not be as experienced, but if you can explain it in simple enough terms, they should be able to restart things and troubleshoot things to get a customer up and running and a lane up and running. Is that something that would benefit the retailer? Lynn Beattie:                     10:12                     Absolutely. I think there's a concept almost of self-service for staff, in terms of maintaining self-service devices, where staff can get some support if there is an issue with being able to record what the issue is, for example, on a mobile device, and then to be able to automate getting them some feedback about how they can resolve that. And there's some really exciting technology that can use again, a combination of video recognition and natural language processing that can take what the staff member is describing and turn it into some sort of action that can come back from a maintenance solution. So, I think, there's a lot that members of staff can do around self-service. And, I think, we will see this will be one of the fronts on innovation we will see in the really not so near future. Jerry Langfitt:                    11:00                     I've noticed in today's self-service models, and technology overall, retailers need to rely heavily on business partners and their staff. I've found that the proper business partner can enhance what a staff does and take away things. I was thinking of one example where Diebold Nixdorf ended up pulling a lot of ticket-entering off the staff. If something happened, there was automated systems that just... Look, there was no need to call in and put in a service ticket. So these kinds of automations, I think, would really help retailers to make their staff more efficient. Don't you think? Lynn Beattie:                     11:37                     Absolutely. I think there's been a real transformation in terms of how tickets, like this, get logged and recorded. And I think there's far better ways, especially as we have so much more mobility, to be able to log tickets like this, and generally that don't require a member of staff to go and make a phone call to a customer service desk. And I think that's pretty exciting that that fairly labor intensive administratively heavy duty action has been taken away from staff. Jerry Langfitt:                    12:09                     One retailer I was talking to a few weeks ago had said 30 seconds, 60 seconds, away from the customer seems like a lifetime. So the more automation we can give to the retailer's staff empowers them, as much as it empowers the consumer. And again, let's mention the razor thin loyalty. If someone's self-service works better than another, a grocery store, you will easily switch to that one. Lynn Beattie:                     12:34                     I think that's right. And I think it's a much, much more empowering and enjoyable experience for members of staff to be helping customers and interacting with customers and delivering great customer service than it is trying to, say, resolve problems with technology. So that's not something that I think they enjoy doing and, therefore, in the same way that we're looking to remove points of friction from customers, we should also be looking to remove points of friction from members of staff. Because I think the more that staff are able to support customers, the more they enjoy the roles and the great jobs that they're doing. Jerry Langfitt:                    13:11                     That's a great point, because that same retailer had said the staff wasn't enjoying the self-service journeys that they had, because there was just problems and there were bugs, both with the technology, but I often told them, it's always technology, people and process. If you just push in self-service, which a lot of retailers during COVID had said, "I need self-service immediately. Get it in the stores." And they skip those steps of properly training the staff, supporting them with the proper processes and then have a business partner that can support them all the way around. It's a great way to have, what I like to call, a false positive where you think the consumers really don't like it, but you just didn't take the proper steps to properly implement, to get adoption. It's not just an installation, you're trying to get adoption and, actually, more than adoption, you're trying to get preference, that the consumers actually prefer this. And so do the staffs. Lynn Beattie:                     14:06                     I think that's right. And I think this comes to something that we talked about earlier is that what retailers need to do is really understand the points of friction for their customers and use technology to address those points of friction, and they need to understand the entire journey and the entire expedience that sits around self-service. And I'll give you an example. It's becoming increasingly popular for customers to be able to go around the stores and to scan products on a handheld device and directly put them in their bag, or in their trolley, so that they can quickly make payments at the end. And that can either be through the app itself on their phone or potentially going to self-checkout device, or another payment terminal, but to do that requires products to be barcoded. So you have to think about, for example, what you do with loose produce.                                                                                 Also, you need to think about how you're going to verify that person is over 18, if they want to buy alcohol. So some of these journeys end up requiring not just the technology for the journey itself, but the wider operation of the store to be considered. And also to ensure that you have got staff journeys to support the customer journey. And I think you have to look at these things really quite holistically for them to really move the dial in terms of the customer experience. Jerry Langfitt:                    15:30                     Absolutely. It's way more than just one device. You really have to look at the whole process. And I like what you said, you have to support the staff journey. Where it's really popular to talk about consumer journeys, but invariably, even with self-service, there is an underlying staff journey, corporation journey, and business partner journey that is all interlinked. And I think you really need to consider all of those things that have a proper strategy to have a good journey, and, like the point of our current discussion, is an always on journey that someone does not hit a hiccup at all. So make sure you have things interconnected so you could properly monitor, have the right business partner, so they can take the data and make it actionable. And with everyone's goal that the customer never hits any snags at all. Lynn Beattie:                     16:18                     Absolutely agree. I completely agree. I think it's deeply frustrating for customers when there is a particular journey that they want to go on, so something like a self-service journey, if they hit a snag and it ends up being hugely damaging for the retailer, in terms of the experience that the customer has. And so it's absolutely critical that retailers work very, very hard, not just to think through the journey itself, but once they've made that investment in these new journeys to ensure that they are always on. Jerry Langfitt:                    16:48                     And it takes a new line of thinking, because it's no longer an SLA or break-fix, how fast can I fix it? How fast can I get a truck rolling? Table-stakes are you better have the infrastructure and service engineers everywhere, so you can support them to reduce first time fixes and get things as quickly as possible. But now with monitoring and interconnected devices, I think it's even more critical to make sure things stay running without a hiccup at all. Lynn Beattie:                     17:18                     Absolutely. And there's huge benefits if you can ensure very, very high levels of availability. For example, my local supermarkets has a number of self-checkout devices there, and they quite often have one or two of these [inaudible 00:17:33] devices that are not operating. And I think they've almost built in the need for more devices than you naturally require, just because they almost expect that some of them won't be working. And I think if they could only improve availability on all of the devices, actually they could probably remove some devices and hand over that space to selling space. So I think availability, and ensuring high availability, has benefits beyond just ensuring that there is a great customer experience. Jerry Langfitt:                    18:02                     That's interesting you say that, because more often than not people are like, "Oh, I want to reduce my service costs," and a proper availability strategy can do that. But what is a great point you just made is you actually can reduce hardware costs, because you're not over-committing too many devices knowing that two out of seven are always going to be down at some point. So that's an interesting cost savings, or total cost of ownership you can tie into your service model, if done properly. Lynn Beattie:                     18:29                     Exactly. And it's not even just the actual cost of the technology or the infrastructure itself. It's the benefit. If you don't have it there at all, not just do you not have to buy it and you don't have to maintain it, you don't have to put aside the space in the store to run it. And you can hand that space back over and either improve the store environment or actually increase your sales by turning over to sellable space. So I absolutely think that there are many, many things that retailers need to consider that are as important, if not more important, than saving cost when it comes to service. Jerry Langfitt:                    19:05                     All right. Thanks Lynn. I think that's a good place to close. Really appreciate your sharing your thoughts and how critical availability is to retailers and consumers. And thank you to our listeners for tuning into this episode of COMMERCE NOW. To download a free copy of the white paper on availability mentioned during our discussion, please visit dieboldnixdorf.com/selfservicesolutions to download your complimentary copy today.

Summary: We're living at the speed of digital banking these days, and the pandemic seems to be pushing the gas pedal to the floor. While the banking industry needs to continue to embrace digital banking, they also need to be mindful of how far to swing the pendulum to ensure they've got that equilibrium between what's best for the consumer and best for the bottom line. Related Content: Banking Predictions Blog Associated Links: Scott Anderson LinkedIn Profile Jeff Bender LinkedIn Profile Alyson Clarke LinkedIn Profile Transcription: Scott Anderson:               00:15                     Hello everyone. Thank you for joining us today on this episode of Commerce Now. I would like to welcome today's guests, Alyson Clarke, principal analyst with Forrester Research and Jeff Bender, who leads our digital solutions team here at Diebold Nixdorf. Alyson, great to speak with you again, and Jeff, so glad you have participated in this session of Commerce Now. Alyson Clarke:                   00:34                     Thanks for having me, Scott, much appreciated. Jeff Bender:                       00:36                     Thanks, Scott. Happy to be here. Scott Anderson:               00:38                     Perfect. So today I want to explore a hot topic. We're living at the speed of digital banking these days, and the pandemic seems to be pushing the gas pedal to the floor on this. The banking industry has been on a digital evolution path for a while now, and the payments mix continues to evolve with sentiment and behavior changes around cash. Consumers have adapted to this new normal and the FIs have pivoted to accommodate. So, I think what we want to unpack is, is this simply an acceleration of further digital evolution or is it really a revolution? Let's look at what this might mean for 2021 and beyond. We can't ignore COVID and the impact it's having on the banking landscape. So, what transformational accelerators have resulted from the pandemic? Alyson, why don't you kick us off? Why do you think the environment was ripe and ready for this? Alyson Clarke:                   01:26                     Well, I'm actually going to say the opposite. Banks weren't ready for this, and that's part of the challenge, right. I and myself and many in the industry now, we've been talking digital transformation for years and years till we're blue in the face and talked about the urgency of it.,And I think we've gotten to the point of digital transformation fatigue before COVID. We saw a lot of firms that had been delaying projects that they needed to do, like digitizing loans and other kind of operational improvements to digitize the back office and the way they serve customers.                                                                                 What COVID did was really, really expose their flaws and where firms had been falling behind. And as a result, of course forced them to do things really quickly and hurry and do things like digitize loans in weeks and even sometimes months, but usually weeks, as opposed to how long it would typically take them, which could be many, many months or years even. So I think we've got this kind of environment where it exposed the flaws. At the same time, I think it's forced banks to react and it's great because it's pushed through some of the hurdles that were blocking firms before. Some of the governance and hurdles that have slowed implementation down. So I think certainly in that front I would probably challenge it and say that I don't know that the industry was ready. Scott Anderson:               02:51                     Fair point. Fair point. Jeff, any perspective from your side of the equation? Jeff Bender:                       02:56                     Yeah. I mean, it's certainly accelerating things. I think that's right. The fall before was, there was a fatigue around digital transformation. You did see digital solutions, things like that becoming an optional. It was something that a bank would like to have, but it wasn't as critical or necessary as other initiatives. And I think certainly in the pandemic we've seen that change. As much as we like to talk about consumer behavior changing over time, we saw it radically change through the pandemic. But I do think there was a lot of technology foundation that was already in place there. And now what we've seen is consumer behavior is starting to drive an accelerated adoption rate of that technology. So I mean, even in our personal lives the way we order groceries, the way we order food. When we go to restaurant, we scan a QR code now to get a menu. Those have all changed the way that we operate.                                                                                 And it's forced us to start to do things differently. I like to tell the story about my father. He's an elderly man. Technology is his enemy. He's literally a guy if, when he doesn't use his cell phone he turns the thing off, so no one can even call him. But during the pandemic, I called him, and sure enough, the guy eating nachos and drinking margaritas and I'm like, "Where'd you get that?" Well, he ordered it on Uber eats. I mean, he never would've done anything like that. But now he's trying these new experiences and realizing that, "Hey, not only are they not bad, it's actually pretty good."                                                                                 It's pretty nice and that's changing consumer behavior from that. And we see that in the banking industry, starting now as well, where organizations, we're starting to see a lot more mobile deposits now than we ever saw before. People are forced to use that. People are forced to go to self-service. They're forced to go through the ATM channel to get cash because they're not going into branches as much as they used to. And so I think that consumer behavior change has been monumental as an outcome of the pandemic activities. Alyson Clarke:                   04:51                     I was just going to add something. It's interesting though, because what we've seen in terms of business priorities, accelerating the shift to digital business is now one of the top three priorities post COVID. It was number 11 pre COVID. So it's shot up to the near top of the list. And on the opposite side, when we talk about consumer behavior and consumers don't think digitally and consumer experience we're actually seeing the focus from firms in terms of their top business priorities for the next 12 months, improving the experience of customers has dropped dramatically and it's not in the top five anymore. So it's interesting how, what we're seeing playing out and then what we're seeing firms saying their priorities are. I think there's a problem there. Scott Anderson:               05:39                     So, tell me a little bit about how you perceive and maybe, Alyson, you can kick off. How are you perceiving any differences or deltas either on a regional basis or even at the size of the financial institution or firm? Is there a difference here? Is there a delta, or is everybody facing this? Alyson Clarke:                   05:59                     Look, I think everyone's facing it, but in different ways, depending on where they were pre COVID. That's what I mean about COVID really kind of putting a microscope on the areas that were behind and the holes, digital transformation strategy. So we're seeing digital acceleration happen globally, but clearly the banks in some regions were better prepared than others. Some larger banks were better prepared than smaller banks. In terms of regions, Europe, for example, was already way ahead of North America for video chat and video banking. Now we've got North American firms scrambling to catch up and figure out how to use video.                                                                                 In Europe, they have been miles ahead on contact less payment take up and usage for years because it's been around a lot longer, whereas it's relatively new in North America. And so, whilst we're seeing that massive take up or we're seeing an increase in take up here in North America of contact less payments. It is COVID that's driven it. So again, I think the difference in regions and the difference in size of firms is reflective of where they were in their journey and the technologies they were already adopting pre COVID. COVID has kind of highlighted those gaps. And as I said, it's kind of forcing everyone to play catch up on stuff they thought they had many more years to build. Scott Anderson:               07:23                     Jeff, you've mentioned a great example with family member, Uber Eats and certainly a great example of how we're embracing digital. Any specifics you're seeing in banking that you can point out? Jeff Bender:                       07:35                     Well, certainly you think when we looked at consumer behavior and adoption and usage of those types of technologies. It's been dramatic shifts. Citibank saw an 84% increase in mobile deposits throughout the course of the pandemic. They saw a 10 fold increase in the use of Apple Pay. So it was starting to see digital payments, touch less payments, kind of starting to come into the mix. We've started to see that massive shift. Our data now coming out of kind of a prediction of a post-consumer world is saying that 55% of consumers are less likely to visit branches as they go forward, and 26% of them don't want to have a face-to-face interaction at all.                                                                                 So challenge now becomes if that's the new norm for consumer behavior then what can you do as an FI to start to embrace technology and not let that technology dis-intermediate your relationship with the customer. So as Alyson said, things like how do you adopt video technologies through some self-service channels? Those things become very, very important to organizations, A, to respond to today, but also B, to prepare themselves for tomorrow. Scott Anderson:               08:42                     It's interesting and Alyson touched on this at the beginning where I think some of the FIs were caught a little off guard, even though digital and in transformation was finding its stride. When we look at some of the output from the 2021 Forrester prediction report, there appears to be an industry focus or response to potentially mistakenly pivoting to digital only. And as we're seeing more and more FIs adopt this, I kind of look back and look at moves that Google has with their Google Plex and wonder, "Do we really think consumers are ready for this bank of virtual experience?" Alyson, again, I'm going to pick on you first, what's your opinion on this? Alyson Clarke:                   09:22                     Yeah. So look, I think it's not a one size fits all answer. I think some consumers are definitely ready for that digital experience. And we know this because we've seen around the globe, the take up of consumers for digital challenges like Monzo and Revolut and Chime. The problem is that, well, it's not a problem necessarily, but those digital experiences tend to be really simple with maybe just a checking or savings accounts. Some may have a credit card. And so those kinds of simple digital only solutions are more appealing to younger consumers who have simpler banking needs or those that are perhaps looking to try something new. And in that case, it's probably a secondary account, not their primary accounts. So, you think of this challenge. Your customers get older and, or they get wealthier, both potentially. And what happens then is, when things get more complex, human interaction becomes critical.                                                                                 I always say that if you have something that's either high value and, or emotional and or complex, any combination of those, that's when people want human help and guidance no matter what their age. And if I look at something like Google Plex, which is this banking marketplace that Google's due to launch next year. I think there's definitely going to be an appeal to consumers with simpler banking needs, so maybe younger consumers or those wanting to try new things. And there's certainly those that will want to try it for the convenience factor because the way it's going to be integrated with Google Pay and some of the tools that Google say they're developing.                                                                                 The challenge is going to be that as these consumers grow. And I think some of the banks are, the way they're going into this relationship with Google Plex is they're setting up separate accounts, a brand new digital checking or savings account that will go on to that marketplace. And what I'm not clear and perhaps they're probably unclear off too, is how do those separated new products for Google Plex integrate back into the bank's own digital services and human support? Will they even integrate back in at all? And so that kind of becomes a challenge then, if you're using Google Plex, if you're a bank using Google Plex to say, "Hey, I'm going to attract a new customer base and get some deposits. And then I'm going to use that to deepen my relationship with their customer base." How are you going to do that?                                                                                 And certainly the human element will be critical in that, in some way, shape or form. It might not be branch. It could be video. It could be... There's many different things. And so, when I think about this in the branch scenario, we've got potentially firms pivoting to shut down branches completely, or some of them are pulling back. I think some of them might get short-term benefits, but I think many will regret it later on. Because what we do know is when we look at consumer behavior, the location and availability of ATMs and branches is one of the key considerations when choosing who their primary bank is. So, those that pull back on that human element and branches too far, it could be a very costly mistake. Scott Anderson:               12:23                     Jeff, any points of view? Jeff Bender:                       12:25                     Yeah. I agree with that. I think it's about striking the right balance. I think if you're a financial institution, you built your brand based on establishing robust relationships with your customer, to turn around and kind of pivot and say, "Okay, tomorrow we're going to be a digital bank and compete with the likes of Chime." I don't think that's smart. So I think it's about striking the right balance. I'm a huge supporter of the digital only channels. I literally have been kind of a digital banking customer for the past 15 years. Probably stepped foot into a branch, I can count the number of times on one hand. But I still have the need for some of that physical interaction. There are times when I need cash. I need to go to an ATM and get some cash.                                                                                 There are times when you have complex customer service issues or you need advice, and those things are still very personal types of interactions and they still require that personal connection. And so, I think in today's world that still takes place through that in-branch experience, but that's definitely evolving.                                                                                 And in with regards to technologies like Google Plex, I think on the one hand that can be seen as a threat, but on the other hand it's also, I think a significant opportunity for organizations to partner with some of these technology organizations and see how they can deliver services more effectively, more efficiently. One thing we've got going on right now in the kind of this post pandemic world is we have historically low, unprecedentedly low interest rates and that's impacting the financial institutions bottom line. And so they're looking to reduce costs, but also open up new revenue streams. And so, are there opportunities to do that?                                                                                 And I look at someone like Google with a healthy dose of a mindset around some of the analytics side as well. If you think about the potential there, you can start simple, and you can start to gain access to consumers and their spending habits and their behaviors and so forth. But as you go forward, you can see how that can become very personalized and a very personalized experience through technology from a company like Google. Maybe Scott, and I know everything about you, every transaction you've made, because you're doing that through a Google platform. I grow and I extend or I offer products through that platform maybe from other more traditional financial institutions, which adds value to both sides of the equation.                                                                                 And you can even get into things like conversational AI. If I know all this data about you and when you pick up the phone, I can go, "Great. How are you enjoying that new car you just bought last month?" Now, we're at a different level where I have this personal connection and as a consumer, how do you leave that? How do you leave that and start over someplace else? So I think they're laying the groundwork and the foundation for something that is very significant in the industry. Alyson Clarke:                   15:05                     I'll just add that I agree with that, and I agree with certainly the personalization that has to happen for those digital touchpoints to create that emotion and that loyalty that comes with that connection. And you're right, it does make it harder to move. That little thing going off in the back of my mind, that just goes over and over and over is, you can't forget the human. And I actually, you know what? I'm going to go out on a limb and actually say that I think what's going to happen post COVID, this is my personal view, is there's going to be a craving for human connection. I mean, how many of us are really kind of sick to death for social distancing and not being able to interact with people? I think potentially when this is over and we're vaccinated or whatever and that could be a year from now, whatever. There will be potentially swing back to craving this human connection in many things.                                                                                 And I don't think banking is not included in that. I think banking is included in that, and it is about getting that guidance and advice to help me improve my financial situation. I think it's about re-purposing the branch to be this engagement center for customers and employees. And yeah, if you want to get the cost savings, there might be less of them. But it's also that better using technology in those branches, being smarter about the footprint, being smarter with the technology and shifting to paperless and cashless branches. So I think you can squeeze some of those benefits out of it without losing the upside from that human connection. Scott Anderson:               16:33                     So Alyson, and I know we've talked about this in the past and your point of view through the consumer's lens is give them choice, don't force them. I think the pandemic has done a little bit of forcing for obvious reasons. But you're feeling fairly confident that consumers are going to want to have that full range of engagement capability again too, once we're through this pandemic and once people are comfortable again engaging directly. Alyson Clarke:                   16:59                     Absolutely. And just to clarify, in terms of full range, I don't mean they want to do everything in person. Not that sort of full range, just to kind of clarify. When you say full range, I interpret that as, they want to have a choice. Don't force me down a path. In fact, we see this time and time again in our customer experience index, which measures how good experiences are, and then how that translates to loyalty and revenue. And firms that do really well are certainly growing faster than their peers, in terms of revenue and so forth. And what we find is that through that data is that when customers are forced to self serve, they're not having a great experience. It doesn't mean they're not happy to, if they want to have a choice. And I think in the spirit of driving down costs, a lot of firms have taken that choice away in certain parts of the customer journey and I think that's where the pendulum can go too far as well. Scott Anderson:               17:56                     And that really builds then on what Jeff's point is, let's use technology to really personalize the experience and use that personalization and that data to ensure that every interaction, whether it's in-person or through a digital means, is empowered with that content in that context. And I think that's where there's probably going to be some huge benefit. Alyson Clarke:                   18:17                     Yes, absolutely. Scott Anderson:               18:19                     So, now all of this conversation around embracing the transformation and going digital and all of this investment, I'm a CFO, and I'm a CIO at a bank and I'm staring my board in the eye or I'm staring my shareholders in the eye and looking at the huge investments that I've made or I'm being committed to make this year and next for digital transformation. How can we capitalize even further and increase the value of that spend? Maybe, Jeff, we'll start with you in your view, how can or should financial institutions monetize this investment in 2021 and beyond? Jeff Bender:                       18:54                     Yeah, well, like I said previously, I think they've got to strike this balance of trying to cut cost, streamline operational expenses, where they can by also better positioning themselves to open up new revenue streams and better engage with the customers. And I think right now, tactically short-term, I think the way for people to maximize their dollars is to invest in those technologies that do allow a more engaging experience through the digital channels. So if you've invested heavily in that ATM channel, bring marketing capabilities into that. Start targeting people who are using your ATMs that maybe are not a member today and offer them incentives to switch banks. Add video capabilities to those same ATM, so you can interact with customers in a way that is more meaningful and more personal and emulates that human interaction that they're missing today.                                                                                 And I agree with Alyson that they're craving it today. I think we will crave it for some time. But I also think we have to beef up some of our other capabilities, too. We look at the behavior changes that have taken place and you think about even things like, "Oh, we're doing more deposits now", and whether that's through a mobile channel or through an ATM. I need to make sure that those self-service experiences are robust. And I need to invest in those areas so that when a customer or consumer comes in and wants to use that self-service channel, because they don't want to go into the branch for whatever reason, they have a way to do that, and it's a good experience. And I think what we've found through the pandemics, when we have those good experiences, we continue to use them. We continue to adopt them and that's beneficial both for me as a consumer, as well as the business I'm engaging with.                                                                                 So I think, it's as Allison said a little bit earlier, it's kind of about choice. It's about making sure you're allowing those consumers to bank with you and interact with you, when and where they want. And I think it's about making sure you've got a really very, very strong customer focus. So as an FI, you can respond to those consumers because I do think there's different dynamics, different banks, different regions, small banks, big banks, credit unions, etc, and I think all of those dynamics are different. You have to take all that into account. Scott Anderson:               20:58                     Alyson, any other opinion on a secret sauce here to make this work? Alyson Clarke:                   21:02                     So I would definitely say, absolutely focus on leveraging the technology you have. I mean, in any economic downturn or tough economic conditions, it's always hard to get funding to do the stuff you need to do, let alone the stuff you want to do. But time and time again, I see a lot of firms that have technology that's completely under utilized. They get CRM technology, personalization tools, some of the marketing stuff that you spoke about. It's like in some cases, people have gone out and bought the Tesla and they're only using it as a cup holder. Some of you may laugh if you heard me use that analogy before, it's one of my favorite because I just, I see it so often. There's so many more ways to leverage and use the technology we already own. So I think that's the first thing to look at because at this economic time it's smart to be cost conscious.                                                                                 But the other thing is when you're thinking about prioritizing what you do, try not to get completely stuck in prioritizing things that reduce costs. Not to say that you don't want to focus on that. But the real priority at this time, and this is always the advice during an economic downturn is, focus on getting closer to your customer, not further away. So things that you're talking about there around forcing them to self serve, or I would say making it hard to contact a person, that won't get you closer. We do know in economic downturns that firms that invest in deepening relationships and adding value above and beyond the product and showing those customers that they're valued instead of spending their energies focusing on trying to sell them a product. Remember it's an economic downturn. They might not be buying as much.                                                                                 Those brands that focus on getting closer and deepening engagement create the loyalty and the [RO One 00:00:22:48] that loyalty and the benefits will be rewarded for years to come when those economic conditions improve. And in fact, when the up to it happens, they will grow at a much faster rate than those firms that didn't focus on getting close to their customer and still we're trying to cling onto survival and how do we sell more product. So I guess that would be my kind of bit of advice there.                                                                                 The second thing I kind of linked to that is around keeping an eye to the future. If you are investing in things and building things out, think about a longer term, think about the world post COVID and position the firm for the future. And I talked about video before, that's a great example. North America is very much behind Europe and other regions. That video chat, video banking are a right way to engage customers. And I know many are accelerating that with COVID. Sometimes not always in a good and secure way. There's probably more work they can do. But it's a great technology that will solve some challenges now, but help you get closer to customers and positioning you for the future.                                                                                 Similarly, with a lot of firms that are building digital loan origination, or even any kind of digital account opening and digital sales and purchasing experience. The wrong way is just to build it for the customer self serve. The right ways to think about how do I leverage this? How do I get more out of it? And that is embed human support along the way for the customer. Allow for handoffs to agents and frontline staff, because we know customers move across touchpoints. And also, allow agents to use the same great technology. So if the customer does choose to call, they're still getting that same great experience. So, leverage in that case as well, across touch points and interactions. Scott Anderson:               24:31                     Fantastic insights, Jeff, Alyson, really, really appreciate you spending time and giving us some opinions on some of these topics that are probably a top of mind for a lot of financial institutions, as we hope to come out of this global pandemic. If anything is certain, we're living in this phase of where digital transformation has been accelerated so significantly. And while the banking industry needs to continue to embrace digital banking, we also need to be mindful as you both pointed out, of how far to swing the pendulum to ensure we've got that equilibrium between what's best for the consumer and best for the bottom line. We've clearly outlined here today they may not always be aligned.                                                                                 So thank you to our listeners for tuning into this episode of Commerce Now. To download a free copy of the 2021 banking predictions report mentioned during our discussion, please visit DieboldNixdorf.com/bankingpredictions to download your complimentary copy now.  

Summary:  In this podcast we will discuss how open retailing is vitally important to retailers today. The COVID-19 pandemic has created a lot of changes for retailers and we discuss the importance for retailers to change, adapt and evolve their consumer journey's as quickly as possible.   Resources:Whitepaper: Open Retailing Guide Blog: The Importance of Openness in the Future of Retail Nielsen Study: Retail Personas Infographic Brochure: Understanding Why Grocery Shoppers Adopt Technology Websites: COMMERCE NOW Podcast Retail Self-Service Solutions - OPENNESS Host/Guest LinkedIn Profiles: Jerry Langfitt Matt RedWood Transcription: Jerry Langfitt:                    00:00                     Hello again, this is Jerry Langfitt, your host for this episode of COMMERCE NOW. In today's episode, we are joined by Matt Redwood, global head of self-service for the retail division, who is a known expert at helping our retail customers find a retail strategy that best fits their organization's needs.                                                                                 Today, we will discuss how openness is vitally important to retailers today. There were a ton of changes in retail, what are some of the trends retailers need to adapt to, Matt? Matt Redwood:                00:41                     Retailers have really got a difficult period at the moment. Parking COVID for one minute, there's two pressures that are really driving them to evolve their value proposition as quickly as possible. The first is the ever-expanding or rising consumer expectations. Consumers are always looking for that heightened level of experience, particularly in-store, more so when you look at the shift to online.                                                                                 So online is obviously extremely convenient, it's very quick. Consumers are still driven into stores because they value the face-to-face contact with that particular retail brand and the experience that they get in stores. So retailers are constantly under pressure to increase their in-store experience to meet the needs, or hopefully exceed the needs of their consumers shopping within their stores, and to try and capture that sale within that particular store to make sure that that consumer doesn't go elsewhere.                                                                                 Similarly as well, heightening that experience within the store also drives that consumer to come back to that store. So in a period where brand loyalty you could say is at an all time low, it's even more important that they deliver the right experience, as well as a good experience for that particular consumer that's walked through their doors into their store.                                                                                 The second factor that they're really having to focus on is the changing speed at which technology moves at. Technology's always been an extremely fast evolutive business, but it's really, really difficult for retailers to integrate new innovations or new technologies or new solutions in a sustainable way that supports their overall platform and ecosystem.                                                                                 Obviously now COVID has come along, it's thrown another dimension into the mix, which is uncertainty and speed of change. Retailers had to adapt extremely quickly over the last 12 months to not only changing consumer trends as confidence or shopping habits changed, but also different regulations or legal restrictions in terms of how consumers shop within their stores. So, there's three massively fast moving influences here that retailers have to combat and navigate successfully. Jerry Langfitt:                    03:01                     What's been their struggle right now adapting to that? Is it their own systems? Is it the solution provider systems? Where seems to be the biggest disconnect? Matt Redwood:                03:11                     Sure. So I think historically there's been certainly a lack of openness within retail IT, and that's something that's changing extremely quickly. It's being forced to change by retailers' requirement to constantly update or evolve their customer journeys or customer touch points within their store as quickly as possible to stay ahead of these trends. So retailers are really looking for open platforms now that gives them the ability to change, adapt, evolve, and ultimately improve their consumer journeys as quickly as possible. A closed system really doesn't deliver against that. Jerry Langfitt:                    03:51                     It seemed like, at least in years gone past, solution providers for retail technology would say, "Here's my software, here's my hardware, and we'll change real slowly." So, the solution provider's been just as much to blame as the retailers for not being very open. Matt Redwood:                04:06                     Yeah, I completely agree. I mean, if you take the self-service business as an example, historically retailers have procured the hardware, the software and the services from one supplier. Which is absolutely fine and will continue to a certain extent in the future, but you're very much then locked into one particular platform, you're obviously dependent on the roadmap of that supplier.                                                                                 So shifting to a more open infrastructure means that, A, you're not locked into a specific solution, you're not locked into a specific vendor and their defined roadmap and you're not locked into a specific process. So, it gives you the flexibility to be able to bring third parties or new technology or new solutions into your environment much easier and much quicker, but also it's giving retailers the choice and the power over their own IT roadmap. So no longer are they dependent on one particular supplier's hardware or software roadmap, they can actually cherry pick best of breed from the market and bring that into their ecosystem. Jerry Langfitt:                    05:08                     Well, it's interesting, because when I'm talking to retailers, their level of sophistication with IT has grown exponentially. Whereas before all I needed was a cash drawer and a till, now I have many different types of paths that the consumer can take. IT has had to grow with that, to the point where even they're doing a lot of the software work themselves and they really want to control it. Consumers want to be empowered, as retailers I feel seem like they want to be empowered as well and be able to choose their own path. Matt Redwood:                05:39                     Yeah, I mean, ultimately, it's about giving the end consumer the choice to shop in the way that they want to shop. Really to do that, you have to take a good hard look at who shops in your stores, why they shop in those stores or at your particular brand and what good looks like to them. Then it's about building the right IT infrastructure to meet those expectations.                                                                                 So gone are the days where you may have one, maybe max two or three touch points in a store, retailers now really need a kit bag of different solutions that they can pick different combinations of to really tailor the technology to each one of their stores. So it's not a one size fits all anymore, it's really about tailoring the technology, not just to your estate, but to each and every store to make sure that you're actually matching the technology to the expectation of those particular consumers within their store.                                                                                 The best example to use is really when you look at a grocery retailer that may have three or four different store formats, right from the very smallest convenience store, all the way up to the supermarkets and the hypermarkets, the customers that shop in those stores may be the same person, but they may be shopping in a different time of the week, and certainly would be a very, very different consumer journey and expectations. Someone shopping at a convenience store, it may be an inner city worker that's coming to grab a lunch, so three items at lunch, or a couple of items that their wife has asked them to pick up on the way home. Transversely in a hypermarket, you're much more likely to have a family shopping to buy their weekly shop with 50, 100 items.                                                                                 Now it may be that same consumer that's shopping across all store formats, but the expectation related to the customer journey or the shopping journey that they're on, that particular mission is incredibly different. So it's about understanding what are the different customer journeys that you have in your stores, finding the right technology, and then providing them with the touch points to deliver against those customer journeys in the most efficient and value rich way.                                                                                 Looking further forward, retailers are really looking at how can we increase that consumer experience within the store? How can we make it as easy and rich as an experience for that particular consumer? I think what we will see moving forward, and back to the topic of this conversation why openness is so important, it's because some more emerging technologies such as facial recognition, item recognition, product tracker, people tracker.                                                                                 All of these emerging technologies retailers are going to start to use them more and more to make sure that they can deliver a heightened level of experience in their stores to make sure that that consumer not only shops in that store once they're there, number two, they maximize the spend once they're in the store, and number three, they come back to that store to shop again. So being able to cherry pick best of breed in terms of different technologies or different solutions on the market, bringing them into the ecostructure for each store in your estate is going to be the important driver for openness in the future. Jerry Langfitt:                    08:44                     Retailers, as the consumers need different journeys themselves, so you need a solution provider that can actually, okay, there's going to be a retailer that wants all the work done for them and you're going to have a retailer that wants to do most of the work for themselves. How does openness serve both of those types of retailers? Matt Redwood:                09:04                     Sure. I think this is the biggest change that we as suppliers have to appreciate and support moving forward, that every retailer is different. Although they may have stores that are similar, each value a different approach in terms of consumer journey, what's important to that consumer, the level of service they want to give, and also the level of staff interaction and technology interaction.                                                                                 I think we as a supplier to the retail industry need to be very mindful of the fact that every retailer may want a slightly different approach, a slightly different value proposition or technology approach, and we have to be able to support that. The sustainable way of doing that is with an open approach. That gives us the ability to work with one particular retailer who may want off-the-shelf solutions, but they're going to combine different solutions in a different way to create the value proposition for their store.                                                                                 We might have retailer B, who's really looking at taking a lot of the development in-house, so acting a bit like a systems integrator, where they bring best of breed from three or four different suppliers and merge them together to create the right value proposition. So, we as a supplier to retail or technology supplier have to be open in terms of how we work with retailers, how we support their future vision and their strategy, and ultimately how we enable them to take the best of our solutions and maybe merge them with other technologies. Jerry Langfitt:                    10:36                     I recently read a study from McKinsey and they surveyed consumers this past March, then again this past June. In just 90 days, they recorded a notable increase in self-service preference by consumers. Does open retailing play a role here to adapt to this quickly changing sentiment? Matt Redwood:                10:55                     Yeah, absolutely. It's really interesting data that you talk about there, because I guess there was a risk when everything was heavily locked down and governments were changing the regulation almost on a daily basis. Retailers had to really react extremely quickly, not only to how they kept their staff and their consumers safe, but also what technology they used in the store. The interesting trend that was driven out of this was actually consumers' comfort level using self-service devices in stores actually increased quite dramatically.                                                                                 It's a strange one, because the perceived risk is actually among human interaction and not interaction with technology. So, a lot of retailers really leveraged the self-service devices they had in their store, because it gave them more flexibility in terms of how they dealt with the changes. Quite a lot of retailers had a big shift in their operations that they had to deliver, quite often managing queues because they had restricted quantity of consumers inside the store and managing consumers out of the store in the car park. But also inside the store, just making sure they had products on the shelves, because consumers in certain times of the year were panic buying or stock buying.                                                                                 So self-service not only enabled them to deliver the right customer journey, giving consumers that comfort level that they weren't interacting with other humans too much and they were safe, but also it freed up a lot of the staff that would normally be on checkout to actually go and work on some of those other tasks elsewhere in the store.                                                                                 So, I think the underlying message is really that self-service gives retailers the flexibility to run the right operational model within their store, and to balance that, I guess, customer journey with staff utilization and efficiency. I think that's the overarching benefit that most retailers took advantage of through the last 12 months of COVID. Jerry Langfitt:                    12:54                     Well, to go back to the original point though, what's happening with COVID is more of an acceleration of what we saw happening anyway with what you said about online shopping and needing to make the physical store much more relevant. So these aren't new things, but these are things retailers always intended to work on, and this is just accelerating everything. Correct? Matt Redwood:                13:18                     Yeah, absolutely. I mean, ultimately a lot of the trends that we're now seeing were moving in that direction anyway, all that's happened is we've accelerated that trend. I think the other trend that will be accelerated is actually consumers will start to demand more from their retailers and their in-store experience, because not only is it about choice in terms of shopping the way that I want for a most enriched experience based on my needs as a consumer, but also there's this safety and comfort element that consumers want this enriched customer experience, but they also want to do it in a way that they perceive as being safe.                                                                                 So, retailers have really got to look at how they can bring even more touch points or even more customer journeys within their store to give those consumers that level of confidence that they need. So, retail is going to become much, much more diverse over the next couple of years where we see a much more blended view, not only between offline and physical in-store, but also in terms of the different touch points that retailers have in-store.                                                                                 I think there'll be a lot more diversity retailer to retailer, but also among the retailer's estates, it really gives them the opportunity to have different mixes of technology in each one of their stores, depending on what the customer journeys are. So if anything, it will give consumers much more flexibility in terms of how they'll shop in stores in the future, and it will give retailers much more opportunity to engage with that retailer in the right way and ultimately influence that they shop more at their stores. Jerry Langfitt:                    14:55                     Well, and that to me seems much more critical, because if I'm talking about my bank accounts, it takes me a lot of effort to change banks. However with retail, I can go from the grocery store across the street to the grocery store one block over, and I can get affected by the parking lot and how busy it looks. So it seems like the retailers, it's even more critical that they look to those new journeys to please the customers. No? Matt Redwood:                15:22                     Yeah, absolutely. I mean, ultimately competition amongst retailers is the highest it's ever been. Brand loyalty is probably as low as it's ever been, because a consumer knows that if they get a bad experience in one store, they go down the street and there's two or three similar stores that they can shop at. So, they're being very fickle in terms of shopping at the stores that they know that they get the level of experience that they expect.                                                                                 I think one of the interesting phenomena when you speak to consumers is once they have a good experience in-store, that becomes their defacto base level and anything below that is then deemed as a bad experience. So, retailers have really got a tough job to make sure that they are continually enhancing the in-store experience, and obviously technology plays a huge part of that.                                                                                 If we look at the self-service space as an example, friction points associated with self-service devices are 100% the focus among suppliers like ourselves, but also in retailers in terms of how we remove or reduce those friction points as much as possible. So looking at emerging technologies, such as item recognition or customer recognition to actually remove some of those friction points that consumers experience using a particular touch point.                                                                                 Back to our openness topic, having the right open ecosystem that allows them to say bring a third party innovation and integrate it within their self-service environment is going to enable them to deliver a heightened level of consumer experience for the end user, and ultimately differentiate their in-store experience against one of their competitors. Jerry Langfitt:                    17:03                     Now about that, when a retailer isn't open or when a solution provider isn't, what are we talking about the damage or the time it takes for someone to adapt? I mean, when you say incorporate a new journey, what's the negative of not being as open? It just takes much longer to react to the consumer, correct? Matt Redwood:                17:24                     Yeah, I mean, ultimately from a retailer's perspective, if your supply isn't open and there is a new piece of innovation or technology that you want to integrate into your store environment, you're very reliant on that supplier being able to build that particular solution or technology into their roadmap to then deliver to you. Ultimately, that's the wrong way round. It should be us as suppliers that are pushing the envelope with retailers in terms of what technology they should be putting in their store to deliver a heightened level of experience.                                                                                 What the openness gives them is, it gives the supplier the ability to actually go to market and find the parties that may be beneficial, could enhance the solution. But on the flip side, it gives retailers the flexibility to do the same. So, if they have a partnership with a technology supplier that they use elsewhere in their store, and it may be something related to their warehousing or their back office, and they see that there is a potential benefit of integrating that technology in the front office, an open environment allows them to take control of that decision and ultimately get the solution out there quicker. So, it provides much more agility to retailers and it provides much more flexibility to the supplier in terms of what's their value proposition and what their solutions look like. Jerry Langfitt:                    18:47                     Hmm. It sounds like openness is definitely critical for every retailer's success. I think this is a good place to wrap up our conversation today. Thank you again, Matt, for sharing your insights with us, and thank you to our listeners for tuning in to another episode of COMMERCE NOW.                                                                                 For more information on openness in retail, go to www.dieboldnixdorf.com/selfservicesolutions or click on the link in the podcast show notes. Until next time, please keep checking back on iTunes or however you listen to podcasts for new topics on COMMERCE NOW.  

Summary: In the midst of the COVID-19 pandemic, we've experienced a major shift in the industry dynamics that will fundamentally alter the economics of the financial industry and require changes in how banks and credit unions interact with their customers moving forward. On this episode we will cover how best to  stabilize operations in order to take control of and execute your business continuity plan, establish a plan of action with vendors and partners, and continuously assessing your execution plans and operating through a hierarchy of monitoring  Resources: On-Demand Webinars Referenced in this Podcast: How to prepare your FI for a Post-Pandemic Marketplace Websites: COMMERCE NOW Podcast Diebold Nixdorf Advisory Services Guests/Host LinkedIn Profiles: Scott Harroff Scott Weston Simon Powley Jim Flannery Transcription: Scott Harroff:                     00:16                     Hello again. This is Scott Harroff, your host for this episode of COMMERCE NOW. In the midst of the COVID-19 pandemic, we've experienced a major shift in the industry dynamics that will fundamentally alter the economics of the financial industry and require changes in how banks and credit unions interact with their customers moving forward. Throughout April, May and June, my colleagues, Simon Powley, Jim Flannery, and Scott Weston hosted a series of webinars to help keep you informed and provide guidance during these unprecedented times.                                                                                 Today, I'm happy to have everyone here together again to discuss how technology investments will provide adequate return on investment as operations begin to stabilize. There will be a few focal points we're going to discuss today. Stabilization of operations in order to take control of and execute your business continuity plan and adhere to realtime guidance from federal state and local government. Next, establishing a plan of action with vendors and partners to align new realities and test new solutions and new processes. And finally, continuously assessing your execution plans and operating through a hierarchy of monitoring an objective key result dashboards to ensure nimble execution and shift the conversation to focus more on the technology we are seeing.                                                                                 While banks have been journeying through the paths of branch transformation and self-service strategy, these journeys have been accelerated by the coronavirus pandemic. One of the most notable changes to combat the impact of COVID-19 has been the push to self-service and digital channels for communication and customer interaction. Today, as we look to the transition of a new normal, let's explore the question of what's next. With that, welcome Simon, Jim and Scott. Thank you for joining me today for this very important discussion. Scott Weston:                   02:00                     Yeah. Thanks for inviting me. Jim Flannery:                     02:02                     Thank you, Scott. It's good to be with us. Simon Powley:                  02:04                     Yeah. Great to be with you today. Thanks, Scott. Scott Harroff:                     02:07                     Simon, to give our listeners a little bit of background, could you please start off by telling our listeners a little more about the webinar series the team delivered earlier this year? Simon Powley:                  02:16                     Yeah. Thanks, Scott. It was great. It was really a three-part series that we developed as we saw kind of the implications and what was happening in the industries. One of the things that we at our advisory services group really are tasked with is keeping our customers up-to-date on changes that are relative to the marketplace, and obviously COVID had a lot of impact on those. And so we worked diligently and got some good information.                                                                                 The first one really was about the impacts of location-based delivery channels. So what was really happening out there and some of the unique solutions that FIs have put into action as a result of this with digital automation being at the forefront of it. And then finally, how things were changing very, very quickly with personalized experiences and what the impacts were to operational efficiencies given this unparalleled time.                                                                                 The second one, Scott led, and that was really about learning from the COVID-19 experiences. What were the various stages of recovery that were going on? What kind of things that they could mitigate, financial institutions could mitigate in the short-term and how to really plan for the duration of this recovery and a general banking or industry outlook of what we could tell was happening in real time as a result of COVID.                                                                                 And the third was, what were the new expectations of customers as a result of this? We saw digital transformation and digital adoption really skyrocket throughout this, due to customers being forced in some cases to digital channels, and how to really capitalize and operate efficiently as a result of that. And finally, adjusting those branch workflows and new traffic patterns based upon those customer needs, which allows changes in roadmaps.                                                                                 And finally, at the end of that, Jim really put together some ideas or suggestions of what kind of technologies we're seeing come out of COVID-19 and how to prioritize or look at those based upon our level of expertise. One of the things I think that was really interesting throughout this, as we got into the webinars, is we were very interactive with the customers and had a lot of polling questions to really gauge what was on the mind and to make sure that we were seeing the same thing that our customers were. That, as we had really good attendance, was a great time to do that.                                                                                 One of the questions that we intentionally delivered on all three of them to see the consistency in how things were changing over the course of the webinar series was, when do you anticipate your organization will resume business-as-usual operations? And you can tell it's somewhat ambiguous intentionally to allow that perspective. And then gave them a myriad of answers that they could choose from. The interesting thing with this was that, in every webinar overall, overwhelmingly I should say, the results were that they expected that within the next three months, they would be back to business as usual, which really puts us into late summer or early fall timeframe, which was surprising to us. Scott Harroff:                     05:11                     Thanks for that, Simon. But as I listened to the governor of Ohio and a bunch of other news media feeds, it seems like things aren't getting better. They might even be spiking a little bit. So how do you see things progressing given that? Simon Powley:                  05:28                     Yeah. Well, it's a great question. I think there's a lot of things that are changing. I mean, I think from a health perspective, we won't focus on that here today. I think we'll focus more on the industry perspective, but certainly we're beginning to see, and we covered this too at our webinar, that there could be what we consider to be a second wave, or this could have longer-term implications to financial institutions and certainly our economy overall.                                                                                 In terms of getting back to normal and that specific question, what we're seeing specifically is I would say we're getting into a new normal. I don't believe, I don't think the group believes that we'll ever go back to the way things were, the way that the customers' interactions were, the channels that customers were using at that time, specifically branches, those kinds of things. I don't know that it'll ever go back to, but we are already moving into what I think we'll see and evaluate as a new normal.                                                                                 And so banks are very flexible. I've been very proud of them in terms of managing their operations and changing things and adjusting their operations accordingly, and they are functioning. And so what we're seeing is banks are really still evaluating their networks. In some cases, branches have not reopened, and in some cases we're seeing reduced hours. In some cases they're operating with less staff. And certainly with social distancing guidelines it is changing the operational role of the branch in these cases, but they are operating, I guess, in more of a new normal. And we'll continue to see that play out here in the future, and maybe we can get Scott Weston to comment on that a little bit more as we get into today.                                                                                 We're still seeing corporate staffs largely working remotely and distancing. And so we're still seeing just a handful of people at what traditionally would be a headquarters with many, many people in many, many operating groups to do that. And we don't know when or if that will return back to normal. In many cases, large digital providers, such as Google or Microsoft or those companies, are already announcing that they will not go back until sometime in 2021, or in some cases I'm hearing will never go back to the way things were or leverage their headquarters the way that they have in the past. And so those are certainly very consistent with what we're seeing in banking.                                                                                 Digital channels are really being leveraged by both bankers and their customers to operate, again, normally, or to not disrupt their operational roles or the way that they're interacting with their banks. And so you're seeing that transition and continue to modify and change a little bit.                                                                                 Finally, mortgage operations, for example, are functioning normal. They're very, very busy right now, given this unparalleled interest rate environment and still extremely busy. However, the interactions are different in more of a new normal way. Things are much more virtual than they used to be. Whether that's face-to-face meetings on Zoom or via Skype or certainly leveraging the telephone or even mobile apps in a much more effective way to track the status of your loan to provide documentation as opposed to handwritten documentation or bringing in paper to a branch in the past.                                                                                 And so those kinds of things are all things that continue to evolve that are much different and much more utilized than they were even just a few months ago. Currently, what I'd say is transaction levels are beginning to return a bit to more normal things. So when I think about this, I don't know that it's going back to the way things were, but they are functioning and operating. Scott Harroff:                     08:59                     Simon, I agree with you completely. The financial institutions that I interact with and I do business with, I'm definitely seeing a push towards self-service and definitely seeing a push towards digital channels for communication. It seems to me like the old playbooks are sort of kind of out the window right now. So a question to the group, what are you individually seeing your financial institutions focusing on? Because it seems like everybody's playing a slightly different game now than they used to. Jim Flannery:                     09:28                     Well, I will say that the priorities for financial institutions are still very similar to what they were. They've just been accelerated. They're still trying to improve efficiency, obviously generate revenue and enhance the customer experience, but they're doing this in a slightly different way right now. So we all know that they're going to be under a lot of cost pressures over the next couple of years as they are today, and one way to drive cost out of the network is to optimize your branch and ATM network.                                                                                 And when I say optimize, that could be consolidations, which will drive a lot of cost out, but it's beyond that. It's also making sure that they're still holding to those trends and priorities, but they have to do that in a more efficient way. So by doing that, they can relocate branches. They can reformat their branch network to kind of fit the demographics of the market, to fit how their consumers are actually using their branch network and their other channels.                                                                                 And part of this could be to open up some off-premise ATMs. So we're working with a number of clients right now, helping them do this. We're helping them close permanently some of these branches that they've closed over the past couple months due to COVID. And now we're helping them work through one, which branches should they just keep closed permanently, two, what is the impact to their consumers going to be, their customers and their members? And three, how do they offset some of the capacity issues that might be prevalent after that consolidation? So those transactions that were going to that branch are going to go somewhere, right? So are they going to go to other branches, or are they going to go to self-service channels?                                                                                 So in a lot of cases, adding off-premise remote ATMs to kind of offset those attrition numbers is a much cheaper solution than just keeping that branch open. And then the cost savings that they're going to collect from or gain from those branch consolidations, now they can reinvest that back into the network. And they can focus on more deposit automation, teller automation, video, having channel marketing, core integration, things like that that will hold true to those trends and priorities of generating revenue, improving the customer experience and such. But they're doing it in a more analytical or strategic way than they were before. And end of the day, everything's net positive for not only themselves, the institution, but also the customers as well. Scott Weston:                   11:57                     Yeah. And if I can add something to that. I think there's still a lot of unknown out there. I think the shift of consumer behavior to a lot of FIs are seen as maybe temporary, but they're expecting at least a portion of consumers to return to the branch. So I think there is probably a little bit of hesitation in pulling the trigger on big closures, consolidations that I think a lot of analysts earlier predicted, right, where we could see mass branch closures. Obviously, the role of the branches is going to change. It's going to be more sales and more service-oriented, less transactional. And was Scott's point, being able to optimize that as a touch point, making sure that it's an [inaudible 00:12:37] that's positioned within that branch is there to optimize the space and provide as much free time, we'll call it, for the staff to do those more complex things.                                                                                 So I think there's still some learning that has to happen. I mean, I bet there's certain markets that haven't seen the bottom yet. As Simon mentioned earlier, we're starting to see some data anecdotally come in from our customers, and year over year, it's bouncing back. It's still probably 15 or 20% off of where it was this time last year. But as more of the economy opens up, as we get more optimistic about what's going to happen with the vaccine, clearly we're going to see a lot of people returning to the locations that they were traditionally using, but they may be using them in a different way. Simon Powley:                  13:20                     I think that's really important. Let me ask this. Because you're talking to these financial institutions about optimizing networks and changing other transactional mix and so forth. Are these new concepts for them? Are they brushing off things to say, "I've been thinking about getting rid of this branch for a long time" and they're finally doing it? Is it that they're completely reevaluating their branch network, where we've never thought about closing branch before? That was kind of a way that we really focused on for our clients, and now they're reevaluating? What are you really seeing when you're talking to these financial institutions about this? Jim Flannery:                     13:56                     Yeah, it's really a mixed bag actually. There's more smaller FIs, say 20 branches or less, that are now considering consolidating a branch or two where they typically would not have done that before. Because a lot of the community banks, they pride themselves on customer service, and the expense of having these branches open was just a cost of doing business. But now their business models are changing a little bit.                                                                                 They might not be under the cost pressures today, but they can see that coming down the road, and the only way that they can maintain that high-level customer service that they've had in their business model and still grow the business in terms of adding replacement customers or replacement members, they have to have a better technical offering, and they have to have a self-service offering. And the only way that they can do that is if they squeeze some costs out of the network and then reinvest those dollars.                                                                                 But I think the smaller FIs, this is a new concept for them. They have not typically done this before, so they are reaching out to us for help, and they want to make sure that they're doing this in a strategic way to minimize the impact to their customers and their business. Scott Harroff:                     15:17                     So question for you guys. We keep hearing on the news that folks are choosing to stay home. Folks are choosing to not maybe go to work and maybe take care of children that are now home that are not in school. How do you see staffing models maybe impacting branch operations? Maybe someone who would come in every day that worked a teller line or worked in an office. How do you see that changing the model? Jim Flannery:                     15:45                     Well, I think to begin with, for the most part, most branches are going to require less staff. So starting with the frontline folks, the ones that are interacting with the public on a daily basis, clearly, we saw that early on a hesitation to have too much interaction with people, and the ability to social distance was important. And I think one of the technologies that we've talked about a couple of times, video-enabled ATMs where you have a video teller on a terminal, I think it really has an interesting future for this. Because there's at least a couple of institutions that I talked to that are sincerely looking at how likely is it that we could have our tellers work truly remotely and when they mean remotely, from home.                                                                                 So instead of having them maybe coming to a call center or having some sort of centralized place where you have a bunch of people reporting to take these video interactions, you're actually looking at setting these folks up at home, having them essentially work from their home as a teller.                                                                                 So there's at least one institution that's doing this at a very small scale but has been getting some press, which I think is pretty interesting. But I wouldn't count that out as being at least on a lot of banks' radar. It's something that could be very flexible and something that they could spin up quickly if required and really offer that attended service that we know was lacking early on in the lockdown, the pandemic, and being able to really be at the forefront of offering a Class A customer experience. Scott Harroff:                     17:14                     Thanks very much for that, Jim. So Scott, how do you see the changing staffing dilemma impacting branch operations and technology usage? Scott Weston:                   17:23                     The changing staffing operation model in branches will absolutely affect the way people self serve, right? So as branches tend to have less staff inside and their staffing model is becoming more of a consultative experience, that in itself is going to drive more transactions out of the branch.                                                                                 So if we think of ourselves as customers and we're doing deposits, we're doing withdrawals, we're doing transactions that could be done in a self-service manner in the branch, eventually the staffing model will continue to say, "Well, did you know that you could do this at the ATM? Let me show you how." So eventually that's going to change consumer habit, right? So the more times consumers will use a self-service device, the more they're going to feel comfortable with it, doing it by themselves later on. Scott Harroff:                     18:21                     And one thing that we heard directly from an FI is that they're being very careful about how many people they're bringing back because they almost want to subtly discourage long lines at the teller. So they're trying to get people to maybe adopt more self-service because if they go on the teller line and have to wait more than a couple minutes, and they don't want to make it too easy for customers to do simple transactions at the teller. They want to really almost nudge them to self-service by making it slightly uncomfortable for them.                                                                                 So, I mean, it's not necessarily a strategy that a lot of banks are adopting, but I think you'll subtly see some FIs are, right? They're not overstaffing their teller line. They're certainly looking at what things the consumer is doing and looking at the cost of doing simple transactions, comparing it to what that cost would be at a direct channel and figuring there's a certain number of interactions that you just don't want to make it easy to happen at a person. Jim Flannery:                     19:19                     Yeah. I agree with you completely. I see people that I know that before would have walked into a branch once a week to go up to the teller to get their cash for buying groceries or doing other things, they are really thinking about, "Do I really want to get out of my car and put on a mask and go into that building and wait in line? Or huh, maybe I start using my drive-up ATM. Maybe I start using my phone." I am also seeing a lot of folks reconsidering what they used to do as customers and changing to something that maybe is a little bit risky for them. Simon, thoughts? Simon Powley:                  20:00                     Yeah. Well, I would agree. I take a little different angle on it. I agree with everything that you all are talking about, that we're talking about here today. The thing I think about is our financial institutions and especially those small to midsize financial institutions and how this really changes their customer journeys, their member journeys and the impact to their people.                                                                                 So from an HR perspective, training, onboarding, hiring the right talent all has to change because we still saw in many cases, traditional roles where we had tellers on a teller line. Whether we called them something or not, that was really their role, personal bankers, managers, those kinds of things. Now we're talking about much fewer staff. We have to talk about people that can be cross-trained to do multiple activities and handle things very differently, not just in the traditional sense of new account opening or getting someone to a loan specialist and handling transactions, but think about the digital capabilities that they now have to be subject matter experts on to be able to troubleshoot, help support and provide guidance on to customers, to show them how well this can be done to help protect them.                                                                                 And then also add on to that the COVID implications, how to socially distance and how to do those kind of things. So I think we've got to make sure that financial institutions, and what I'd recommend to our partners out there is, do not lose track of that. We've got to start with your people in terms of how they can drive that change and how they're molding to these operational efficiencies and changes that are happening in these journeys, both how the customers face and deal with those, but also the internal processes, how those are changing. So I think about it in terms of that as well. Scott Harroff:                     21:35                     Yeah, it's a delicate balance because you don't want to alienate good customers that have a preference for choice in how they interact, but at the same time, conscious of the broader whole of what the branch should be. Simon Powley:                  21:49                     All right, Mr. Harroff. One thing we haven't talked about, I think that's really important for us to consider is the security issues out there. You talked to us a lot about this internally. We should probably talk a little bit about what's going on out there from a security compliance standpoint. Can you tell us a little bit about that? Scott Harroff:                     22:06                     Yeah, sure, Simon. Happy to do that. There's a couple of things going on right now that are pretty relevant and relatively time sensitive. First, we saw the bad guys as the United States closed down, if you will. We saw a drop-off in bad guys out on the road and moving around and doing things at either point-of-sale terminals or ATMs. But as the United States opens back up again, what we're seeing from local law enforcement, state and federal law enforcement like the FBI and secret service, we're seeing the bad guys opening up their business as well. They're back out on their routes going up and down the East Coast and the West Coast, and Texas especially is having some challenges right now, especially in the Houston market. The bad guys are back at it as well.                                                                                 So as our financial institutions and our retailers consider how they're opening back up for business and considering how they're going to change their operations, I think now is a very good time for our financial institutions and retailers to sit down and say, "Okay, this is the security I used to have. Is this the security that I need going forward? Is my as-is environment really ready for the new to-be model? Should I be looking at what I'm doing and reaching out to an expert to consider what I should be doing differently, seeing what my peers might be doing differently and really building a roadmap for what I should be considering for security and fraud for the next six, 12 or 18 months?" That's one thing.                                                                                 And the second thing that we're also looking at is there's things that are happening right now that are pretty time sensitive. The migration to Windows 10, for example, is still ongoing. We're moving towards the end of the year where the Microsoft critical updates will be expiring in December. What's my thought on what I want to do after December of this year? If I still have an Optiva ATM, I have an old encrypting PIN Pad Version 5. That can only do Shaw 1 certificates. Should I be buying encrypting PIN Pad Version 7 so I could run Shaw 2? Have I had the conversation with my network to see if they support that? Have I reviewed what my network does for fraud?                                                                                 For example, we're seeing transaction reversal fraud coming up in the United States now where somebody will go to an ATM and they'll ask for $100, and the ATM dispenses $100. They take $80 out, and they leave a 20 there. The ATM retracts the cash, thinks that, okay, well, the customer must have driven off and not taken any of the cash. So it credits the account back immediately. Is my host really holding that debit transaction, if you will, so somebody goes to the ATM and verifies that I get $20 back or I get $100 back? So I really do think that now is a good time to reinvestigate my whole ecosystem around security and see it's what it should be in plans for the future. Jim Flannery:                     25:07                     Gentlemen, we've covered a lot of information, and we've given our listeners a lot of ideas to consider. And I really do appreciate your open and candid dialogue. We could go on with this conversation for quite a while, but I think this might be a good time to wrap it up unless somebody else has something to add. Simon Powley:                  25:24                     One of the things I'm interested, Jim, because I know our time is getting short here. You talked a lot about roadmaps. You talked a lot about the sequencing and what's the kind of technologies and put in there kind of your rating scale of what technology should be in there. And that's been really well received by our customers. What are you seeing changing from a roadmap perspective? I know we touched on video. Maybe you want to touch a little more on that. I think that's probably one. But who are you really seeing changing from roadmaps in the FIs that you're talking to? How are they changing things or what are the technology that they made moving up and prioritizing what they want? Jim Flannery:                     25:56                     Yeah. I think broadly you have to look at the shift in mentality on how they rationalize what to invest in. Historically, it's been all about payback ROI and what's the return. But as we moved through the COVID, what we found is that certain things took precedent, not because they had the best payback, but because they offered the greatest customer experience or offered the highest level of safety and security for both staff and consumers.                                                                                 So I think, first and foremost, I thought that was interesting. It was no longer about competing departments saying, "I want to do this. I want to do this. What's the cost? What's the benefit?" It became more of a, "What are some quick hits that we can do that are going to solve things now and then also set us up for future success?"                                                                                 So really, are there certain solutions that we can build off of in offering something now, but potentially make that into a greater part of our delivery strategy down the road. And I think we talked about some of those. I think the core integration, being able to utilize the ATM to directly tap into the accounts of the consumer and offer a broader range of transactions. That's something that you can do in pieces. You can start with some and add functionality as you go through it. Certainly video, and we talked about that a couple of times. That's one that we see.                                                                                 Well, and then the third one is really the marketing piece. We haven't really talked much about that. But this whole idea of using the ATM or self-service in general to do more of your communications. Historically, it's been primarily banners about products and rates, but really when you think about well, there's a big chunk of consumers that you're probably not seeing on a regular basis, they may not be engaged in mobile or web usage as a channel. So using the ATM to really communicate with those consumers, telling them what's happening as we move through things, what's the best channel to do certain interactions. There's a lot that you can really offer from that, that I think people take for granted. They assume that when we talk about the marketing communication on the ATM, it's all about product, pushing product when, in fact, it can be so much more than that. Scott Weston:                   28:04                     Well, Yeah, Jim, to build off that a little bit, I remember the conversation you and I had with that financial institution yesterday. One of our partners was they were actively involved as there was a line building at one of their locations, and they are actually out there troubleshooting and really interacting with their customers to figure out why are you waiting in line, right? What are the resistances that's making you actually want to stand here in this line under these circumstances to, in this case, cash a $54 check at the teller line? Can we move this to maybe taking a picture of this from a mobile deposit perspective? Can we get you cash back at the ATM of 40 to $60 that would cover that check?                                                                                 And that customer, as you recall, said, "No, I'm here. I've got my $54 check and I want $54." And so they're actively pursuing denomination selection as a result of that at their ATMs, because they're trying to solve for these kinds of nuances of how they can really help drive and adopt to that. So there is a lot of changes there, Jim. I think you're right. Scott Harroff:                     29:05                     With that, thanks again, Simon, Jim and Scott on behalf of all our listeners for joining us today. If you're interested in scheduling a conversation with anyone from the advisory services team, listeners, please visit dieboldnixdorf.com/advisoryservices or click on the link in the podcast show notes. Until next time, keep checking back on iTunes or however you listen to your podcasts for new topics on COMMERCE NOW.  

Summary: On this episode of COMMERCE NOW, you will hear from Diebold Nixdorf CMO Devon Watson, who recently was a guest on the Stacking Benjamins podcast. Devon spoke with Joe Saul-Sehy, and was on their Friday FinTech segment, where they discussed the hottest new tech hitting your wallet, and the merchants you'll someday shop with again.   Resources: COMMERCE NOW Podcast Diebold Nixdorf Devon Watson Stacking Benjamins Podcast Joe Saul-Sehy Transcription: Speaker 1:                           00:15                     On this episode of COMMERCE NOW, you will hear from Diebold Nixdorf CMO Devon Watson, who recently was a guest on the Stacking Benjamins podcast. Devon spoke with Joe Saul-Sehy, and was on their Friday FinTech segment. We hope you enjoy this special segment of Commerce Now, as we come together with the Stacking Benjamins podcast. Doug:                                    00:42                     Live, from Joe's mom's basement, it's The Stacking Benjamin Show.                                                                                 I'm Joe's mom's neighbor Doug. Hey there Stackers. On our Friday FinTech segment, we'll talk to a guy sitting at the backbone of some of the hottest new tech hitting your wallet, and the merchants you'll someday shop with again from Diebold Nixdorf, It's Devon Watson. And now the guy that can blah, blah, blah, all this away, except now with a mask, it's Joe Saul-Sehy. Joe Saul-Sehy:                   01:27                     It's amazing. When I was seven, I always wanted to wear a mask and now I get to do it. It only took me a few more years, but sadly we are at that point. Hey everybody. Welcome to another quarantined edition of The Stacking Benjamins Show. I'm Joe Saul-Sehy. Average Joe Money on Twitter. So I'm so happy today that we're going to hello to Devon Watson. How are you, man? Devon Watson:                 01:46                     Fantastic. Glad to be here. Joe Saul-Sehy:                   01:49                     I'm so happy you could talk Friday FinTech with us. You guys, I think different than a lot of the FinTech companies, Devon, that we talked to, you guys are a little more in the background. We are more consumer facing where I think you guys, I think of you as more B2B, but you're really right at the intersection of a lot of these solutions that we talk about every week. Tell me about what you guys do so we can kind of bring everybody up to speed. Devon Watson:                 02:15                     Sure. So you can really think of us as B2B to C. Diebold Nixdorf is a top 10 global financial company. We're in about a hundred countries worldwide, about four and a half billion in revenue. We're really the software, the services and the devices behind many of the, every day banking and shopping channels that people use. So, from the digital experience, you might have banking or shopping on the go to the self checkout that you're using at the grocery store, to the ATM that you're using outside the branch. Even the point of sale device that you interact with at maybe one of your favorite retailers, we provide those solutions. In the branch, in the store or online with your mobile, we're there automating and digitizing the way people bank and shop. Joe Saul-Sehy:                   03:07                     It's actually funny Devon. I think about you guys the same way that I think about Cisco for the internet, like you're everywhere. We just don't really, you know, as a customer, we don't see you a ton. Every once in a while we'll see the name Diebold but not that often. Devon Watson:                 03:20                     Yeah, exactly. And you know, if you start looking for it, you'll see it all over the place. When you're not looking forward, it's one of those seamless things that just keeps running and keeps powering the way you bank and shop. Over 2 million ATM and checkout devices globally, if you look hard enough, you'll see us about a third of the time. Joe Saul-Sehy:                   03:40                     Well, I want to start out with banking. I want to talk about two different things. Let's talk banking first and then let's talk commerce second, but pain points, as you know, better than I do Devon. Every day, you've got bank branches closing down, right? Making it harder for people to do face to face banking, which means that we're relying on devices even more than ATM's. Tell me kind of what you guys are working on there. What are the big pain points you guys are trying to solve for customers now? Devon Watson:                 04:07                     Sure. So in the banking sector, innovation these days is really about digitizing the user experience. You know, as you rightfully observed, there is a reformatting of the bank branch networks globally. That's a global phenomenon. They're not always just closing, they're reformatting, they're making smaller ones or opening different ones in new locations. And I'd say right-sizing, but you know, more than anything, the bank brands have to compete for consumer's attention. It's a global war for the attention of a consumer, and that applies to every participant in the ecosystem. So for a bank, they've been focused for the last several years on this vision of omni-channel, which for many bank brands meant taking their branch experience, their online experience, their mobile experience, and making those things cohesive. That's been helpful, right? That's I'd say step one of the journey, but when you kind of look at what that did, it made it a better journey for a very small piece of what somebody might be trying to do.                                                                                 So the example I use is, Joe, if you decide that you want to have Joe's Famous Donut Shop, and you can go to your bank to open up a small business loan, the technology trend over the past several years around omni-channel would say, let's make sure that that loan origination process for Joe is pretty seamless, no matter what channel he uses. But that's not enough to really compete for Joe's business, because to Joe, opening up the small business loan is only a small piece of your journey to being a small business owner. You got to figure out where's the best place to put a donut shop? How am I going to run my checkout? What's the merchant acquiring I'm going to do so I can swipe a credit card when somebody comes in and tries to pay with their Amex? Where am I going to get my equipment for the back office? Do I need insurance? Et cetera, et cetera, et cetera.                                                                                 The brands that can help you and can address the larger journey that you actually have, are going to be the ones that win. The vision that we have for our bank clients is to really engage that larger consumer journey, use API ecosystems in order to work with other players, that can bring value to Joe is he's on his small business, opening a process and compete for that. If you look at what's happening in the retail world, that's already playing out. So I'll use the quick example of Amazon. They follow me every single place I go, whether it's at home with an Alexa device in the living room, I got an Echo Dot in my little gym area, I've got their app on my phone. They're absolutely following everything I do so that whatever the need is, they can be there to try to fulfill it. That's what the leading brands are doing, and the banking industry is quickly learning from that and trying to figure out how do we also compete along all those steps of the journey to own that customer relationship. So that's the big idea. Joe Saul-Sehy:                   07:21                     It's funny you mentioned Alexa because Gertrude, our social media manager had a joke online recently about, she told her husband a joke and she laughed, Alexa, laugh, Google laughed. Like everybody's listening to you. It seems like Devon, there's a fine line between being helpful and feeling a little big brotherish. I bet That's got to be difficult for institutions to navigate those waters. Devon Watson:                 07:45                     So that's a key backlash. I actually use a tweet, a screen capture of that exact joke in a talk I give to banks. And I think that's something that the bank brands have learned from. There's in all technologies, there's this helpful versus creepy line that you don't want to cross. There's definitely a little bit of a pushback on the retailing side of this. You're starting to see consumers take their privacy more seriously. We have GDPR in Europe, which is, I think the right move for protecting consumer privacy's online. Bank brands are very cautious about how they experiment with whatever the technology might be. Whether it's banking by voice, things like that, not crossing that line. But at the same time, if you don't experiment with these new technologies, whether it's biometrics, whether it's voice banking, et cetera, you're going to be left out. So the trick is to learn from some of those mistakes, to be very, very smart about how you're handling consumer privacy and security, especially, but still innovate. Joe Saul-Sehy:                   08:57                     It sounds like what you're talking about, Devon, is still much, much, much, much more than having a more robust banking app. You're talking about something many, many degrees larger. Devon Watson:                 09:07                     Exactly. And you know, this is something that we see as a longterm trend towards this kind of vision of connected commerce. A more robust banking app would be certainly just a small piece of that. The end to end orchestration is how I would think of it, that's really the game changer. Just doing one step along the way really well, isn't going to be enough. And I'll give you another example. You know, right now we have a lot of pretty interesting challenger banks, online, pure plays, kind of reminiscent of what we saw in the early days of the.com boom popping up. Europe in particular has a lot of these. There's this interesting experiment being run on pure play digital. And one of the best examples of that is Ant Financial. Ant Financial, which is associated with the Alibaba Group is as deep pocketed and capable a digital organization as there is on planet earth.                                                                                 A little over 12 months ago, they made a bid to buy Money Gram, which is a international remittance company. On the surface of that, you would say, okay, they're trying to get into the remittance business, that's smart. But if you dig a little bit deeper, I never really thought that was a compelling explanation because from a technology perspective, they can whip up the anti money laundering rule systems and all of that software that they need to conduct a remittance business. What would they have gotten if they actually were successful in acquiring Money Gram? They would have gotten a few hundred thousand over the counter location and a few tens of thousands of kiosk locations around the world. That gives you the biggest physical distribution network for banking services ever seen. Joe Saul-Sehy:                   10:54                     Game changing. Devon Watson:                 10:55                     Absolutely. The kind of aha moment that I talked to our clients about what that is, that's a pure play digital and one of the most sophisticated ones in the world, making a very bold move to get into physical distribution. So this intersection of physical and digital channels, and being able to traverse the two and compete very, very effectively in either, I think that's really what the best brands of the future are going to be doing. Joe Saul-Sehy:                   11:24                     I think that's exciting and fascinating, making digital more human and human, a little, a little more digital. Devon Watson:                 11:30                     It's a great way to put it. Joe Saul-Sehy:                   11:31                     Let's go over to the commerce side. I was listening to your podcast Commerce Now, which for people that are geeks in this industry, I think I can highly recommend that. They're short and fun and kind of a view of the future. But the people on the show, were talking about your shopping cart, and how physically going down the aisle at whether its a grocery store, convenience store, wherever, that the shopping cart is, is changing. Tell me about that because I found this technology really fascinating Devon. Devon Watson:                 12:02                     So when you're thinking about retail, and it doesn't matter if it's grocery, whether it's fashion, whether it's fuel and convenience stores, all of these retail formats are in a race to digitize their physical shopping experience. Just like we were talking about before in the banking world, this intersection of physical and digital, super, super important. What's the one advantage that an online retailer has over a physical retailer? It's data. As soon as you go onto a online web front, to go shopping, I know everything you're doing Joe, right? If you go onto my website, I can see that Joe went to this page, then this page, then this page, and then he put this in the cart and then he took it out and he put this other thing in instead. And then he backed up and then he actually got three quarters of the way through the purchase decision, and then he added this other thing.                                                                                 As I see that data stream, that payload of information if you will, gives me the chance to influence it. So I can suggest extra things, I can put smart advertisements around your shopping experience on my website, and some of the greatest minds of the last generation have fundamentally been spent, trying to figure out how to get us to buy an extra pair of socks online. I say that somewhat jokingly, but quite seriously. The Manhattan Project of my generation since college has been driving digital shopping.                                                                                 Now with that advantage of the online folks, what is it that a physical retailers want to do? They want to be able to have that data payload. And if you just wait until the person shows up at your checkout lane, it's too late. So as one of our very smart industry pundits, Richard Crone says, check in is the new checkout.                                                                                 Starting that shopping data payload early is something you can do through technology. That can be done with some of the innovations in shopping carts. That can be done with some of the innovations in self scanning. Many grocery stores you're going to start to see, if you haven't already, when you walk in, there'll be this rack of self scanners, and you pick one up off the rack. You associate it to your payment card and account, you wander around the grocery store scanning things, as you go on your merry way, you drop them in the cart. And instead of having to go through the checkout lane, take everything out of your cart, put everything back into your cart, you just walk out of the store. It's great. And what that does, besides the fact that made the queue shorter for you, made things easier for the retailer, now they actually have in technology terms, a user session for the whole time you're in the store. They can recommend things that can influence what you're buying. It's a real game changer. Joe Saul-Sehy:                   15:05                     Everybody wins their Devon. I mean, on my end, I get rid of the pain point of having to stand there in line to buy the stuff that I've already decided 20 minutes ago, maybe half an hour ago that I wanted to buy. And on your end, you're getting data on me. I don't really want to be followed, but I also don't want to stand in line. So I'm willing to make that trade. Devon Watson:                 15:24                     Absolutely. It really is a win, win. I think at least for me, as a shopper myself, I think the innovations in in store shopping that's digitally enabled just makes life easier. Right? Joe Saul-Sehy:                   15:36                     Yeah.I also think though, as a consumer, the store of the future, I got to be even more mindful of my pocket book, and maybe use those online tools better because it's going to be awful easy Devon, for you to put stuff in my cart and walk away with that purchase that I might not have, before that technology hits. Devon Watson:                 15:57                     At the same time, if you're Christmas shopping, hopefully you won't give the kids a toy that you don't have the batteries for. So there's an upside as well. Joe Saul-Sehy:                   16:09                     That is very true. You're going to have a much better holiday season because he got all the accessories. Devon, how can people reach you guys if they've got more questions for you? Devon Watson:                 16:19                     Sure. So www dot Diebold Nixdorf.com. That's the webpage. You can also search for us. Our podcast is COMMERCE NOW, or look us up on YouTube Diebold Nixdorf. We got a lot of content, podcasts, videos up there, great way to follow us. Or at Diebold Nixdorf on Twitter. Joe Saul-Sehy:                   16:38                     Well, thanks for hanging out and talking about the future of banking and commerce with me. I really appreciate it. Devon Watson:                 16:43                     You betcha. Thanks for having me, Joe.  

Summary: On this episode of COMMERCE NOW we will discuss how DN can help FI’s adapt and provide new – or maybe not so new technologies to help with how consumer behavior is changing.   Supporting Content: Registration Link for COVID-19 upcoming May 20th Webinar COVID 19 Landing page Diebold Nixdorf Website Transcription: Jeff Bender:                       00:08                     Well, this is Jeff Bender. I'll be your host for today's episode of COMMERCE NOW. We really are living in some unprecedented times right now, and the longterm impacts of COVID-19 on consumer behavior and the financial services industry in general are truly unknown. We do know that both consumers and the FIs do you want to get back to business and the FIs doing everything that they can to make sure they're helping their customers adapt to what will be this new normal in terms of consumer behavior, whatever that might actually look like. So, today I'm joined by Simon Powley who leads our Diebold Nixdorf Global Advisory Consultant Services organization, as well as Heather Gibbons, who leads our US Regional Software and Services organization. Jeff Bender:                       00:57                     And on this episode, we'll discuss how DN is helping financial institutions adapt and provide new, or maybe even not so new technologies to address these changes in consumer behavior. So with that, Heather, Simon, welcome and thank you for joining us today. Simon Powley:                  01:10                     [crosstalk 00:01:12]. Heather Gibbons:            01:10                     Thanks for [crosstalk 00:01:12]. Jeff Bender:                       01:12                     Heather I [inaudible 00:01:13] the first question to you. The current situation, obviously, a lot of [inaudible 00:01:18] were shutdowns. We see that there's desire for consumers to social distance, not interact in person as much. And in some cases, obviously government is restricting the ability to actually interact in person as much. So how do you see FIs being able to maintain meaningful connections with those consumers through this pandemic and in a post COVID world? Heather Gibbons:            01:38                     Thanks Jeff. Today, we're seeing consumers and retailers across industries modify the way they're doing business. Just as you mentioned, if I even look at how I grocery shop today versus two months ago, I can guarantee that I won't fully go back to the way I did pre-COVID-19. This isn't to say that face to face or retail in-store in the cases of financial institutions and branch transactions, won't take place in the future, but more and more consumers are going to now be more comfortable using technology. And they're also going to realize that some transactions can be done in a more convenient and efficient way than maybe they were before. For financial institutions, this translates to bridging the physical and digital divide, looking at how different consumer endpoints can work better together. I often reference how Amazon and Kohl's teamed up when speaking with customers, because it's really about the physical and the digital coming together and joining forces. Heather Gibbons:            02:35                     In this case, it was for Amazon returns and it makes it much easier, much more convenient. You can pre-stage everything on your mobile device or through online. The same can really hold true. When you look at consumers and small business journeys for financial institutions. If you take a closer look at both of those journey maps, I believe it will really lead to more core integration for better data sharing, access to more information. It's also going to lead to face-to-face interaction through video, and basically a more personalized approach while increasing the types of transactions at the self service devices and through online and mobile. Simon Powley:                  03:14                     Yeah, I would agree with that, Jeff, this is Simon. I think there's a lot of different things going on. I think Heather said it very well. What we're seeing around social distancing is many of the same things that retailers are doing in terms of spacing out people in their branches, certainly monitoring their ability to come in various ways, even taking their temperatures in some cases. And so, that's not the best way to establish a meaningful connection to [inaudible 00:03:37] point. So, when you look at that, I think that there's a real focus on moving the horizon forward, so to speak in terms of digital capabilities and technology. We've done a lot of research on this and people really want to and prefer to transact digitally and interact physically. And so that's been the primary role of the branches to provide those services that can't be done digitally, such as the meaningful conversations about wealth management or taking an in depth look at financial aspects of their life. Simon Powley:                  04:07                     That's done more in a conversation and when we're having this, and we're beginning to see the changes here over the years, and it depends on the financial institution. The large providers, the Bank of America, the Chase of the world have really led this kind of charge. And now it's really come down to the regional banks to really look at how they want to change and interact with their value proposition and to do that, they have to make their digital channels work better and educate their employees on how to use these and how to educate their customers on those. And we've seen a lot of interesting things happen with COVID such as texting customers links to their mobile sites or tutorials on how to leverage their mobile capabilities or their online capabilities so that they can interact or places to find their most convenient ATM machine to get cash or make a deposit. Simon Powley:                  04:57                     And we're seeing adoption being driven to those customers that maybe you didn't see value, or maybe they were laggards in technology, so to speak. They're now seeing more and more interest and leveraging these digital channels in new and creative ways. So, I think there's going to have to be continued education. And then I also see a re-inventing of marketing. I think the marketing capabilities that a lot of financial institutions have invested in are brilliant, very targeted ads. Sometimes we're even as far as [inaudible 00:05:25] based, being able to specifically target offers, that's really resonates with their particular customers, which is a really good experience for them and allows them to learn more about their products and services. We're going to continue to see that evolve and they're using it for messaging now on terms and information about COVID, how to protect themselves, but also messaging on which branches are open or how they're shortening their hours. Simon Powley:                  05:46                     So those kinds of messaging. So you're going to see those kinds of interactions begin to really change where they can continue to drive their value proposition in a meaningful and convenient way for their customers in a digital channel. Jeff Bender:                       06:00                     Well, that makes a lot of sense. And so Simon, how do you see that actually translating to the small business space as well? Is there a role that technology is playing there in relationship with the small business owners? Simon Powley:                  06:11                     Well, sure. I'll tell you what we do know. The first is that small business owners are really the highest users of branches and are very what we'd call branch dependent on that. So they come in more often than a consumer would and in many cases that's weekly. On average, small businesses spend over an hour per week transacting in a branch. And in the same time, less than 80% of them have a dedicated relationship manager for their business and only 13% of them are really truly satisfied with their financial institution in terms of their offerings and capabilities to support them. So, there's a lot of opportunity for financial institutions specifically with small businesses. And they've got to cope with that in a number of ways. First, I think Heather talked about the journey mapping that's really gone on in the consumer space. That same rigor has not been done within the small business journey mapping. Simon Powley:                  07:03                     And so, the first thing financial institutions have to look at is, how are they going to define their journey maps and what can they do to alleviate their business rules and make it more conducive for them to be able to use automation to make their deposits, withdraws. They need faster access to their cash, they don't want their cash cycle disrupted. And in many cases right now, technology does that for them. And so, how do they change their interactions with their small business customer to be able to make that more consumer friendly or more like their consumer journeys. And so, access to those cash from the business rules, locations to be able to generate more activity in those particular cases. In many cases, the hardware now is being made with a deeper throat, so to speak. So more bills can go in there to help with those journey capabilities. Software capabilities need to be able to keep up with that, to ensure that both hardware and software work together to make these journeys a little bit easier for them. Simon Powley:                  08:02                     So I think that the ATM will be a viable road. I think we'll see more cardless cash activities or pre-staging transactions, so employees can interact with those a little bit easier. And what that will really do is allow banks to repurpose their staff in the branches to be able to help them with their financial needs, such as business lending. PPP was a big change and a big process given to banks in a very short amount of time to try to react to. That's going to create different relationships with their small business customer. So, freeing up that FTE to allow them to have those deep conversations is really, really important as well as changing those business rules and enabling technology and hardware for making those checks and cash deposits in a more efficient way. Jeff Bender:                       08:48                     Very interesting. So competition is changing on all levels and it presents both a threat and an opportunity. Simon Powley:                  08:54                     Yes. Jeff Bender:                       08:55                     Heather, anything you would want to add to that? Heather Gibbons:            08:57                     Yeah. Thanks, Jeff. I think I probably just add a little bit to what Simon mentioned around journey mapping, because I do think it's really critical, which is one of the reasons why I had kind of mentioned it earlier. What we see more and more our financial institutions have a really strong focus on consumer experience. And I think just making sure to remember that small businesses is just another segment of consumer experience that they need to really look at, what I do think is interesting is a lot of times those two groups are looked at very separately. Where I think if you started to try to bring them together a bit more, you'll see that you can utilize a lot of the same technology to do the things that Simon just went through. And really when you look at those different types of business rules that I think you can get a much greater return on investment if you're looking at both groups at the same time and utilizing the technology to be able to do that. Heather Gibbons:            09:53                     And Simon even mentioned one really good example of that is the pre-stage transactions. It's not a secret, my family owns a small business so, I kind of see what they go through on a day to day basis. And small business has the words [inaudible 00:10:08] it because it's one of the biggest things that they have to consider because they just don't have the resources that other organizations have. And they want to be able to do things remotely, do them much more quickly, do them in a much more efficient way. These are the types of things that really help out small business owners, because they're just busy trying to handle their customers and their day to day operations that they have. Heather Gibbons:            10:32                     Interestingly enough, when I kind of look at it from that perspective, to me financial institutions with COVID-19 are now kind of finding themselves with some of the same concerns as small businesses. Limited resources, they need to have virtual access to services, to data, along with really reprioritizing the need to transform how they conduct business and really serve their customers on a day to day basis. And I think the key to all of that really comes around automation and doing that through technology. So that's where again, we get into these concepts of CRM integration, core integration, looking at recycling cash at the self service devices to be able to give more access to it for both consumers and in small businesses. Jeff Bender:                       11:21                     And Heather, how does that translate to the roadmap? I know you're in front of customers a lot, you and your entire organization. What are you hearing from them right now in terms of how that's impacting the areas in which they're investing today? Heather Gibbons:            11:34                     I would say we're having more and more customers that are looking at the ATM channel a little bit differently. This is something that every time we go talk to customers, we straight up ask them, how do you look at the ATM channel? Do you look at it as a strategic end point or do you kind of look at it as a necessary evil, you just it to dispense cash and be available at all times. And other than that, you don't see maybe as much use for the channel. What we're seeing with all of this as self service and being able to do things remotely or through digital channels is really having them look at it as a critical connection point between the physical and the digital channels. It's becoming much more important to them. And they're trying to think of ways that they can utilize it maybe a little bit differently than the ways they have in the past. And also look at what they're going to do with it in the future. Heather Gibbons:            12:26                     We're seeing many FIs that are going back to the drawing board, looking at their strategic initiatives, kind of doing sanity checks on those. In some cases they're reprioritizing or speeding up some of the projects that they were maybe looking at for the future and other cases they're revisiting solutions or options they once had passed on. Video, core integration, marketing are all really good examples of that. Simon Powley:                  12:51                     Yeah, I would agree with everything Heather said. What I'm seeing again is moving that horizon forward. I think that the need for technology has never been stronger. I think COVID is proved that out even to FIs that felt like maybe their value proposition wasn't to leverage technology in the way that they're now being forced to, or their customers need to. We're seeing a couple of different things. I'd kind of formated three different buckets. One is what's happening now? From now is what are financial institutions can do and what can they do in a very short amount of time and realistically purchase and implement, to be able to move their financial instance forward and to make this happen, maybe even faster for them than what they expected. And those are low hanging fruit, like deposit automation, right? Teller automation, those kinds of things, or video that Heather talked about. Rather, those are the things that we can implement very, very quickly for a customer and make that come to life for them in a very, very quick period of time. And then on the roadmap, it comes kind of what's next? Simon Powley:                  13:50                     And so next is okay, what are the things that we need to put on the roadmap? It may take a little bit longer than six months for us to be able to completely implement and design due to capacity, or what have you. And then, that's really the core integration. Things that really bring all of these things to life. Certainly the cardless and the contact is there or the recycling. And that's really where I think small business fits into that as well as how do we really gear up and get the functionality ready to go so we can implement that. And then finally, I'd say is then what? What's kind of on the longer term roadmap and what do we put out there and how does that change based upon COVID and that's more as a service models or open banking, digital integration with specialists. Those kinds of things that really need to be done, but you have to of course stagger these things for financial institutions. So, I would say those three buckets are kind of what we're seeing financial institutions reposition as. Jeff Bender:                       14:40                     Oh, that makes sense. Simon Powley:                  14:40                     Mm-hmm (affirmative). Jeff Bender:                       14:41                     Anything self-services are going to be a priority in this day and age right now. Now Simon, just kind of building on that, what are the ways that DN is helping FIs reinvent how they serve customers? It's all about convenience and availability today. So what new capabilities is DN bringing to market to help FIs adapt to the new consumer norm? Simon Powley:                  14:59                     Yeah, I think this is just a great time to be a part of the organization, I think and exciting from my perspective. We really value our partnerships and I think we differentiate ourselves in the market pace by really looking at every FI individually and helping tailor things specifically for them. And what I mean by that is not only with our advisory services group to come in and take a step back and help consultant and look at these roadmaps through that all the way into our teams and the way that they really go into investigate, ask questions and really find out what the pain points are for financial institution. And what we're really finding coming out of those things is things such as ATM as a service. Simon Powley:                  15:38                     Again, those model really changing that and allowing... Not only just shifting the capital expense to operational expense, but really allowing them to focus on their core business. I think from what we've learned over the last several years, that's been trending, that's now just being impacted even more dramatically is banking is very complex and what they really want to focus on is their core business and allowing good partners to come in and help them operationalize. Some of these things certainly change the expense parameters around those things and take some of that weight off their shoulders so they can really focus on their customers and their core business is really critical to them right now. Heather Gibbons:            16:16                     Yeah. And Simon, I think some other things that I would maybe add to this are, the one thing that we've really learned from going and meeting and partnering with all of our customers and really listening to them is, there is no one size fits all model for all of these different financial institutions. You range from banks to credit unions, from customers that have one ATM to 16,000 ATMs. So, there's definitely differences around the goals that they have, objectives, key priorities, resources. So, what we've really been trying to do as an organization is to make sure that we can help them wherever they need it and however they need that. And Simon really alluded to it with some of the different business models that we have around how customers can really consume the offerings that Diebold Nixdorf is putting out there today. Heather Gibbons:            17:10                     So, we've mentioned many of these items and we have customers that really look at hosting and owning on-premise solutions to be able to do things like video and marketing and pre-stage transactions. But what we've really found is there's a subset of the marketplace that that's not what their core competency is. They want others that are the experts in those areas and in this case, we would say, Diebold Nixdorf is the expert when it comes especially to the ATM channel. And with that, they want to hand it over all to us and say, "Hey Diebold Nixdorf, we'd like to really outsource these types of services or capabilities to you." That can range anywhere from software updates, through remote distribution to the ATM, handling the cash management at the ATM. We had a customer in the global solution center and he said, when he handed over cash, it was one of the greatest days of his life. His family immediately within a week noticed the difference in him because he wasn't having to take phone calls all the time with cash at the ATMs and the branches. Heather Gibbons:            18:15                     Security is another major concern, something that we outsource, customers can outsource to us, and we provide managed services around that. And then of course monitoring the overall availability of the terminals as well. What we also see if we've got customers that really have a mixed bag of the offerings and how they want to see them. So, that's something that we've really tried to do with the portfolio itself is to make it flexible from a [inaudible 00:18:40] model perspective. If they want us to handle certain items of the operations of the ATMs, we can do that. They can be as hands on or hands off as they want. Heather Gibbons:            18:51                     And then we're also offering cloud based solutions. So, what this is doing is really making access to more of the advanced technology and solutions that we have much easier for financial institutions and in a more affordable way so that they don't have to really work about the maintenance of servers and the security around all those servers, that they have the ability to really control the solutions and have them work the way that they want and make adjustments on the fly. If that's something that they want to be able to do. Jeff Bender:                       19:21                     That's excellent. Just a good lead and there's a lot that we covered today in this podcast and a lot of different topics, different delivery models, different priorities for different size institutions and Heather, Simon I appreciate you being here. I'd really like to hear more. And in fact, I'd like to tee up for our listeners to tune into a on-demand webinar from Wednesday, May 20th. During the webinar, our DN Global Advisory Services team covers how you can stabilize the operations of your environment, how you can establish a plan of action? And then also how you can continuously assess your execution against that plan? You can listen now at dieboldnixdorf.com/COVID-19. And as always, thank you to our listeners for tuning into another episode of COMMERCE NOW. Until next time, please keep checking back on iTunes or however you listen to your podcasts for new topics on COMMERCE NOW.    

Summary: In today's podcast, our Head of Advisory Services and Consulting, Simon Powley, will touch on what FIs are doing to protect their employees, while continuing to serve their customers during COVID-19 Crisis. Replay On-Demand - April 29th Webinar:  https://www.dieboldnixdorf.com/en-us/banking/insights/ondemand-webinar/whats-next-for-financial-institutions-during-the-covid-19-crisis Related Content:Diebold Nixdorf COVID-19 Web Page: Page:https://www.dieboldnixdorf.com/en-us/about-us/news-and-events/covid19 Transcription: Amy Lombardo:                00:15                     Hello again, this is Amy Lombardo, your host for this episode of COMMERCE NOW. During a recent Diebold Nixdorf webinar with guest Forrester Research, we shared ongoing research tracking how financial institutions are responding to the COVID-19 pandemic and what and how they are communicating to customers in this time of crisis. As the pandemic continues to grow and our economies continue to be impacted, how can financial institutions respond? Amy Lombardo:                00:43                     Well today I'm joined by our head of advisory services and consulting, Simon Powley, and we're going to touch on what FIs are doing to protect their employees while continuing to serve their customers during this unprecedented time. So welcome Simon to COMMERCE NOW. Simon Powley:                  00:59                     Oh, thanks Amy. It's great to be with you again. Amy Lombardo:                01:01                     Awesome. So let's get started here. My first question for you is this webinar that we had recently here, we saw new consumer behaviors and also shifts in channel usage. Based on these changes, how are we seeing banks initially adapt and really cope with COVID-19? Are we seeing an importance for more digital initiatives and the usage of those digital channels? Simon Powley:                  01:27                     Yeah. It's a great question, Amy. There's a lot of exciting things happening in the turmoil caused by COVID-19, especially for banks and financial institutions that are impacted by this. Simon Powley:                  01:39                     I thought it was a great webinar. I listened to it a few weeks ago. I thought it was fantastic. Simon Powley:                  01:44                     We're seeing a lot of changes. Early adaption is really driving a lot of changes in the way that they are operating and really touching customers. We're seeing branches being closed or certainly reduced hours. We're seeing call center volumes increasing dramatically as customers who are used to trying to reach out and communicate with their banks and be advised and guided through this. Obviously with the closures of banks they're looking to other channels to be able to service them. So it's been very interesting to see those changes. Simon Powley:                  02:17                     I think not only are our customers beginning to see the value associated with these digital channels in times like this. What I mean by that is people that we were talking to executives out there and a lot of our customers with banks, they're getting a lot of questions from people who either did not see value in digital channels in the past or were reluctant to use them for whatever reason, really beginning to gravitate and begin to not only have interest in these particular channels and how they can self service their deposits or get questions asked or check balances or what have you. They're really looking for solutions from their banks on how to do this in a new vibrant way. Simon Powley:                  02:58                     So we're certainly seeing those digital strategies and initiatives begin to change a lot for banks. It'll be very interesting, and we'll talk more about this in future, be very interesting to see how banks are defining their channels as a result of this and how they're leveraging that with their customer base. Amy Lombardo:                03:16                     Right. That makes complete sense, and we see the news cycles and note that responses and reactions that they're changing quite constantly. Right? We're in this different place today than what we were weeks ago, a month ago, even at the turn of the calendar year. Amy Lombardo:                03:31                     So with that said, what themes are you seeing emerge as the weeks change? Are bankers holding to their continuity plans? Are you seeing more gut reactions? What's that type of feedback you're hearing? Simon Powley:                  03:45                     Yeah, it's a mixed bag. Absolutely. Things are changing extremely quickly. I think if asked, most senior executives or even CEOs within the organizations, over the last couple of days we've seen JP Morgan Chase and Bank of America kind of come out and everybody is repositioning and changing their 2020 strategy. Certainly you're seeing that from an earnings and how they're really dealing with this downturn in different ways. Simon Powley:                  04:10                     So yes, certainly things have changed from the beginning of the year in the guidance that they're giving and their strategies are changing. From a week to week and a fluid environment I would call it is I think financial institutions are learning from this. So we're seeing a lot of trends emerge such as how do we leverage our digital channels again to be able to change with our customer base? Simon Powley:                  04:34                     I saw an article come out even this morning from Lloyd's Bank that they will be providing educational seminars for people on their digital strategies and giving away iPads to customers that are impacted by COVID-19 and I think specifically for customers that are over 70 for instance. Amy Lombardo:                04:53                     Oh wow. Simon Powley:                  04:53                     Yeah. So those kinds of strategies are obviously new, and I think I'm hearing from a lot of banks really from an internal standpoint is as they're doing this they're saying, "Okay, here's ways that we've always done things. Everything's on the table right now. How do we open up and change the way? What are we learning for this and what ideas of solutions do we have from our teams in the organization on how we use this to begin to change the way we interact with our customers and clients? How do how we support them during this time?" So you're seeing a lot of interesting things and things come out, which is just exciting even in the midst of terrifying weeks in some cases for people. Simon Powley:                  05:30                     So I think these continuity plans will continue to change. I think that we'll see a lot of people looking at new ways to reinvent the business and leverage a new way to talk to consumers. Simon Powley:                  05:42                     When we look at how customers really want to be interacted with, you have to look at the experience driven by Amazon or a Microsoft or an Apple in terms of how you leverage the customer journey. Right now those journeys have been completely disrupted in the traditional sense. So those are completely being reinvented. Simon Powley:                  06:06                     This I think in the long term will be very good for banks, and allowing them to be focused on PPP, the small business loans. The banks did not have long to stand those up and get those moving and being able to process those. So that took a tremendous amount of capacity. Simon Powley:                  06:25                     When you have digital channels, and some of these strategies already outlined on how to help your customers without being touched by a human being for all of their needs, you're able to adapt and adjust a little bit more quickly. So they're fairing a little bit better I think right now. But even in the smaller maybe community banking space, they're coming up with good creative ways, and I think that they will re-look at how they want to interact with their customers and the value proposition of technology. Amy Lombardo:                06:55                     Right. You mentioned something interesting about the tablets available for the elderly. It's interesting how the topic and the importance of financial inclusion is now coupled with how banks and credit unions are communicating how they can help here during this crisis. Simon Powley:                  07:13                     Yeah. We touched on it a little bit and certainly we can talk more about this down the line. But around that I talked to several folks in the industry and you're absolutely right, Amy. What we're seeing is a proactive stance not only on driving the awareness of digital channels, but outreach to help customers in some very unique and interesting ways. Amy Lombardo:                07:34                     Sure. That's an interesting point. Okay, so Simon, last question here. Is there a recommendation or best practice that FIs can use or approach with their business plan? Maybe even here, is the approach simply the current and near term plans to deal with this situation and take it more day by day, week by week? Simon Powley:                  07:55                     I think it's a combination, amy. I think first of all, it's triaged, but we're beginning to get out of that triaged perspective. People are getting used to working at home from a corporate bank perspective and the branches, they're beginning to define their journeys and how they can operate in this environment. Simon Powley:                  08:12                     The biggest thing you want to do right now is learn from this and gather as much data and information as you can, because what the next phase obviously is what are those business continuity plans going to look like and as you evolve, how do you create those and learn from that to change the way you're going to handle that the next time this comes up? Simon Powley:                  08:30                     Then it's the longterm trajectory. Looking at the roadmap of are your products and services still the same need that they were going into that and how do you begin to look at what your plans are over the next, let's call it 12 to 36 months. How do those plannings change as a result of that? Amy Lombardo:                08:46                     Yep, makes total sense. To hear more on this topic, listeners can listen to our on-demand webinar. Simon covers how to balance the needs of consumers, small and medium business clients and staff, the unique solutions FIs can put into action with digital automation at the forefront and the changing expectations for personalized experiences and operational efficiencies. Amy Lombardo:                09:17                     Listen now at DieboldNixdorf.com/COVID-19, and as always, thank you to our listeners for tuning in to another episode of COMMERCE NOW. Until next time, please keep checking back on iTunes or however you listen to your podcasts for new topics on COMMERCE NOW.    

Summary: In this podcast, we sit down with Scott Murison, Co-Owner of Wild Rock Outfitters, located in Ontario, Canada and we discuss how FI’s should consider the importance of enabling small and medium businesses to focus on their own customers by simplifying and streamlining banking – especially around cash operations - to deepen their relationships with small and medium businesses (SMBs). Related Links: Wildrock Outfitters website: https://wildrock.net Diebold Nixdorf Website: www.dieboldnixdorf.com Scott Murison LInkedIn: https://www.linkedin.com/in/scott-murison-413205a/ Transcription: Scott Anderson:               Hello again, this is Scott Anderson your host for this episode of COMMERCE NOW. The relationship between small and medium businesses and financial institutions should not be underestimated. Small and medium businesses or SMBs are the backbone of modern economies and their banks are a critical [00:00:30] partner in their success. In the United States 99.9% of companies are classified as small by the U.S. small business administration. In Europe the situation is similar, small and midsize companies make up 99% of all businesses. Two thirds of the workforce belong to the SMB category. However, from the small business perspective it's not at all about what they contribute to the FIs bottom line it's about being part of their community and focused on connecting with their local customers. Scott Anderson:               Today, I am onsite at Wild [00:01:00] Rock Outfitters located in Ontario, Canada and joined by Scott Murison one of the co owners. And on this episode of Commerce Now we will discuss how FIs should consider the importance of enabling small and medium businesses to focus on their own customers by simplifying and streamlining their banking especially around cash operations to deepen their relationships with small and medium businesses. So welcome to COMMERCE NOW Scott and thank you for hosting me today at Wild Rock Outfitters for this very chat. Scott Murison:                  Well, thank you very much for having me. I'm looking forward to it. Scott Anderson:               Excellent. [00:01:30] To give our listeners a little bit of background can you start off and tell us a little bit more about your business? Scott Murison:                  Absolutely. We're a retail operation. We've been in business since 1992. We're at 16,000 square feet so in some means that's a large retail operation and other means it's a small retail operation. We deal in the specialty outdoor gear industry which is bicycles, self powered outdoor gear like kayaks, canoes, snowshoes, skis, and we sell a lot of clothing and footwear [00:02:00] as well. Scott Anderson:               Yeah, and I unfortunately have a lot of frequent flyer miles at your store so thank you very much for that. Maybe you can tell us a little bit about how you conduct your banking transactions on a day to day basis. Scott Murison:                  Absolutely. So automatic every day at the end of closing we are doing transactions through our debit and credit machines and making deposits that way and at least twice a week if not three times a week we are physically going to a bank to do cash deposits or wire transfers or check deposits. Scott Anderson:               Great. [00:02:30] And I know you're a strong community guy and you strongly support local jobs. We've been discussing in the past how you can have some concerns around how banking automation and automating everything to reduce staff could have some some pain points in the community. I believe financial institutions need to strike a balance but from your perspective Scott if there's ways to release capacity in a branch and automate some of those time consuming cash processes to spend more time for direct interaction and service for you and your business how [00:03:00] would that change your relationship with your local branch? Scott Murison:                  I think anything that a bank can do to facilitate our monotonous jobs just cash deposits would be great and if it freed up capacity so that when we do have one off things we need to make a wire transfer. When we have a more technical issue that takes more staff power from ourselves as well as the bank it would be great if that line up wasn't long. Scott Anderson:               Great, great point. So typically when [00:03:30] you're in the branch how long are you spending with a cash transaction? Scott Murison:                  It completely depends on the day and it's a bit random and it's not a stressor but it is occasionally an issue. You go out thinking you're going to be 15 minutes to make a deposit and sometimes the lineup is itself 15 minutes long and sometimes it's two minutes and there's no way of guessing before you're actually physically in the bank. And I would say 50% of the time your two minute job takes 50 minutes and the other 50% your two minute job takes two [00:04:00] minutes. Scott Anderson:               So what time of day are you typically hitting the branch to conduct these types of transactions? Scott Murison:                  Often just before lunch. So the deposits are gathered in the morning at store opening for cash and then a deposit slip filled out and then walked down to the bank. Scott Anderson:               Okay. And are you getting a cash float to support your tills for the day at the same time or is that a different task that you're doing? Scott Murison:                  No, absolutely that would be on the same trip. So we are getting change in the way of coin and small bills in exchange for [00:04:30] larger bills. Scott Anderson:               Interesting. Speaker 3:                           Camping line one, that's camping line one. Scott Murison:                  See it's a real outfitter store. Scott Anderson:               That's okay. I like the fact that you've got some of that real store background noise it's all good. So when you're making your cash deposits or going into the branch for some of those routine transactions is it typically you or some of the co owners or are you sending other staff members to do this as well? Scott Murison:                  It's usually our accountant. Scott Anderson:               Oh, okay. Scott Murison:                  Because they are tabulating all the day ends and they're making sure they balance. So you have one of your highest [00:05:00] paid people leaving the building and doing a fairly mundane task but it's just to keep the whole assignment of the job to one person as opposed to splitting it up. But so yes the less time that she were out of the building the better. Scott Anderson:               The better it would be okay. And is there ever a situation where there's other people involved or is it typically always your accountant who's going to do this? Scott Murison:                  If she's on vacation or going to be away she'll assign it to somebody else. Scott Anderson:               Okay. So is there any impact with her going midday leaving operation to go into [00:05:30] the branches? Would there be a better time or is there a better way that you think would help her perform these tasks? Scott Murison:                  I'm not sure if there's a better time because the things in business happen at random times so it's more the amount of time, the less time at any point during the day that she can be away would be better. Scott Anderson:               Okay, fair enough. So if we were to look at ways that banks could potentially automate some of these simpler transactions both in person and business bankers being able to free up [00:06:00] teller lines and help your accountant get in and out quicker and help them enhance the customer experience is that something that you think would be useful to your business? Scott Murison:                  Absolutely, that would be a win win situation. We'd have one of our highest paid employees more often able to do their higher end work as opposed to standing in lines to do more mundane tasks, that would be a win win situation for us. Scott Anderson:               Okay. Is there situations where your accountant then is dealing with some of those more complex transactions and having to speak to somebody versus performing some of those [00:06:30] mundane transactions? Is that typical for your business? Scott Murison:                  Absolutely. On a consistent random basis we would have to be dealing with wire transfers to Europe to prepaid hotels for our travel business or things like this that we would require a teller to do for us. And then we'd also have special occasions where we have let's say we're doing a larger buy and we need to talk to somebody about upping our line of credit for a short term. We need to talk to real people, real managers for that and the less time that can take [00:07:00] the better. Scott Anderson:               The better. And is that something where you have a good relationship in your branch where you're recognized when you walk in so a personal banker or a small business banker knows that they can go talk to your staff or is this really hit and miss based on what you're in the branch for? Scott Murison:                  Our bank managers know our staff, our accountant and ourselves the owners but the actual tellers for a wire transfer may not know us at all but the larger asks are usually pushed up [00:07:30] further anyway. Scott Anderson:               Okay, fair enough. So if I think about some of the journeys then that your accountant's going on for some of these more routine cash based transactions if there was somebody in the branch who could help guide them through automating some of that and show them the way and perhaps bring them to a self service device like an ATM and then free up those tellers as we've discussed to discuss more detailed or technical transactions is this something that you think your business would be interested in supporting? Scott Murison:                  Yeah, absolutely. I don't see why, [00:08:00] it would be great if [inaudible 00:08:01] could give us change for the day for our cash floats. There's no value added by the bank teller doing that, it's not like they do better job of giving us a role of pennies. Scott Anderson:               Fair enough. One of the things that we've been looking at from a solutioning perspective is talking to both customers as well as, in customers I mean by a small and medium business as well as bankers, in saying if there was a way for us to help that automation journey. And perhaps it's where we start in your location [00:08:30] of business and we use online or mobile banking to pre-stage a function, one of those more mundane transactions, where your accountant could set up all the deposit details, itemize what the cash was going to be, and then pre-stage that into a mobile app where instead of presenting a card, waiting in line, entering a pin, perhaps at the counter you could simply go to an ATM and tap that phone or enter that one time code do you think that would help streamline some of that process? Scott Murison:                  It could [00:09:00] help. The time savings is not in the actual filling of the form it's in the actual physical weight. You don't know whether you're going to arrive and there's 17 people in front of you or whether there's two and the same could happen in an ATM. So it would depend on. Scott Anderson:               That's a fair point. And I think typically what we're seeing is there's a lot of queuing in the branch because there's an expectation that I can only fulfill that transaction with a teller [00:09:30] but if that were something that a self service device was available that would streamline that process. I guess that asks to beg the question is there coin often in your deposits or is it typically bills that you're exchanging? Scott Murison:                  It's typically bills, very little coin that we're depositing. What we are doing is receiving coin for our floats. Scott Anderson:               Okay, that makes sense. Good stuff. How long has your relationship been with your current financial institution? Scott Murison:                  Maybe 12 years so far I think. Scott Anderson:               Okay. And do they reach out to you and ask you about how you [00:10:00] perceive your banking in ways that they could potentially improve that? Scott Murison:                  Absolutely. They survey us once a year for sure and then they usually have us in for a chat to see what else we might need. Scott Anderson:               Good. Is there any views that you've seen or any ideas that you've heard of or seen within the financial institutions that you deal with that you're saying, "Hey, that's a move in the right direction. It's a balance of making sure that people are there to talk to me but also a good process for automating some of those more mundane tasks." Scott Murison:                  No, not from our particular bank managers. They have been more interested [00:10:30] in selling their goods which are loans and line of credits which we have not had the need for so. Scott Anderson:               Okay, fair enough. Scott, given the history of Wild Rock and you guys have been in business for a lot of years and the changing ways in which consumers are actually paying for goods and services can you talk to me a little bit about the changes you've seen in the industry between coming in with more cash heavy payments and then moving more towards those digital or card based payments? Scott Murison:                  I mean it's been a huge change [00:11:00] in evolution since 1992. In the 1990s checks, cash and then we had Visa and MasterCard, we didn't even have debit cards back then, were king. And then debit cards came on the scene and that was a real game changer. Suddenly the cash needs went down and the checks went way down and then now in the last five years it's been mobile devices, people paying on their phones, people paying with their watches, people paying obviously with debit cards at a fairly [00:11:30] high level and then a large number of different types of credit cards as well. And then I would say the other thing that's tapped in are there's so many of the gift card operations as well. It's just all of these different digital ways of paying for something at the cash. Each teller has, where it used to be is that cash or check and then it became cash check or credit card, now it's cash check, credit card, debit card, [00:12:00] gift card. Scott Anderson:               Mobile pay. Scott Murison:                  It's unbelievable. Scott Anderson:               Interesting. But cash has always had a place in that payment scheme it's just probably reduced in the amount of transactions is that fair to say? Scott Murison:                  Absolutely. Yeah no cash is still real, people use it every day and it doesn't seem to follow a demographic. There's 30 year olds who come in and pay for a bike with cash and there's 65 year olds who come in and pay with cash. But the percentage has definitely dropped over the last 20 years but it's still an [00:12:30] important part. And it seems for us it's big purchases sometimes. People, I don't know if they squirrel it away in their mattress or what but they do large purchases using cash. Scott Anderson:               That would go against what most people would think but that's an interesting statistic that you're seeing. Interesting. And how has that changed then how you have to prepare how you serve your customers? Has your bank been there along the way to help you with these more digital payments as they become more and more prevalent or have you [00:13:00] had to find your own way? Scott Murison:                  Our particular bank is making cash more and more difficult because they're making it more and more expensive, they're not really interested in dealing with cash. So, in our negotiations we've actually had to negotiate that we actually don't want to pay a cash handling fee, things like that yeah. It's almost more expensive to take cash than it is a debit card. Scott Anderson:               I've seen some of that trend in other geos too where cash has been a premium price to handle [00:13:30] and if you think about it from the financial institution's perspective they're counting it multiple times, etc. So I get it but I also understand the perspective of the small to medium business where margin is pennies and you need to watch those things. So that again comes back to if there was a way to still get the level of service and personalization in your branch but then perhaps price your mundane cash transactions through automation accordingly to help you on that cost side and help you with that speed [00:14:00] side. Is that something that would make sense to you? Scott Murison:                  Yeah, absolutely because from the consumer's perspective most consumers expect a cash discount and if cash becomes more expensive it would actually be a cash premium that we'd have to charge and that's not where the consumer's head is at. Scott Anderson:               Absolutely not. I mean most consumers think about, "Hey, if I pay with Visa or MasterCard my merchant is paying a percentage on that," they're not realizing that there's also a percentage on the cash. Scott Murison:                  Yes. Scott Anderson:               [00:14:30] Interesting. Yeah, that's a perspective I think most consumers miss and yet the merchants are having to balance things out. Scott Murison:                  We're just on the cusp of that. Scott Anderson:               Wow. Well, thank you for sharing that tidbit with me that's really interesting. Well Scott, this was a lot of great information and I hope we have given some clarity on this topic to our listeners today and I think this is a great place to wrap up. So thanks again to Scott and all of our listeners for joining us today. And again, thank you for hosting me here right on premise at Wild Rock. To learn more about topics like these [00:15:00] log on to dieboldnixdorf.com/SMB or click on the link in the podcast show notes. Until next time keep checking back on iTunes or however you listen to our podcasts for new topics on COMMERCE NOW.  

Summary: Today's podcast is an oldie but goodie.  A podcast we first released in May 2019 was so popular we decided to share it again! In this episode, we take you on a journey of how self-service has woven its way into so many of our daily activities from paying for gas to checking in for a flight and really what are the consumer expectations for these types of offerings.  Resources: Chart your Path for Retail Growth - Connect with our Retail Experts here Blog: Retail Self-Service: Today, it's WAY more than self-checkout  Transcription: Amy Lombardo:                Hello again, this is Amy Lombardo, your host for this episode of Commerce Now. In today's episode we're joined by Matt Redwood who is the head of self service checkout for Diebold Nixdorf's retail division. And today we'll discuss how self- service has woven its way into so many of our daily activities from paying for gas to checking into a flight and really what are the consumer expectations for these types of offerings. So hi, Matt and welcome to COMMERCE NOW. Matt Redwood:                Thank you for having me. Amy Lombardo:                Always a pleasure to talk to our friends in the retail division. So Matt, let's talk a little bit about your background first. Can you tell the listeners a little bit about yourself? Matt Redwood:                Absolutely. So as you said, my title is head of self service for Diebold Nixdorf. Been in the company about 15 months now. It was brand new position within the company and DN saw the need to put more focus on the self-service checkout. So look after the self-service checkout business for Europe, Middle East and Africa. I've been in and around self-service my whole career. I've been in retail for a nearly 10 years.  So, I've worked with multiple different retailers all across the globe on their self-service strategy. But also that self-service implementations to make sure they're deploying the right solution into the right place. Amy Lombardo:                Very good. So Matt, what I wanted to do was start at a very high level and talk about some macro trends that are shaping the retail industry because you can't get away with reading any headline of any major industry publication these days without seeing something about self-service in there. So can you talk a little bit about some of those macro trends that are shaping the retail industry today? Matt Redwood:                Sure. So self-service in the form that we see at most grocery stores has been around for 15 years, which you know in the retail landscape is a long time. But it's taken a long time I think for retailers really to understand self-service checkout to get to a position that deploying it in the right way and of course for the consumers to adopt it in the right way. I think we're really at a tipping point now where from a consumer perspective is, there's self-service in every part of our life. Whether you go to the gas station, whether you go to the train station on the app or you go to the grocery, there is a self-service option and what we see in our data is that consumers really now see it as point of convenience for them. They see the benefits of self-service checkout and they've moved past the point of not only wanting it but they actually now dictate it to retain it. Matt Redwood:                So we have a lot of retail customers that come and want to work with us purely because that's [00:02:30] amazing that stores are actually demanding it. I think when self-service initially came on the scene and a lot of retailers saw it as a great way to strip costs out of that store. And so a lot of retailers, particularly in grocery, really went for very very high density self-service checkout deployment. They stripped a lot of stuff out of their stores but what they came to realize that actually they saw a bit of a drop in the consumer experience within their stores and I think the assumption was that they put self-service checkout and they remove staff, customers will use it and everything will be fine. But actually what happened is that had a detrimental effect on the consumer experience in the store because there weren't staff to help where consumers really valued the experience within the store. Matt Redwood:                So what other retailers now do is actually, it's not about a reduction in staff, it's about a redistribution in staff. Amy Lombardo:                Right. Matt Redwood:                If you take tasks that were normally done by the system and you give it to the customer to do, that frees up that member of staff to then be in other areas of the store to make sure that customers can find products, or the shelves are well stocked, they're well priced. So actually getting the experience right or getting the efficiency right at the self-service checkout as a knock on effect on the customer experience all the way right back through the store. Amy Lombardo:                Right. So Matt, can you explain how consumer's knowledge and their comfort level is shifting in terms of how consumers are engaging with the self-service technology today versus maybe what they did when retailers first started introducing it many years ago? Matt Redwood:                Sure. So I think there's really a perception shift with self-service checkout that's happened over recent years. I think when self-service was first introduced to stores, there was a bit of negativity and a bit of push back from consumers because they saw it as a replacement of the members of staff within the store, especially very loyal consumers that went to the same store every single week to do their shopping. They built a reputation with the member of staff. The thought of that member of staff being taken away and replaced by a machine was hit with a lot of negativity from consumers. The shift that's really happened over the last couple of years is consumers value the choice, the choice to check out or to interact with a brand, a retailer in the way that they want. Matt Redwood:                So now what we see a lot of retailers doing is focusing on giving consumers as many channels to shop within their stores or checkout within their stores as possible. So the role of the assistant has changed completely from just a member of staff and the checkout to really kind of a customer experience manager within the store. So the tasks that would normally be done by an assistant at a point of sale system will now be done by the consumer either on a mobile device or self-service checkout or a kiosk. Matt Redwood:                And that frees up that member of staff to actually deliver the right level of customer experience within that store. So I think the perceptional shift has been away from that machine is taking a member of staff's job to actually that machine is an option for me to check out of the store and it's freed up the member of staff to deliver a better customer experience somewhere else in the store where I wouldn't normally get it. Amy Lombardo:                So Matt, I wanted to comment on what you just said because I think about how when I go to my local grocery store and I use self-checkout all the time, maybe because I'm a control freak and I like to see what I'm actually scanning and paying for. I let my kids do it sometimes, but then I hear time and time again, you'll see certain generations that come up and they say, I don't want to use this, this takes longer. And there's always a problem with it. And I'm just wondering is that a perception issue? Is it a training issue? You know, can you comment on that a little bit in terms of maybe just generational preferences and using self-service? Matt Redwood:                Sure. I always say to retailers, deploying self-service checkout is not as simple as deploying a point of sale solution because innately it's a change in so many processes in your store. So we really refer to self-service checkout as a business change solution because it enables retailers A. To make their stores more efficient and but also B. Delivering a much, much better customer experience to their consumers. But the byproduct of that is because of the interaction is so different between the brand and the consumer, that retailer has to change so many processes in their stores for self-service to really be efficient and work well. Matt Redwood:                So things like cash management, how they staff their stores, how the staff interact with the customers, how their customers interact with them as a brand, all changes. So there's a huge amount of operational shift that has to happen. So I'd say a big part of getting self-service right is how you operationalize it. Ultimately it puts a lot more onus on the staff to deliver a better customer experience because you're taking away so much human interaction within the store. But when [00:07:30] staff do interact with consumers, it's that much more important that they deliver a much, much better service. So I think it's probably a combination of not just the technology but how you staff the stores, how you operationalize your stores. It all comes together to really deliver the right customer experience. Amy Lombardo:                Got It. And so in self-checkout or really varying ways to shop, it goes beyond just self-checkout. So there's smart phones, there's handheld scanning devices in the stores, [00:08:00] all of these different types of self service options. How have these changed the way consumers engage with brands? Matt Redwood:                Well, I think it's giving consumers a lot more choice in terms of how they do interact with the brand. If you think about a customer journey of a grocery shopper five years ago, they'd make the decision that they want to go shopping and that may be influenced by family or what they're going to eat tonight, what they have in the fridge. [00:08:30] They'd make the choice to go to the store. They'd shop that store, they'd pick their products, they'd go to the checkout, they'd check out and they'd leave. Matt Redwood:                Now what we're seeing is the customer journey is actually a lot more cyclical and yeah, retailers really have to focus on the digital journey. So how do I influence that consumer when they're away from my store, when they're away from my brand? So yeah, while they're watching type TV, how do I influence them to actually shop at my store, rather go to a competitor store and then how do I drive that consumer into that store [00:09:00] and enrich that customer journey when they get there? Matt Redwood:                So give them the choice to shop your brand in the way that they want. Once they get to your store, enable them to shop the store in the way that they want, but put the right technology in there to enrich that consumer experience. Apply the right level of staffing to the store as well to supplement that technology journey. Allow them to check out in the way that they want. I think now more than ever we're seeing retailers really put the most amount of choice in that technology [00:09:30] that consumers can use to interact with a brand than ever before. Matt Redwood:                But then it doesn't stop when they leave the store. Once they left the store, how do I influence that consumer to come back my store and actually driving the consumer into the store and actually making sure they come back is as a bigger part of the customer journey as the in store piece. So just giving the consumer a good in store experience isn't enough anymore. You've really got to enrich the consumer experience all the way around the circle. Amy Lombardo:                [00:10:00] Do we see custom retail apps tied into self service options? So I think of Target for example, and I have their cartwheel app and I always get special discounts given to me just through the app. And then a lot of times then it's for the ease of self service. So do we see that customized apps maybe have any type of leverage on how self-service is used? Matt Redwood:                Yeah, absolutely. So [00:10:30] when you think about a mobile app, and more than ever, every single consumer has a mobile, a piece of technology that allows them to effectively never go to a store again. But what retailers can do with that app is they can actually influence that consumer come to that particular brand or that particular store. And as you said that may be through personalized adverts, it could be through promotions or through a loyalty system. But ultimately that's an amazing tool for retailers to, I wouldn't say target [00:11:00] specific consumers, but definitely engage with consumers when they're away from that store or make sure they come into their store. And then really the use case flips because if you take the online second screening type of example of, I want to buy a TV. I might go into a store and look at TVs, but there I'll be using my mobile phone to second screen. And actually I'm researching prices all the time. Matt Redwood:                So I'm now a professional shopper because I'm price matching as I'm going through the consumer journey. So it's really important that [00:11:30] retailers don't shy away from mobile. They actually embrace it because consumers don't like to be forced down a particular path. They want choice and they want clarity as well. Clarity of what they're buying. Clarity of pricing. So really retailers have to accept that every consumer has that mobile device and really put a lot of focus on using that to enrich the in store experience. Matt Redwood:                Of course., as well, consumers could apply the application to allow them to actually shop the store. So scanning products and [00:12:00] actually use it as the checkout. So yeah, self-service checkout then becomes a supplement to a mobile application because it allows them to finalize the journey within the store, potentially pay cash or pay card or get help from an assistant or coupons or loyalty. So really the self-service checkout on the mobile device shouldn't be seen as competing technologies. They really supplement each other. Amy Lombardo:                That's an interesting way of looking at it. So when a retailer is ready to make the shift to self-service or they need to modify their existing plan, something's not working right, maybe they are ready to add on some new functionality. What's your advice on how that retailer begins? And I ask you this because I go back to one of your initial comments here was the over simplification of self-service solution. So you can't just set it and forget it. So you know, talk to us a little bit about some of those advice pieces. Matt Redwood:                [00:13:00] Absolutely. So really important, as I said previously, not to consider self-service checkout as another point of sale solution. And as you said, which I'm going to use actually set and forget. We don't want any sets and forgets because it's not a guarantee that our consumer is going to use that device. So if anyone wants any help with that process, we have some great advisory services where we work with retailers specifically on identifying the right solution to put into their stores A. For what they're trying to achieve as a [00:13:30] business but B. For their consumers. So staff from a data point of view work out what the trading profiles of your store are. Work out what you're trying to achieve by putting self-service checkout at the store. Is it efficiency, is it customer experience or is it just because everyone else is doing it or your biggest competitor is doing it? Matt Redwood:                That's quite an important [inaudible 00:13:51] to start from. And then I think really focused on the customer journey. So why do your shoppers shop at your store and what kind of customer experience are they [00:14:00] expecting? If you can nail those three points, then you can really identify what type of self-service checkout to put into your store. But then more importantly, how you operationalize it within your store. Matt Redwood:                So the landscape that we see now with retailers, particularly with retailers that are quite far advanced down the self-service checkout journey, they're not just putting one type of self-service checkout in to a store, they're putting three, four, five different types of self-service into a store and really focusing that particular solution [00:14:30] at a particular customer demographic. A. It delivers them the best operational efficiencies but it also delivers the best customer experience for their consumer, because it gives them the choice. So I would say focus on the operations and focus on getting the right solution for your stores and for your customers and then operationalize it in the right way. Amy Lombardo:                That was a good way of listing it out here for our listeners. So you talked about some of these new industries or just [00:15:00] the fact that retailers want to get on board if they're not there with self-service. Can you talk a little bit about maybe some of the unexpected types of industries that you're seeing? Because we all know of the grocery model or the C-store that it's pretty easy to grab something quickly, pay and go. But what are some of those like unexpected industries? Matt Redwood:                Sure. Self-service has been around for almost 15 years in the grocery industry, but for the first time I think retailers outside of grocery are starting [00:15:30] to sit up and notice self-service checkout as a way of enabling them to deliver the right in-store experience. So we're talking to fashion retailers, the petrol retailers, the GM retailers, the DIY retailers. Ultimately there should be no bounds to self-service checkout. The same person that shops in a grocery store is going to be the same person that goes to the DIY store on a Saturday because they're renovating the house or goes to the petrol convenience store because they want to buy petrol for their car [00:16:00] or takes their family shopping and goes through a fashion retailer. It's the same consumer. So I think we as a supplier to the industry really need to realize that actually every consumer is the same whatever shopping type their shopping in. And so if a consumer is demanding self-service in a grocery environment, why wouldn't they expect it in any other shopping environment? Amy Lombardo:                I think it makes our lives much easier and it gives you that piece of empowerment and control your shopping experience a little bit. If you're making the list [00:16:30] and you're checking your coupons, why shouldn't you just be able to finish the transaction as well? But maybe that's just me. Matt Redwood:                I completely agree. Amy Lombardo:                So Matt, I think this is a good place to wrap up our discussion today and I thank you for joining us here and sharing your insights. And to our listeners out there, if you're interested in more information on self service and retail, go to dieboltnixdorf.com/retailgrowth or click on the link in the podcast show notes. Until next time, please keep checking back on iTunes or however [00:17:00] you listen to podcasts for new topics on COMMERCE NOW.  

Summary: Devon Watson, Chief Marketing Officer for Diebold Nixdorf recently traveled to Dubai UAE and sat down with the Dubai Future Foundation - a government initiative driving accelerator programs - as well as a special block chain consultant, to discuss how the region is approaching growth and innovation. Resources: Dubai Future Foundation Website Dubai Future Foundation LI page Mark Balovnev, LI Profile Educhain Website Accelliance Website Diebold Nixdorf Website Transcription: Devon Watson:                 00:14                     Hello again and welcome to this week's episode of COMMERCE NOW my name is Devon Watson, Chief Marketing Officer for Diebold Nixdorf. Today I find myself in Dubai, UAE. We're at the Dubai Future Foundation, a government initiative driving accelerator programs in the region. I'm joined today with Ghaith Abdulrahman and Karin Gabriel, both of whom are project leads at the Dubai Future Foundation and a special guest Mark Balovnev. He's the founder of Educhain and a partner at Accelliance, a blockchain consultancy based here in Dubai.                                                                                 So maybe to start off, Ghaith, if you could tell us a bit about Dubai Future Foundation and some of the programs you guys are running here. Ghaith Abdulrahman:                  00:54                     Sure, absolutely. Dubai Future Foundation was born out of the belief in the need to drive future in Dubai. As you know, Dubai is one of the global cities and a major, major regional player and it's been doing really well in a lot of sectors, primarily specific sectors that drove it out of turbulent times in the past and it created a successful business community and society. We've had brands come here and stay and we've had homegrown brands that have gone global. So the need to start planning for the future comes out of the belief that we need to continuously be number one, and it started in the World Governance Summit where we had an exhibition around the Museum of The Future, where we wanted to demonstrate what the future could look like. And instead of demonstrating relics of the past, it was more about what could future sectors look like, what could human interaction technology look like and how could society look like in the future? Everything from government to private sector and the society itself.                                                                                 From that very, very humble beginning. The foundation has over 200 employees, a vast portfolio of projects that range from everything from building capacity for society, government and multinationals around explaining what the future could look like when when emerging technology comes into their sectors to building disruptive programs around with multinationals government about how could we lead on certain sectors? How can we transform government from a nascent and inactive player to a proactive player? Which has been the case for Dubai government for a long time, where they've been pushing and driving the innovation in any economy or any sectors or in the economy, since their inception, and the private sector has been kind of following rather than leading. So that's really to build and capitalize on that effort quite a lot.                                                                                 Some of the programs that we host range from connecting government to very bright startups to entrepreneurs to building capacity on a leadership level to help them understand how is technology changing their sector? How it could change your organizations to working with private sector as well around a similar scope to building capacity with university students and high school students around breaking down myths, breaking down misconceptions around things like AI, blockchain, other parts of technology and how could they be part of that new wave of entrepreneurship, but also how can they use that technology moving forward. So the scope's quite vast. We get into a lot of programs, what we primarily focus on building programs that link regulators or government with a private sector and startups and how do we build the value chain around these three. Devon Watson:                 03:38                     Got it. And one of the things that you mentioned that I thought was pretty interesting, so as I look around Dubai, the desire to be number one is pretty obvious, the world's tallest buildings and very impressive engineering feats. But there's also this kind of clear trend towards the societal aspect, the satisfaction or happiness. I've noticed that those measurements are kind of stitched in every place I go in the user experience. Can you talk a little bit about how the user experience, as it pertains to really a societal benefit here right, the government is what's actually driving this and how does that marry up to this desire to be number one because many other governments or institutions would view it as one or the other? Ghaith Abdulrahman:                  04:23                     Absolutely. You're spot on. I mean the general vision is to be number one and that, to different stakeholders and government, that could mean different things, right? From a government centric perspective, one of the things that means is that, beyond creating government entities that are stellar, that are continuously innovating and taking the lead in their sector, there's a huge services mandate towards the people, towards a society that needs to be fulfilled. And that's been a primary concern and primary focus of the government entities here. How can we provide world-class services to the citizens, to the users, whether they're commercial, residential, and everybody who even passes by or transits Dubai, right? How can we give them an experience around service that's not comparable, right?                                                                                 And there's been a lot of focus. Everything from gearing the Government entities internally, whether they're from an organizational perspective or from a services perspective, operational perspective, but also how can we team them up with the best technology that can facilitate providing the best services. So that's been really the focus. And ultimately the common denominator across all that is that we want everybody who hand or deals with Dubai government to be happy with the outcome and the transaction and the experience. Devon Watson:                 05:36                     Got it. And one of the things that I've always thought a lot about when I go to a different city and I see how they're trying to stimulate innovation is, how you bring the right mix of participants together, right? And you need students, right, that are graduating and becoming risk-takers and new ventures. You need often some sort of government support. You need large corporations that can be acquisition vehicles for these different startups and things like that. And you need capital, right? And one of the things that I noticed that I thought was really interesting is that you've brought a Techstars program here, so maybe you could tell us a little bit about that. Ghaith Abdulrahman:                  06:12                     Sure. So Techstars program was launched the beginning of last year and it was the first accelerator program we hosted in our flagship project Area 2071. So Area 2071 is an experimentation space between government multinationals and startups focused on identifying a disruptive business models and technology. And out of that we hosted a Techstars for the first time in the region. It was the first endeavor in the region there were sponsored by one of the big family businesses in in the UAE. And we really liked the outcome of the program because the way it was organized and the way that it was structured was in a way that ensured that the companies would not just succeed, but find a home in Dubai. So we found that quite attractive to our mandate and our positioning. So we hosted them for two cohorts over two years. And a lot of these companies are going to get special visas around that enables them to stay for a long period of time, sponsor their teams, and sponsor their families to be based here out of Dubai.                                                                                 So that's the support that we've usually provides any accelerator program or any startup. But that Techstars experience has been quite stellar because it also pushed us to launch a project recently, it was one of the reasons that focuses around how can we incubate ideas on a university level where it's safe to fail, it's safe to experiment with new ideas for businesses and how can we play a role along with the private sector and the government funds around seeding these ventures and graduating a lot more of these ideas. And that's the problem that you find in the Middle East in general, is that there's a lot of talent, there's a lot of bright ideas, but there's very few mechanisms that enable it to go from idea stage to execution stage or a POC stage. And that's kind of where this project, which is called Genie Zones or Alchemy Project has come out from. Devon Watson:                 08:01                     The way I often phrase that problem when I'm thinking about it. It's something that recurs in different regions as well as solving the get to market problems, not the go to market problem, right? And it's a different mindset, right. And you need, in particular, permission to fail, right? And that's not always culturally viewed as an okay thing. Ghaith Abdulrahman:                  08:21                     And that's why universities are the best place to do it, especially when you embed that program within the credit system that the university student goes through. It becomes more of an incentive and it puts the parents at ease as well because they say what, he or she are focusing on the degree and at the same time that this program that they're doing is contributing towards that degree. So that program really fits in quite well with everybody's needs Devon Watson:                 08:45                     And then that changes the perception, right. And opportunity to learn rather than a blatant risk, right? Ghaith Abdulrahman:                  08:52                     Absolutely. Devon Watson:                 08:52                     That's excellent. So thank you Ghaith. That was super helpful. I really liked the kind of the mission around what you guys are trying to create here with the ecosystem. So Karin, maybe we could move over to you and tell us a little bit about, as this ecosystem is coming together, you're trying some new things, what are the technologies, what startups maybe are starting to capture your attention that you're bullish for that will have a great future. Karin Gabriel:                                    09:18                     Absolutely. And I think, I just want to start off giving a bit of context of the kind of programs we run here. So my colleague mentioned earlier Techstars, which is one of the programs that are invited to set up an Area 2071. And Area 2071, as mentioned earlier, is an ecosystem that comprises of three main stakeholders, private sector organizations, government organizations and talent in the form of startups primarily. And they're all situated here in Area 2071 in Emirates Towers. And our goal is to make sure that we harnessed experience and expertise of our members in this ecosystem. And we work on specific programs that are all driven by a specific challenge. So challenge is a need, a problem statement that we identify together with our partners. Then our goal is to find the right stakeholders, bring them on one table, and then we create a program that allows the different stakeholders to work together and co-create a solution for the challenge statement. And these challenge statements usually revolved around technologies and we have seen all kinds of technologies from AI to a block chain artificial intelligence. Sorry, let me move [inaudible 00:10:29].                                                                                 Yeah. So we have seen all kinds of technologies being represented in our programs from artificial intelligence to blockchain, virtual and augmented reality and so on. And I think what's interesting about our programs is that they are driven by a specific need. So in Dubai future accelerator, if we work with their road and transport authority that looks into autonomous driving, for example. The electricity and water authority looks into new forms on energy savement, energy generation, but it was a water generation. The knowledge authority of course really wants to revolutionize the education system to make sure that it's ready and prepared for the 21st century. I think what we have seen interestingly is, in the beginning a bit of question on the government side on why should we work with startups? Because for them this was a new field. As you can imagine, even for us in Dubai Future Foundation, we are very young organization. We are less than six years old.                                                                                 But if you want to buy let's say new furniture and new equipment, we have to go through an RFP process which is very strict, which doesn't allow us to work with startups, which means all of the solutions that startups provide around innovation. I think that we can access on a legal basis. That's why Dubai future accelerators was set up as a test bed to allow startups to work with government entities and explore during the nine weeks program how they can collaborate. And we have really seen a shift in the mindset of the government from being in the beginning very careful when it comes to working with startups. They wanted to know which were the partners that the startups have worked with before and they wanted to do have references. To really switch integrate, you have never tested it before. I want to be the first one you test it with.                                                                                 I want you and us to sit down and further develop your technology. Now I can give you an example here, we had a company from the UK called Desolenator and they brought to Dubai a solar powered water desolination technology sit in MVP stage. They signed an agreement with the electricity and water authority from Dubai and over course of one and a half years, defer to develop the technology and have now building a community size plant in Dubai using this technology. Devon Watson:                 12:46                     It's a great success story. Karin Gabriel:                                    12:48                     Absolutely. It's brilliant and I think it shows the risk appetite the government has and the confidence in the startups and really understanding that emerging technologies can help them offer better services to their customers. Devon Watson:                 13:02                     So the self-awareness and government's part to understand that there probably was a lot of red tape and things like that. I did a similar interview with another accelerator in a different part of the world and they were telling me that at first when they got started, they were bringing these brand new startups in and the government form had to make the startup list of the number of fire extinguishers they had. No startup has any clue why you would even, right? They don't even think that way. Right? So it's interesting that the government here was kind of self aware that there was impediments and red table, whatever you might want to call it, to that progress and then and then fixed it. What was that conversation like through the education process though? Was there an aha moment or was it just kind of a continual collaboration to help refine how the government looks at it? Karin Gabriel:                                    13:52                     Yeah, that's a good question. And I think it's an ongoing process. So they have been a lot of aha moments and I'm pretty sure they will be a lot of aha moments moving forward. So for example, one of our partners really looked into changing or adapting their procurement system, right? Because our procurement based system sometimes takes months. And months are not an issue for large corporations, but months are an issue for a startup because they have limited resources. And I really think it's by having the government partners and private sector organizations as well, work with the startups over a period of nine weeks, every single day side by side to really see the potential that they have in transforming the services or the way we offer the services to our customers. And not only our customers, but we had one example where a smart Dubai office who is kind of like the tech department of the Dubai government so to say, and they are also in charge of the software used in their houses, the inventory, management and planning system, which until recently was very much focused on paper and it was very manual.                                                                                 It was sometimes very frustrating for the employees, right? Because you know you have to print a lot of items. There's just a lot of time that is gets wasted from employees time on this admin tasks. They teamed up with a company from the US called Ensosoft. Now they changed the name to Nybl. And over the period of nine weeks they went to one of the warehouses. They looked at the processes and they recommend to the director training of smart Dubai office and how they can change it and they agreed. Then they signed a contract and they're now using IOT and AI to digitize the system, which means the employees have now more time because they can focus really on the important tasks. So again, looking into happiness. Devon Watson:                 15:40                     Excellent, interesting. In all of these different entities that you're working with. Can you give us a couple of examples of other interesting technologies that you know you guys are maybe doubling down on or really focused on? Karin Gabriel:                                    15:52                     Yeah, I mean, one very interesting one is around virtual reality for example, and augmented reality. This year we run a very interesting competition with Burj Khalifa and HTC. And Burj Khalifa was looking into providing a new touristic experience at the top of Burj Khalifa. They already have one, but they wanted to edit a new one. And instead of just creating it internally, they wanted to harness the creativity of the VR ecosystem globally. We ran a competition, 115 companies applied. The top six came to Dubai. They presented the demo and then we had two winners and they walked away with... the winner walked away for prize money and the second run app their experience will now be placed in the Dubai mall, which is attached to Burj Khalifa and the winners on top as well as the global port of HTC.                                                                                 What do you have seen as well with Emirates for example, they focused in our core this year on transit pass passengers. There are a lot of passengers we have coming to the Dubai airport, it's the busiest airport in the world, so we are very lucky. A lot of transit passengers, a lot of flights that are being missed or people don't find their gates. So they developed a very interesting solution and the country [inaudible 00:17:03] too much. How they can really personalize the support, the customer service support, after transit passengers and they worked with a startup during this program. Devon Watson:                 17:15                     So virtual and augmented reality is something that I think the banking sector has taken interest in a few times. Nobody's really figured out quite how to use it. And so there's some things with the signage that helps direct traffic flows and stuff like that. And it's an augmented reality if you will. But it's very interesting to think of the different use cases you could have at the top of Burj Khalifa. And I can't imagine trying to catch Pokemon, running around on the top floor. That would be a dizzying experience. Karin Gabriel:                                    17:44                     Yeah. But I mean it's interesting because we talked about banks and of course, I mean as mentioned earlier, blockchain is massive, right? And the hype around blockchain has slowed down a bit now. We really talk about proper applications in blockchain. But there's still a bit of a question mark around that. And in partnership with the World Economic Forum and the Center for the Fourth Industrial Revolution, we hosted a blockchain governance accelerator. So again, we brought together private sector organization, public and startups who have either looked into implementing doctrinaire already done. So at a certain extent and using the World Economic Forums toolkit. So it's a guide book that they have created. We analyze the Skybook through case studies and the outcomes were fed back to the toolkit to now be presented next year to World Economic Forum. But this really goes back to our goal. We believe that innovation is driven through collaboration. I think that's the way forward and Dubai is doing its best to position itself as the global test but for emerging technologies. Devon Watson:                 18:50                     Fantastic. Great, thank you. Mark, I'd like to switch over to you and you've been the founder of a company called Educhain. You're a partner at Accelliance, which is a blockchain consultancy. Maybe just to get your macro perspective on blockchain first, how do you see things as they've evolved over the past couple of years, right? From the hype cycle and what do you see moving forward as we kind of get to the industrial phase with blockchain? Mark Balovnev:                19:19                     Yeah, sure. So I am a bit of a unique experience and I guess I came in as a hobbyist. So before they were cryptocurrencies, they were virtual currencies. And back in 2009 2000 time we were trading those currencies and we were the market makers for various types of virtual currencies. And of course when Bitcoin came around we were one of the first to adopt it and start trading. And so before there were really big exchanges, I hear about these days where you can go and buy and sell different types of cryptocurrencies. We were actually doing that manually with a team of agents across several countries connecting different markets from China to the US and beyond. So we've seen everything in the space from the emergence of big point as a new way to facilitate payments all the way to blockchain in 2015 and early 2016 when financial institutions started taking notice.                                                                                 So we've seen a dramatic shift in the way that blockchain has been approached from the early days when there was a lot of hype and a lot of over promising and under delivering to a new sort of environment where people have gone and they've invested a lot of money, they've seen what works and what doesn't. And they started the drill down on the fundamentals. So there was a time in 2017 2018 where people thought blockchain could be applied to everything. And of course there was that corresponding investment and time. And we've definitely seen that die down a bit. But what that means is that now that the people who are in the space, they understand what to do and what not to do, and they've really to focus on the applications and technologies that work. And so for me personally, it's a time of great excitement and rates anticipation because this is really where the production applications are coming out and the technology is really started to impact the end users. Devon Watson:                 21:04                     Got it. And I think you're exactly right. And in 2018 I was personally convinced that if my coffee wasn't enabled by blockchain, I wasn't cool. I would those 100% convinced to that. But now as the tech is industrializing, there are more developers trained up. Right. Because that's been something that's kind of starved that ecosystem is that, you know, if you don't have a really good grasp of not just comp side but mathematics, it's very hard to get into the core development of it. That shortage is slightly alleviated. What are the areas where you're seeing kind of the most promising traction? Mark Balovnev:                21:42                     Well, I would even add to that in the sense that people and the governments and banks and others didn't know how to work with the technology. So not only were they missing those technical capabilities, but they didn't know how to structure governance. They didn't know how to work with their competitors. They didn't know how to collaborate with startups and emerging technology. So that was one of the things that we as well saw a lot of development and a lot of maturity. And so with that said, I think there's this moment where we saw blockchain being applied to everything. Everyone was talking about blockchain for every single industry. But these days it's really come back to the fundamentals, which is the same industries that they emerged from financial industry. So financial services clearing and settlement, supply chain, trade finance, a lot of international use cases around financial services and the financial industry at large.                                                                                 So that's definitely one of the biggest ones as well as things like records and data notarization. So blockchain is a very good at a few things. It does some very well, but when you tried to make it do everything, it breaks down, right? So one of the things that we see a lot of traction in is digitizing processes, digitizing documents, and using blockchain as a way to find out where things are coming from, who's issued them or who's shared them and if they're legitimate or not. And that can be applied across a variety of industries from education to supply chain and beyond. Devon Watson:                 23:01                     Got it. Final provocative question. Is Bitcoin a currency or an asset? Mark Balovnev:                23:07                     Well that that is a tough question and I'd love to prefix this by saying that I'm not a financial advisor and this is not the official position of any of the companies organizations that I represent, but I think that it is a payment token or something like this. We've seen a definitive sorting of these types of tokens. For example, Finma Switzerland looks at utility payments and securities and I think securities represents a non-tokens of shares and companies, shares and debt shares and other assets are the real asset back tokens. Whereas, so you have to open some utility that provide access to a certain right or certain products in payment tokens. So we like to categorize on and look at them from that perspective. Devon Watson:                 23:56                     Fantastic answer. Thank you, Mark. That was excellent. Well, thank you all for joining us on this episode of COMMERCE NOW, if you enjoyed listening to this, please follow us or subscribe to Commerce Now on iTunes or your favorite podcasting app. You can also find us on YouTube, Facebook, Twitter, LinkedIn at Diebold Nixdorf.  

Summary:  On this podcast we discuss how to transform from traditional sourcing to an “as a service” economy. Today’s consumers expect “anytime, anywhere” access to the self-service channel, leaving financial institutions with the challenge of optimizing availability without driving up costs. For many FIs, this challenge can quickly become overwhelming.  Resources: Blogs: Banking Innovation: 4 Ways You Can Make a Big Impact Quickly The Growing "XaaS" Service Economy Trend Websites: COMMERCE NOW Diebold Nixdorf Transcription: Amy Lombardo:                00:13                     Hi, this is Amy Lombardo, and I'm your host for this episode of COMMERCE NOW. We're coming to you live from DN Intersect 2019 in Las Vegas. I'm joined today by Homi Karkaria, who is head of our Solutions Group, and he's presenting to our bankers today a topic that's entitled Evolving the Operational Model, which I think is a little intriguing, due to your role in the software market. So let's talk on the topic of software as a service model and why a banker should think about this as an operating model. So my first question for you, Homi, is where do you think the global software as a service market is headed right now? Homi Karkaria:                   00:52                     Sure, thank you so much. Well, there has been significant increase in the global software as a service market as we look at things. For example, if you look at everything as a service, or what people would coin XaaS, that market has grown by 38%, or is expected to grow by that by 2020. When you look at the software side, which is the software as a service, that is also growing at healthy double digits greater than 20%, with a cumulative growth rate expected to reach a huge 185 billion by 2024. Amy Lombardo:                01:27                     Does that sound about right for the role that you're in? Would you expect to see that? Is it something that bankers are accepting and gravitating now? Homi Karkaria:                   01:36                     I think bankers are really understanding this and accepting it. They have started realizing the advantages of why this is happening, what's in it for them, and how they could benefit, whether they look at initiatives like branch transformation, more automation, connectivity of physical and digital channels. I mean, all of this has to happen with limited cost, with limited infrastructure, with limited resources that the bankers have, and this is where software as a service can really help them. Amy Lombardo:                02:06                     Okay. So dive a little bit deeper into that. You mentioned a few of those benefits there, but can you explain them in a little more depth here for our listeners? Homi Karkaria:                   02:15                     Absolutely. When you look at customers, customers have different needs. So there are different needs for tier one customers versus tier two entry. A tier one customer might be able to have a large capital expenditure as a part of their budget. A smaller customer might not. So how do I have a solution which translates or which goes from a CapEx mode to an OpEx mode? So that's one benefit for the tier two segments. Homi Karkaria:                   02:40                     The second thing is, banks want to retain, in certain cases, their own cloud environments, their own private cloud. However, there are certain applications which are not business critical and they want to connect to a public cloud. So how do I build a hybrid solution which connects the best of [inaudible 00:02:57] from what Diebold Nixdorf brings with what the have in-house? Homi Karkaria:                   03:01                     When you look at the challenges that the banks face today, a lot of it is to do with upgrades. So I have done, you know, how much time does it take to do an upgrade and that could be reduced significantly in software as a service model. Homi Karkaria:                   03:15                     The other big challenge is, when I have an update, how do I ensure that my install base is not affected because of somebody else? How do I have a faster go-to-market? How do I have a seamless migration to have a positive consumer journey? So those are all the benefits that the standardized solutions which comes as a part of the SaaS models brings to the banks. Amy Lombardo:                03:38                     So where does security come into this model? Is it almost you're more protected by going through as a service model, or maybe what are the considerations that a bank needs to think about pertaining to security? Homi Karkaria:                   03:52                     Security becomes absolutely critical when we go to this model because the benefit is the flexibility across the different channels that brings with it the challenges associated with security. Now, when you look at security you're not just looking at security from a client end-point perspective, which might be the ATM, you also need to look at security from a backend server perspective based on the solution that's hosted in the cloud, and how are these two connected? How do I ensure that my end consumer is indeed the right one and is using the channel effective. Security becomes an extremely critical part of this equation. Amy Lombardo:                04:29                     Okay, so Homi, let's move a little bit into the implementation side. What does a banker need to think about as they want to move to the SAS model or are there particular models based on their own environment? Homi Karkaria:                   04:43                     Yeah, so I give simple example to illustrate what kind of models the bankers can think about. If you are an end consumer, you have multiple options. You could own your own car. That is equal to, in my books, putting a software on-prem at the customer side. But I could decide to lease a car. I don't want to own the car. I do not want to have the headache of it's a maintenance and upgrades, et cetera. And I want to change it after a couple of... so I could lease a car. And leasing a car is then synonymous to software as a service. I could also have a situation where, I don't even want to lease a car, I don't want to drive it. I want to take a taxi. I want to go from point A to point B today. I want to go from point P to Q tomorrow and I want to take a taxi. Homi Karkaria:                   05:28                     And that would be a synonymous to a managed service model where a customer is requesting, I have not only to deploy the solution but operated on the RBF. And finally when we look at something that we call biz sourcing, it's like taking a train. A train leaves a station, irrespective of the number of consumers that enter it. A train does not deviate. It goes from station A to B to C at a specific predetermined time period. And that's akin to what we call biz sourcing, where solutions ATM as a service come in. So bank needs to think of where are they today? Where do they want to go, how much do they want to invest? What's the level of maturity inside the bank? How do they focus on their core competencies of financial services versus focusing on technology and let us handle it for them. Amy Lombardo:                06:16                     Got it. Well that was a perfect example there and made very logical sense to me. You mentioned on premise and off premise servicing. Can you explain the differences there and and really is there any difference for the consumer? Homi Karkaria:                   06:34                     So from a consumer perspective there wouldn't be a difference. From a bank's perspective, there are a couple of differences. When you look at a solution that is hosted as a service, you have all those benefits, like a standard solution with faster go to market with the quick upgrades and seamless migration, et cetera. However, when you look at an on-prem solution, you have other types of advantages. Namely a customer might want to have a highly customized solution. They might want to have control over the implementation timelines. They might have specific integrations which are very proprietary to the banks ecosystem, so they might have cash on the balance sheet, which they want to invest upfront and they want to pay for the licenses right away rather than distributed over a couple of years. So it's a very different model when you look at on-prem versus SAS and that are advantages and differences between the two. Amy Lombardo:                07:32                     So it sounds like there's benefits either way, it's just based on how your organization's makeup is built and where you want to go with the offering. Right, Homi Karkaria:                   07:42                     Absolutely. I think especially for tier two banks, who do not have significant investments to be made on the technology side and have on faster go to market, I think a SAS solution would be better off than an on-prem solution. But otherwise, work models are very much work in the market marketplace. Amy Lombardo:                07:58                     Got it. Okay. So I think this is a good point in our discussion to end here. Homi, I'm grateful and thankful that you sat down with me today and to our listeners out there, keep following us along on COMMERCE NOW and for more information on our Vynamic Software Offerings go to dieboldnixdorf.com. Thanks for listening.  

Summary: In a follow-up conversation with Karen Webster from Pymnts.com, Carl von Sydow from Diebold Nixdorf recounted that self-checkout store data is not complicated or complex — it’s pretty simple information, including time stamps, the number of items in a basket and whether certain items are age-restricted, but paying close attention to the data will ensure an optimal customer journey throughout the check-out process. Resources: Pymnts.com related articles: https://www.pymnts.com/checkout-conversion/2019/for-self-checkout-location-location-location-and-data-boost-conversions/ https://www.pymnts.com/news/retail/2019/using-data-to-increase-checkout-conversions-in-store/ Blogs: Relevant Retail - the New Norm Retail Self-Service: Today, it's WAY More than Self-Checkout Website: Diebold Nixdorf Previous Carl Von Sydow Podcast: Using Data to Increase Data Conversions In-Store Transcription:  Karen Webster:                00:00                     Hey, Carl, thanks for joining me today. I'm looking forward to having a follow up conversation that will build on the last chat we had about using data to increase checkout conversions in the store. We talk a lot about checkout conversion online, and in the store, using the right data, can certainly help to increase that process.                                                                                 We set the stage last time we chatted, now we're going to dig into the details of exactly how to do it. So, thanks, as always, for making the time. Carl:                                       00:43                     Well, thank you. Happy to be here again. Karen Webster:                00:46                     Okay. So, let's get practical about what to do with the data that has been collected, and observed. Now, action is ready to be taken. How would one go about actually putting a checkout conversion plan together when looking at their data, for figuring out how to do that? Carl:                                       01:10                     Well, first of all, I just want to come back a little bit to what we said last time, perhaps. [Core 00:01:18] data we are talking about, first of all, is not complicated or complex, it's pretty simple information. I don't anyone to believe that we are doing some highly sophisticated, rocket science analysis here. It's more or less about the timestamps, amount, number of items in the basket. Is there age-restricted items or not, et cetera? It's pretty simple information, it's just how you interpret that information.                                                                                 But, coming back to your question, first of all, you have to, when you collect the data, you have to think a little bit about from what period you picked the data. You can have data from a slow week, or a busy week, or some kind of average week, but the important thing is that you know from what type of period you pick your data. Or, you can choose to have a data from a longer period of time, like work with averages. That's one thing that's important.                                                                                 When it comes to conversion rate, you have to look through the data, and put together what might have an impact on your conversion rate. Conversion rate, of course, is being the ratio of customers coming into the store, buying respectively, as not buying anything. You want to have as high conversion rate as possible. You want all customers that comes through your doors to buy something.                                                                                 Typically, the customers that leave the store are customers with few items. They come in, they are in a hurry, they want to buy just a few items and get out of there. The good thing is, like, self-service is ideal for customers like that, with the few items. If you look at your store data, and you can identify a group of customers with small baskets, less than five items or something like that, then you have a good potential to increase your conversion rate if you, then, add more self-service, or add new self-service to that store location. Karen Webster:                03:12                     So, when you think about the impacts of conversion, and looking at data on the efficiency of the experience throughout the store ... we're talking grocery stores, I guess, and other stores where people are going in and out, and buying things. Convenience stores, I guess, would be another category. There's the consumer angle to this, which is obviously very important, that drives sales.                                                                                 There are also other behaviors that, looking at data, and trying to make decisions about checkout efficiency, is also very important. Can you talk a little bit about the staff impacts, the management impacts, some of the investments in technology that need to be considered in looking at this bigger picture? Carl:                                       03:55                     We have one example. We have a customer I'm working with right now, they didn't have self checkout. They installed card-only self checkout in their exit area, four lines. We studied the data before and after. All of the after, only a few weeks, we could see that we had an adoption rate of 25%. Karen Webster:                04:17                     Wow. Carl:                                       04:17                     Which was really good. Karen Webster:                04:17                     Mm-hmm (affirmative). Carl:                                       04:18                     It was four lanes out of a high number of lanes in that store. They were careful with the investment, self checkouts is expensive. They didn't know how their customers would react to this new concept. This is actually this summer, so we retailers just adding self checkout. Karen Webster:                04:38                     Mm-hmm (affirmative), Mm-hmm (affirmative). Carl:                                       04:38                     So, what we could see, when we looked at the data, we could see some signs that, perhaps, they have some possibilities for, first of all, add more self checkout. We could easily see that we had a lot of customers going through the normal lanes, still with very small baskets, paying with credit cards, that would be ideal to try to push them to the self checkout. So, the potential was clearly there.                                                                                 We could also see, since we can go in and look in 15 minute brackets when lanes are open, I could see that, for some reason, they didn't open the self checkout lanes until after two, three hours later in the day. They could have several [manned 00:05:18] lanes open before they open the self checkout.                                                                                 So, we had a discussion with that retailer about that. It was all about it being really careful with customer satisfaction, and customer experience, and also staff training. They felt that they didn't have trained enough staff to be able to man the self checkout area. Karen Webster:                05:41                     Mm-hmm (affirmative). Carl:                                       05:42                     Then, we went there and made some observations. It's always good to see everything - Karen Webster:                05:46                     Sure. Carl:                                       05:46                     - live, as well. Numbers are one thing, but you have to see it for yourself. We could see that as soon as they opened the self checkout, the line of customers waiting for the other manned lanes immediately gravitated towards the self checkout. Because, customers today, they know that self checkout is a very quick way to leave the store, and that's what they want. Karen Webster:                06:12                     Mm-hmm (affirmative), Mm-hmm (affirmative). Yeah, I mean, it's interesting because ... I'd be curious to get your thoughts when you observe this. People just don't like waiting in line, right? If they have a small number of items, and they have an option to use self checkout, and they can do that without standing in line, it seems like an obvious choice. So, you get - Carl:                                       06:33                     Yeah. Karen Webster:                06:33                     It's not as if consumers are going to put their basket down and walk out. They've already made the investment to go there, park the car, and select their items. You know, they may not come back the next time if the experience is difficult for them, or the association with the store is, I'm always going to have to stand in line when I've got five items that I want to just buy to get in and out. It plays on basic human behavior. Carl:                                       06:57                     Yeah, it is. As I said, it's common sense, it's like an after thought. Everything is so easy when you look at it afterwards. Karen Webster:                07:05                     Sure. Carl:                                       07:06                     And you have the good example in front of you. It is actually very simple.                                                                                 Interestingly, in you take just the transaction process itself, a cashier is always faster than us normal customers, when we go and go through self checkout. Karen Webster:                07:23                     Yeah. Carl:                                       07:23                     We have the same number of items, a cashier would scan them faster and all that than we can do ourselves, but the perception that we have as a customer is that the process is faster, because we are in control. Karen Webster:                07:38                     Yeah. Carl:                                       07:39                     We do everything ourselves. So, there is a lot of objective things that make the customers gravitate towards self-service nowadays. Karen Webster:                07:47                     Mm-hmm (affirmative). Carl:                                       07:48                     They are getting more and more simple to use.                                                                                 Another trend, a little bit, is that some retailers, they add more staff in the self checkout area. Perhaps, deactivate or disengage the wait security during peak hours. Karen Webster:                07:48                     Mm-hmm (affirmative). Carl:                                       08:05                     To increase the throughput and make it easier to scan and just go. That's a sensitive topic, of course. More and more retailers, I think, they're looking at the throughput rather than the hard fact, security, and you have security features and all that. Add more customer service, more staff monitoring and helping the customers, and you will have a higher throughput, and everybody will be more happy, really. Karen Webster:                08:29                     Yeah. Carl:                                       08:29                     Throughput is more important than every, I think. The speed that you get customers through the self checkout. Karen Webster:                08:35                     Yeah, no, for sure. I think you're right. You fumble around to get the bar code, sometimes, and then you have to - Carl:                                       08:43                     Exactly. Karen Webster:                08:43                     - push your stuff down the chute, and then you have to bag it. All that takes time. You do feel better, because it's you that's doing it. You don't have to wait behind someone that has 50 items in their basket, and that takes forever.                                                                                 As we all do, we scan the lines to make some mental decisions about what line will probably move the fastest. I always pick the wrong lines. Carl:                                       09:10                     Yeah. Karen Webster:                09:10                     I think that's what consumers do.                                                                                 What about the convenience store environment, which is not the same large format as grocery stores? What are you seeing there, in terms of best practices with self-service, self checkout? Carl:                                       09:27                     With convenience stores, it's an interesting store format right now, for self-service. They have a different challenge, in a lot of cases, compared to bigger supermarkets and [hyper 00:09:38] markets, in the way that they have not so many staff in the store. They could have one lane open, or two lanes open, typically. Then, perhaps a maximum capacity of four or five lanes. Conversion rate, they are very sensitive for that, because especially in a convenience store, customers tend to go out immediately if the lines are too long at the checkout.                                                                                 Nowadays, when we have smaller, more efficient from a footprint perspective, self-service solutions, the door has opened a little bit for convenience stores to start to use self-service. On top of that, there are some clever hybrid self checkouts on the market, as well, where you can have a lane in self checkout mode, and then you can easily just switch that self checkout, without turning anything around or anything, just you switch the software application so it turns into a manned lane. Karen Webster:                10:39                     Mm-hmm (affirmative). Carl:                                       10:41                     For example, we have another project with a C-store customer in the Midwest. They have four lanes in that store. Typically, they had one, two lanes open. Then, peak hours, they went up to four quite often. Difficult to plan staff, because it went up and down, up and down, over the day.                                                                                 We discussed with them, looked at the data. We took out two of the four lanes, and put in three self checkouts instead. Karen Webster:                11:08                     Hm. Carl:                                       11:09                     Which means that, in any given point during the day, with one person, they will have four lanes open. Karen Webster:                11:17                     Yeah. Carl:                                       11:17                     That person will operate the manned lane, but she will also have three self checkouts available. So, the maximum capacity, at any given time, increased dramatically. Karen Webster:                11:28                     Yeah, sure. Carl:                                       11:28                     If you do that, then it will take much longer for lines to build. Karen Webster:                11:32                     Yeah. Carl:                                       11:32                     When a customer comes in. Karen Webster:                11:34                     Yeah. Carl:                                       11:34                     So you have, immediately, a positive impact on the conversion rate. Karen Webster:                11:39                     Yeah. Carl:                                       11:39                     When you need the maximum capacity, you can switch the self checkouts to manned lanes, and the capacity you need is available. Karen Webster:                11:47                     Yeah, I think in those stores, the opportunity for abandonment is very high, because the abandonment happens because consumers will walk in, they'll see these long lines and say, "Forget it." When you're going to the grocery store, you're committed because it's bigger format, and you don't always have that same visibility because lines are dynamic. Carl:                                       12:09                     Yeah. Typically, convenience stores, an argument you'll always hear, or very often, at least is that, "Oh, well, most of our customers pay with cash. Self checkouts with cash is very expensive." Karen Webster:                12:22                     Mm-hmm (affirmative). Carl:                                       12:24                     They are difficult to use, a lot of maintenance, and all that. Which is true, to some extent. Then again, if you take the time and really analyze the data, you will see that, all right, you might have 55, 60, or even more, 65 percent cash, but you still have quite a lot of card customers. Karen Webster:                12:24                     Right. Carl:                                       12:42                     Why don't install self checkouts to address those customers? They will be happy, too, if they can come in and pay with their card and get out of there, instead of just leaving without buying anything. Karen Webster:                12:52                     Mm-hmm (affirmative). Carl:                                       12:55                     I always try to open the door, to think a little bit. Be brave, look at self-service. It doesn't have to be with cash, even though cash is king, cash is forever here to stay. Karen Webster:                13:11                     Yeah. Carl:                                       13:11                     Just be flexible, open-minded. Karen Webster:                13:14                     A lot of retailers are looking at these smaller format stores. I mean, certainly, grocery, but when you think about the expanse of stores that are looking to locate in urban areas, where they don't have the ability to have the same size store, but want to be able to serve customers. I'm curious to get your thoughts on where to put some of these self-service lanes? You've got this consumer that is, perhaps, going to opt in to self-service because they're in a hurry, but the store operator wants people to, perhaps, see other things while they're there, making their little journey, making their little shopping journey, and pick up things that they hadn't planned to buy when they walked through the door. I can see the pros and cons, but I'm curious to get what's considered best practice there? Carl:                                       14:10                     Yeah, we always try to push for having self checkout, or any kind of self-service solution, whatever you have, as visible as possible when the customer enters the store. Karen Webster:                14:10                     Mm-hmm (affirmative). Carl:                                       14:20                     When the customer enters the store, she or he will know that is a possibility for them when they go and checkout. I don't really understand, when they put self checkouts in a wall in a corner, or somewhere it perhaps fits from a floor plan perspective, and is not in the way for anything, but in contradicts the whole idea with the self checkout, right? It's more customer service orientated than ever, and you have to pay that price with floor plans, perhaps. I would definitely not put it somewhere where it's not easily visible. Yeah, that's my recommendation anyway. Karen Webster:                14:58                     Seems logical to me. It also seems logical, as you said at the beginning, Carl, that you're not talking about data that requires a rocket scientist to go dig up, it's pretty simple data that stores have available. Why is it that these data aren't used more effectively, or more regularly, to make some of these decisions? Carl:                                       15:22                     Well, I think a lot of retailers really do look at their store data. Absolutely they do, especially a lot of the retailers that have been using self checkouts for a lot of years. They know a little bit about what and how to look for information.                                                                                 But, quite often, after a while, they tend to trust their gut-feeling more than anything else. We have developed this very simple, easy to use, data tool, which makes this super easy to do on a regular basis. A lot of retailers I've talked to, they typically use Excel, and that's it. They do the number crunching in front of the computer screen. That is perfectly okay, but it takes time, and is a little bit more cumbersome. If you have a good tool, that helps you, it's fast.                                                                                 We have another customer, actually. They were so happy. When they saw our scorecards, the application that we have, they wanted to use that as their management tool to improve their self checkout performance, as a management tool, which is perfect. Again, it's nothing really super seriously advanced we're talking about, but it's just a simple way to look at data.                                                                                 Absolutely, a lot of retailers do look at their data, but perhaps not close enough, or they're not drilling close enough. It's a mix, I would say. It's not like it's new for everybody. Karen Webster:                16:47                     Right. Is the motivation, though, different today, perhaps, than it once was? I can imagine that, one of the original drivers of self-service was to reduce staff. It sounds like the emphasis is shifting to not just that, but improving checkout conversion in the store? Carl:                                       17:09                     Yeah, that's a very good comment, and I couldn't agree more. If you look at the self checkout, self-service drivers, 10 to 15 years ago, it was very much ROI-based, headcount reduction, efficiency, and all that. Now, it's much more customer service driven. Retailers add self-service because customers expect it, they demand it more or less. So, the driver is very different.                                                                                 That's why it's more important to really understand, or identify, what's your target group when you install these self checkouts. That's also why, I think, the standard self checkout with cash, and weight security scales, and bagging platforms, that was the only version that existed for so long. No one really looked at it. Now, we have a wide range of different alternatives, different solutions. More big ones, et cetera. That's a big change, I think, in the driver, why we are looking at some many retailers looking for self checkouts nowadays. Karen Webster:                18:15                     Are they thinking about it from the perspective of, yes, customer satisfaction, but, perhaps, redeploying staff in other parts of the store, to help address customer service issues, or better merchandising of products? I'm thinking of things that help drive basket size, at the same time self checkout is trying to drive conversion by making it less time consuming to actually take the times you want to buy and check out. Carl:                                       18:49                     Yeah. I mean, just the other day, I think it was yesterday, I read an article on LinkedIn about ... This was from Europe, by the way. It was an article from the Trade Union paper, concluding that, looking at the numbers, the staff count working at the checkouts had reduced. That was just a fact, compared to five, six years ago. Then, on the other hand, the number of floor associates, working inside the store, had increased. That's exactly the purpose. Karen Webster:                19:21                     Right. Carl:                                       19:21                     You want to move your resources, the valuable resources you have, from the checkout into the store. That will only increase customer satisfaction, improve customer service. I was so thrilled, but it was a Union representative that had written that article. They have been so negative over the years about self checkout. Karen Webster:                19:43                     Sure. Carl:                                       19:44                     Of course. But, here they were, saying, "Wow, this is not a bad thing, actually, because we are moving the staff into the store." The staff, of course, sitting in the checkout, it's a pretty repetitive work, actually. All the cashiers working out there, they're doing a pretty tough job. Karen Webster:                20:01                     Yeah. Carl:                                       20:02                     Repetitive, scanning items, tough environment. To, instead, be walking around in the store, helping customers, of course, that's much more rewarding, also, for the staff. I think it's a great ... I was really happy when I read that article. Karen Webster:                20:18                     So, Carl, if the motivation to initially install self checkout was staff reduction, and now it's different, how are retailers measuring? What are the KPIs that they're using to evaluate success? It seems like there's just a lot more input now, right? Inputs into coming up with those KPIs. Carl:                                       20:44                     Yeah, that's a tricky question. I don't have a good answer to that.                                                                                 I mean, the KPIs the retailers are using are, of course, basic ones. Number of transactions, how many customers come in, what's the average transaction value, average basket size, traditional traffic KPIs. They have been there, and they are still there. I think as retailers add self-service solutions, different self-service solutions, it could be click and collect, or home delivery - Karen Webster:                21:13                     Yeah. Carl:                                       21:13                     - or self checkout, hand scanning, whatever, I think a lot of retailers in Europe, they are actually really proudly presenting their adoption rate, the numbers. Karen Webster:                21:23                     Hm. Carl:                                       21:23                     How many customers are using our self service solution. So, perhaps that is one way to look at a KPI that's getting more and more important, and a competitive advantage, sort of, since customers, as we said before, are driving this a little bit right now. Karen Webster:                21:39                     Mm-hmm (affirmative).                                                                                 Well, I mean, consumers, as we've looked at on so many levels, and our research shows this on so many different touch points, whether it's in the retail or banking sector, or payment sector, consumers are driven by convenience. That's what they gravitate to. How do you make it easy? Carl:                                       21:57                     Yeah. Karen Webster:                21:58                     How do you eliminate the friction? How do you make it more convenient? You know, this certainly is the big step to doing that in the store, especially at the end, right? I mean, that is where, still, a lot of the friction remains. Checking out, whether that's payment methods, or standing in line, or not having to stand in line. I mean, there's just a lot of friction to remove from the checkout experience. Carl:                                       22:21                     Yeah. No one really likes to stand and checkout, right? Karen Webster:                22:24                     No. Carl:                                       22:24                     Because you're shopping journey is over at that time. Karen Webster:                22:27                     Yeah. Carl:                                       22:27                     You're not really going to sell anything more, you're not going to buy anything more. The only thing you want to do is to scan your items, and pay, and leave, and do that as fast and convenient as possible. Anything that improves that, makes it faster and more convenient, is a good thing. Karen Webster:                22:45                     Yeah. Yeah, also ... Then, I'll let you go. This has been a fun conversation. You know, the longer people stand in line, the more they consider what they've put in their basket. I don't know about you, but I've been behind people who, you know, if they stood in line a long time, maybe they won't buy the magazine, maybe they'll put it back. Carl:                                       23:03                     Right. Karen Webster:                23:03                     Or, maybe they won't buy this, maybe they'll put it back. So, you know, there are a lot of little things that go into the standing in line part that can work for the retailer, in the case of making it more efficient. Or, against, in the case of making it less efficient. Carl:                                       23:18                     Absolutely. Karen Webster:                23:19                     There's that, too. Carl:                                       23:20                     Yeah, I agree. Karen Webster:                23:21                     All right, Carl. Well, listen, this has been a fun conference. Thank you so much for making the time. It certainly seems as though this is a great way to satisfy what retailers are looking to do to make their operations more efficient, and to serve customers better, and clearly what consumers want, as well, who are always in search of convenience. Thanks again for making the time. Carl:                                       23:41                     Thank you very much for having me. It was fun.  

Summary: In this podcast we will share an interactive panel session we recorded live from Intersect 2019, our marquee partners shared how their solutions and strategies align with financial industry trends and Diebold Nixdorf’s roadmap, such as; more integrated, with devices that enable better service delivery; more available, with optimized service capabilities that enhance the customer experience; and more efficient, with tools that enable you to achieve your customer-experience objectives. Guests:Vanessa Foden, Strategic Planner Retail Banking Hospitality & Education, Intel Ken Pedersen, Business Development Director, KICTeam Bill Stutzman, Director of Strategic Initiatives, Ventus Steve Gilde, Director of Global Product Marketing, Paragon Application SystemsShai Stern, Co-Chairman & CEO, CheckAlt Moderator: Scott Anderson, Brand Evangelism, Diebold Nixdorf Content:More Integrated Video: https://www.youtube.com/watch?v=hsIXFjt0IzA More Efficient Video: https://www.youtube.com/watch?v=w3yPIPmEuak More Available Video: https://www.youtube.com/watch?v=r6PktPP309g Transcription: Speaker 1:                           00:00                     In this Commerce Now podcast, we will share an interactive panel session we recorded live from Intersect 2019. Our marquee partners shared how their solutions and strategies align with financial industry trends and Diebold Nixdorf's roadmap. Such as: more integrated, with devices that enable better service delivery. More available, with optimized service capabilities that enhance the customer experience and more efficient, with tools that enable you to achieve your customer experience objectives. Devon:                                 00:31                     Next up we have our diamond partner panel, so I'd like to welcome to the stage our Diebold Nixdorf evangelist, Scott Anderson. We're going to have our partner friends, Shai Stern from CheckAlt, Vanessa Foden from Intel, from KICTeam we have Ken Peterson and we have Steve Gilde from Paragon and Bill Stutzman from Ventis. Welcome to the stage everybody, thank you for joining us. Devon                                   01:09                     Awesome. Scott Anderson:               01:14                     Thanks everybody. We are between you and alcohol. I do apologize. And we all convinced in the back and we said "You know what? The modern tool that we would like right now is alcohol to help us with this next task", but we'll get you there soon. It's my distinct pleasure to welcome this panel. A group of panelists up on stage today to share with you a little bit about their organizations and talk about how Built To Connect and Built For More actually means more than just an ATM and solutions. Really, to run a banking environment, it takes a community, just like raising a child takes a community. And we have a community of people up here who really have a passion for our business and who help really transform the banking industry along with Diebold Nixdorf's partners and we're really proud to have them up here. So, I want a quick round of applause to welcome these folks up here. Thank you very much. Scott Anderson:               02:06                     And while Devin gave us a quick introduction of these individuals by name, I'd love them to take a couple of moments and introduce themselves more personally and share with you who they are and what they do. Let's start with you, Shai. Shai Stern:                          02:15                     My name is Shai Stern and I'm the CEO of CheckAlt. I do not have a phone on my desk, I run my company on WhatsApp voice notes and I do have my emails printed out. Vanessa Foden:                02:28                     I'm Vanessa Foden. I'm with Intel corporation as you noted, and I'm the director of strategic planning for our retail banking, hospitality and education group. I don't print my emails, but I did print some outdated notes for the show. Ken Pedersen:                  02:46                     Ken Pedersen from KICTeam and for those who don't know what KICTeam does, we manufacture and design cleaning products for currency, print and payment technology, so ATMs, POS terminals, check scanners, TCRs and... Yeah, thank you. Steve Gilde:                       03:02                     Steve Gilde from Paragon Application Systems. We're all about testing the payment systems. I will say that I could not have predicted that Ben ran 30 minutes over. Who knew that that future was going to happen, but happy to be here. Devon                                   03:15                     Excellent. Bill Stutzman:                     03:16                     Hi, I'm Bill Stutzman from Ventis. Ventis is a networking company. We work with making sure that you're ATMs are up and running, so that your customers are happy. Scott Anderson:               03:25                     Fantastic. Thank you very much for introducing yourselves. I think what we wanted to do today is really focused on all of the cerebral thinking we've been hearing about today. [what rounds 00:00:03:34] the Built to Connect and Built For More, but hone in a little bit on what does that mean and how do the individuals at this panel contribute to that and really make a difference in our overall industry as we go forward. This is a great opportunity for us to have some open conversation. We actually agreed that we don't have to always sit in our chairs, we can get up and kick each other if we don't agree, whatever the case may be. But what I'd like to do is, maybe tee up some questions to the individuals to get things started and of course we'd love to open it up to the audience and get some feedback from you and some direct questions as well. So, let's start with personalization. More personalized. Vanessa, let's start with yourself. What's Intel's point of view on personalization in this industry? Vanessa Foden:                04:14                     Yeah, so let me start with, as noted, we're a retail banking, hospitality and education. So, we have the pleasure to see a connection point with use cases across these different sectors. And for retail for example, what we have seen is... And heard and everyone in this room has probably heard is, "Oh, stores are closing into retail as we know it, et cetera, et cetera". And really, what we've found is, that there's opportunity there and yes, there are definitely retailers that are not growing. But then there's the some that are going to different size format and then there's a few that haven't innovated and we know who those are. And yes, some of them are no longer with us. So, when we think about this with branches, we know that there are some shrink happening at the branch that could be in the actual space of the branch or closures. Vanessa Foden:                05:13                     So, [Octavio 00:05:14] was talking this morning about 9.000 closures branches in the last five years. Now again, there's opportunity there, because there's different size formats and different technologies and ways to bring in our customers, because it's not just about one solution. And so, what we're really seeing, is opportunity. There is over a billion branches worldwide. So there is still that personal connection with the technology. So, the physical with the digital and that's the way we really need to think about it. And in the sessions today, which I really enjoyed them all, someone asked for a vote, I thought the two I went to are both great and very different. So I couldn't say one was better the other. But, it was very consistent in the message of opportunity and what's available to us in these use cases. So, it's really about understanding from the customer's standpoint, when they walk into your branch, how do they feel? Vanessa Foden:                06:14                     Are they employees trained? Do they know how to engage with these customers? And on the flip side, digital. How do we know what our customers want? So, we're always thinking about what are our customers want? When do they want it, and what location should it be? And on and on and on. Right? So we apply that logic within our team to how is that relevant? Whether it is an Interactive Teller Machine, an Automated Teller Machine, a Virtual Teller Machine, POS system, et cetera. So that's how we really look at those use cases and try to apply it to make it personal, whether physical or digital. Scott Anderson:               06:53                     Interesting. Steve, I'm going to challenge you a little bit. So, Paragon Systems and Testing, how would that bridge into the personalized world? Steve Gilde:                       07:01                     Sure. So, we heard this morning a lot about the customizable capabilities that the new DN Series will give to... That Diebold customers will have a chance to give to their consumers, right? You can do all sorts of interesting things, but the last thing you want to do is come up with an exciting new program, a new card, a new something for your high-net-worth customers and then have it fail when it gets in their hands. And being that we engage a lot on the testing side of the equation with customers, we hear a lot "Oh well, we couldn't test that with our host, because of this reason". Or "We forgot to test that because we ran out of time" and they wind up with a negative customer experience. And today, in the YouTube world, it becomes a very public brand damaging issue right away. So, with all the stuff that we talk about, all the changes and all the difficulty in projecting what consumers are going to want... We know they're going to want something, right? But it's all got to be tested and... Because you want that perfect customer experience every time. Scott Anderson:               08:04                     Excellent, thanks. Any other comments from the panel? Scott Anderson:               08:08                     If not, I'll tee up the next question. Shai, you got to have something to say. Shai Stern:                          08:11                     Yeah, I'll go for it. We look at personalized services a little bit different, in the fact that we are the ones who service you, the financial institution, on the ATM side. And we know that your job is to go ahead and to get the best experience to the consumer, to your customer, to your member if you're a credit union. So us, as a vendor to the financial institution, we want to make sure that you're able to provide the best services, the most advanced services, and the most personalized way. So, I have my cell phone on the website of CheckAlt.com as I try to give personalized attention and we give direct dials and direct emails and we make sure that the folks at the financial institutions are experiencing the best service possible, in order to recognize that checks, even though we all would have envisioned years ago that checks would have gone away, they are still here and rather healthy. So, our job is to provide the best services to you, the financial institution. Scott Anderson:               09:04                     Excellent. Let's keep it with you and think about... More integrated. So, what tools in your organization are you bringing to the marketplace to help with that integration piece? Shai Stern:                          09:14                     You're staying with me? Scott Anderson:               09:15                     I'm staying with you. Shai Stern:                          09:16                     Oh wow. So, what we look to do is, we are a payment agnostic company. So, I always say that my mother is never going to stop writing a check and my daughter is never going to start writing a check. And amazingly, my little, almost two year old grandson won't even know what a check is. But the fascinating thing is that at CheckAlt, our job is to be what I call "payment agnostic" and "demographic agnostic". And when I think about integration and when I think about how the financial institutions are able to take the legacy needs in their payments and their futuristic needs and the discussion around the electronic payments and realtime payments, we are there to create APIs to tie it all together to give a great experience. Scott Anderson:               10:00                     Excellent. Ken, I'm going to kick it over to you, no pun intended with KICTeam, but what interesting insight capabilities are you bringing to the market? Ken Pedersen:                  10:07                     Yeah. For integrated, we are... The way we design our products and create them is very data-driven, right? So we want to understand where does dirt build up, how frequently does it build up and when does it need to be cleaned, because we want the right solution at the right time. So, today you heard from Chase talking about integration and data and using that data to become predictive. And so, we try to design our tools around that so that we can provide a better product in that... Ultimately, the devices that we support provide an ultimate experience. It's an optimal experience and that the end user enjoys using the device that we support. Scott Anderson:               10:44                     Excellent. Vanessa, Intel Inside. I mean, what are we doing here from an integration perspective? Vanessa Foden:                10:49                     Oh yes. But if you don't mind, I'm going to do a little bit of back to the future. Yes. So, in my previous role, I was an integration manager at a banking institution, and they had actually outgrown their software and hardware solution. And one of the things, and I'm sure it's like this today with a majority, if not everyone in the room, when you went to the internal webpage, the number one thing you saw every single morning is: "How many customers did I gain from yesterday?". It was so important to continually watch the customer base. And so what happened is, as they're worried about the customer base, we're in the background saying "Okay, we've outgrown our customers. And if we don't do something, we're going to let them down". At the same time again, what we've heard time and time again, is security is so important. Vanessa Foden:                11:46                     Now, security has evolved into way more of a complex monster than it was back then. But it's really important at the end of the day why we're thinking about integration. We're thinking about "How do we protect the customers?". And that can be multiple ways. That is through security. That is through having remote management capability, so that if your system's down, meaning, down down, you have an opportunity to bring it back up or if you just need to do a patch or et cetera. So, we really think about it from all aspects and understand, at the end of the day, it's about growing the customer base and if you lose a customer you can... Well, you might be able to get them back. But it's really hard. Statistically, it's really hard. So we'll focus more on "How do we help with the overall security?". We help with the remote connectivity and we, as you know, we also help with our Intel Inside. We believe that our products are secure and do help provide the best solutions available in the market. So that's what we do. Scott Anderson:               12:52                     Excellent. One of the other mores that we've heard about, and I think this is top of mind to a lot of the folks in the audience, is available. And my fellow bookend at the end here, let's... Bill, kick it over to you. Availability leads to enhanced customer experience. So how does this impact, how was this impacted by the network? Bill Stutzman:                     13:09                     Yeah. Availability is one of the highest priorities that we look at from a networking perspective, because all the stuff that everyone else is talking about, unless it can get from one point to the other, it's something that just isn't going to make your customer experience positive. And so, uptime is an extremely important element for us. And so, we look at it from different perspectives. First, where is it that you're putting your ATM? Your locations, are they at the branch? Are they at a sports stadium where 60.000 people show up and use them? Are they in a mall, or are they in a more of a less traffic area? Even to the point where we're out in remote Louisiana, where there's nothing else out there and we've been able to find a type of connectivity. And so, we look at what's the most important type of connectivity to make those networks work. And so whether it's cellular, whether it's a broadband circuit, whether it's an MPLS circuit, we build that to work it through. Bill Stutzman:                     14:02                     And that can also impact based on the type of machine that you have. And so, we look at how do you integrate those pieces together. If you're putting in an ITM, the amount of data that you're required for that ITM can impact the type of infrastructure we would put in, as to whether you need something that allows you to have a cost effective... The amount of information that goes back and forth to an ITM or that might be built into a full MPLS circuit versus a cellular circuit. Bill Stutzman:                     14:28                     The other really important thing that we've seen recently is business continuity from availability. And so, we've been working with a lot of our bank and credit union partners on taking their branch ATMs, isolate them from the branch network so that if there are issues on the branch or on the ATM, either one or the other is up. And so, we've launched this program called Branch ATM Network Isolation and it's worked very well for us because one, it provides that business continuity for the branches so that the ATM stay up, it removes some of the PCI auditing that you're required as part of the branch experience because the ATM needs it, but the branch does not. And then it allows that customer experience, which is... Always, the biggest measure is how is that customer feeling when they come into the branch. So there's always something there for them, whether it's one or the other. And so, to us it's really always about availability. Scott Anderson:               15:17                     Fantastic. Ken, Steve, I think this is a perfect topic for your lines of business as well. Ken, why don't you kick it off here and give us some thoughts? Ken Pedersen:                  15:23                     Yeah, absolutely. So availabilities is key for our products, right? So our products enhance the performance, they enhance the customer experience, they prolong the product and they increase the availability, which I think for all of you out here that's very key and that's very important. So when we look at the products that we're creating, we want to make sure that they are enhanced, so that the experience's at a top level. We're trying to enrich the experience and we're building it in to the data. So we talked about data and we talked about predictive maintenance and prescriptive maintenance and Chase talked a little bit about that earlier. And so, when you can get into that model where you can clean this device or maintain this device before something goes wrong, you are increasing the experience ultimately. Scott Anderson:               16:12                     Excellent. Steve Gilde:                       16:13                     Yeah and it's the same for us. As Bill said, it's all about the end-to-end experience and all of those pieces have to work together, they all got to be tested together. You need to make sure that one transaction works and you need to make sure that you test transactions at scale and find out if there are any bottlenecks or any issues. And again, you just got to make sure that the customer has a good experience and make sure, end-to-end, it all gets tested, it all works. Scott Anderson:               16:39                     Excellent. If we think about efficiency, obviously time is money to every one of us and all of our consumers as well as, as we look at the customer journeys that they're going on. Bill, from a Ventis perspective and being a leader in the ATM network, what are you guys doing in this regard? Bill Stutzman:                     16:54                     Yes, so we look at providing the full experience with the managed network as a service. And so, our ultimate goal is to help our bank and credit union customers and partners develop a process that mostly takes it completely off their plate. And so, working with CheckAlt, we provide a direct relationship with them with Multi Endpoint Routing. We can go to your check imaging, we can do your security, we can do your alarm panels, we can do your DVR. And so, the network that we've built within the Ventis private core is a fully redundant, multiple circuits, multiple data centers, and that allows that integration. And so, our whole objective is to make sure that we integrate whatever you're doing within that ATM, so that we can provide you that service, so that it takes your IT teams off. Because every banking show, everything we go to, is all about the next thing. Bill Stutzman:                     17:44                     And so, by us taking those basic networking issues off your plate, it allows you to then look at those future projects and kind of see where you're going in the long run. And so, by doing the engineering, by doing the 24/7 customer support, by doing the ability to troubleshoot remotely, because we've built the whole IP addressing schedule into our tech center, we're not just looking for routing, we're looking for how the whole thing works. We concentrate on that full customer experience with our managed network as a service. Scott Anderson:               18:13                     Excellent. So you mentioned CheckAlt. So Shai, why don't you comment a little bit on that part of the equation from a check perspective? Shai Stern:                          18:19                     I think that when we look at the way checks are coming in, we're constantly seeing about who are processing the checks, where they're coming from and how we need to make sure that the ATMs are always up and running. So we monitor the heartbeats. And I think that that is something that's very important about heartbeat monitoring. Having a dedicated team, seeing if the ATMs are, quite frankly, processing quickly enough. I think that working with Bill and his team is of utmost importance. I think the other thing that's super important is understanding security around these ATMs and that why is somebody motivated to put a check in an ATM versus a mobile phone? And that's so interesting, that you haven't seen a big falling off the cliff about the processing around the ATMs and ATMs are alive and kicking. Shai Stern:                          19:08                     And it's really fascinating and I think that when we go ahead and we think around security, we have what we call extended deposit approval. We give certain fraud protection capabilities, we go ahead and we have duplicate detection capabilities. So, I think that when you look at the way checks are being processed, it's very important to think about security. The time of day that checks are being processed to make sure they're processed same day as many of the folks who are putting their checks into the ATMs, they are living a, let's call it... They need that money right away. So, to making sure that those deposits get in right away, you don't have to wait the next day, but rather their money is available to them immediately, are things that we're constantly measuring, constantly monitoring to make sure that we can give, again, the best experience to the customer. Scott Anderson:               19:55                     Excellent. Let's shift it to more future-ready and we just heard from [Ben Hammers Leon 00:00:20:00] on the future point of view. Steve, if we think about being future-ready and some of the testing capabilities that are out there, what's Paragon's point of view on this? Steve Gilde:                       20:09                     Yeah. I know Ben mentioned the term "pace of change", but that's really what we're all dealing with today, is how fast consumer behavior's changing, how fast our technology is changing, and so the thing that we would say is that you need to be prepared to deal with the change, because whatever the change is, something's going to change on you, legal and regulatory changes, et cetera. So, having an environment where you can easily integrate a change within your... Whatever it is, within your testing environment and make it happen quickly that you're not... Your projects aren't delayed because you can't digest a change or that you're not prepared to deal with it. Steve Gilde:                       20:49                     We would say to a new prospect that the more you invest in your testing solution, the more valuable a resource it becomes. As you automate your aggression tasks, as you integrate with your other application life cycle management systems, as you make those investments, it becomes easier to say "I can deal with change, I can make my ability to digest change, a competitive advantage for my company by being able to just take whatever comes up"... Well, I don't know what it's going to be. I know something's common. Scott Anderson:               21:23                     Right. Interesting. Given we just had a futuristic conversation a couple of minutes ago, any other panelists want to comment on sort of future-ready from your point of view? Bill Stutzman:                     21:32                     Well, I think the one thing that we can look at is that everyone's working on Windows 10. And so when you talk about change in the future, we know that Windows 10 isn't the last update. And so, knowing how that's going to impact... And from us, from a network perspective, Windows is just such a different animal than what it was between the amount of updates that have to go through for security, to even just installing it and things of that nature. And so, working with our partners and customers to make sure that whatever impact that change has, that it's future-ready and going forward. But we know three years from now there's going to be whatever they call it, Windows 20, Windows 15 or something of that nature. And those systems are going to continue to change and change. Bill Stutzman:                     22:10                     And so, I'm always fascinated when I've talked with the banks and credit unions on where they're at with their Windows 10 integration. And so, finding people that are completely done to folks that are like... We're just going to get finished in December. And so, planning for that change has been a... And we've known about it for what, two years, three years that it's coming and that the deadline is December. And so, watching that type of change happen, I think it's something that we constantly see within the industry. Scott Anderson:               22:36                     Interesting. Vanessa Foden:                22:37                     I think some of the things that are opportunity for change, and I saw some of that in your demonstrations outside. So, if anyone didn't stop by and check out the demos, they're really exciting. It's really exciting to see what you all have done. We really have been focusing around opportunities in artificial intelligence and computer vision. And I think that's a game changer for us. For us, everybody, whether you're in banking or other industries, we're going to continue to see that relevance around artificial intelligence, computer vision, and we need to be able to engage in that. Where do we need that compute power? Is it at the edge or is it in the cloud? And so, those are some things we need to continue as our businesses are evolving and we're evolving with you, what is it that's the priority? And how do you decide, depend on... And again, this goes back to security. Not everything needs to go to the cloud. Vanessa Foden:                23:36                     So, we need to think about what really needs to be edge compute when we're processing. And we need to think back on security. Various ways of security, including understanding. Is the person coming up to the Teller Machine? Is it who they say they are? And how do you know that? Or if they're coming up, whether automated or coming up physically into your store, is that the person that you should be engaging with? And I think artificial intelligence and computer vision will help with that. Scott Anderson:               24:04                     Interesting. And that's a great Segway to our... I'm sorry Steve, did you want to [crosstalk 00:24:08] Steve Gilde:                       24:08                     Yeah, I was going to say one more thing is that... The thing that we see a lot with branch transformation... If you'd asked me two years ago sort of where ATMs were heading, we were kind of flat-lined, we weren't seeing growth and things like that. And then the whole change in branch is getting a little smaller. Branch is changing and the products that you guys are putting out now are now allowing branches to kind of reconfigure what they're doing. And so we talked to... We're always interested to see how they're integrating those devices into the universal. We're seeing a lot of universal bankers with cash recyclers with ATMs and where that's becoming more of a part of that integration into the branch versus just a sort of out-the-window or out-the-best of your remote location. And so we've seen a very positive uptick in that element of the automation being integrated into the different branch setups. Scott Anderson:               24:54                     Excellent. Shai. Shai Stern:                          24:55                     I just want to add on one thing. One of the things that we think about is that we speak about an iPhone... All of us who have iPhones, which I assume is most of us here, you see some times that if you plug in your iPhone at night, by the time you wake up in the morning, the update has been completed. One of the things that we have established at CheckAlt is that we have a universal installer that, where were there to be an update in our deposit automation technology or whether it be to roll out any updates, it's a press of a button and we can go out there and touch all the machines in one swoop. Shai Stern:                          25:23                     We do that in a very thoughtful way, in a very futuristic way, but also recognizing that the environment that we live in, even though we all would love to be in the cloud tomorrow and have great computing tomorrow and all those great advantages but we, unfortunately, or fortunately, we do live in a rather regulated environment. And when the regulators come in and they challenge a cloud, a futuristic plan, or they challenge the way that you're thinking about security, it is incumbent upon each and every one of us not to get in the cross hairs of these regulators. So it's a rather delicate balance between planning and executing for the future, but yet maintaining the happiness of those regulators to make sure that we can continue doing what we're doing. Vanessa Foden:                26:06                     Happy regulators and happy customers. Scott Anderson:               26:10                     So we've tiptoed around security in a number of these comments here. And that's the last more we want to talk about, sort of the elephant in the room, and for most of us is this secure environment, this trust, this ensuring we're protecting our brand. So, let's open it up to the panel. I'd love your points of view on what we're doing in the security space in each of your organizations. Maybe... Well, let's start with you, Vanessa. Vanessa Foden:                26:31                     Oh, I thought you were going right past me. Yeah. So, around security. So, really good question. Globally, right? So it really depends on what's happening globally. We see lot of... I'm going to go sideways just a little bit, I promise I'll come back. We see a lot of activity in China around what they're able to accomplish because they have different regulations to your point, and it is amazing what we've seen there. The way that they've been able to use the automated kiosk with any engagement, the things that can be done on a mobile phone, the biometrics and scanning to identify who they are and a lot of what they're doing never requires another person. And so it's edgy, but it also reminds us, puts us back into reality here in the United States and in EMEA. And if we didn't need that, GDPR has made sure... And PCI compliance, our other good friend, has made sure that that keeps us in our place, if you will. Vanessa Foden:                27:36                     So when we think about that security, we try to embrace what we can push at the edge, but at the same time making sure that we are able to help our customers innovate because it is happening. And when we think about... A lot of people didn't want to do the PCI compliance on these different devices and now Square's killing it in the market, right? And we were all afraid of that because we were following the rules, this is the rules and they weren't PCI compliant and it's not going to work. Not true. They're doing extremely well in the market. So, it's just that fine balance on innovating while still making sure we follow within guidelines. And that's how we work with our partners. Because at the end of the day, again, I know I've said it a million times, I'll say it one more time. We understand it's all about the customers and keeping the customers and growing that customer base, and with that they need to be secure but also... We have different generations and security and what people are comfortable with is different depending on the generation that you're working with. So it needs to be that balance. Scott Anderson:               28:37                     Great. Ken, anything to add on that? Ken Pedersen:                  28:39                     Yeah, so you wouldn't think of cleaning and security going hand in hand, but when we look at our products, we think about exposure and risk and can we make products that are easy to use that limit exposure and risk? And can they be done quicker and faster? So, we do take a lot of thought designing our products. Can we maximize security and minimize risk? Scott Anderson:               29:02                     Excellent. Steve. Steve Gilde:                       29:04                     Yeah, a couple of things. We hear often from customers who are behind on Windows patches and things like that at their devices because they're busy or they just can't get to it type thing, which is difficult because there's no sympathy for any more in the marketplace, right? If you see some exposure because you didn't have your Windows patches updated, nobody is going to come in on your side on that one. And so, if you can automate your capabilities to test and get those things out there, it makes it easier to stay on target. Another aspect of security is internal security, which is unfortunately a real issue that we all have to deal with today. So, having a centralized infrastructure to manage users and roles and permissions and understand who's tested what and who hasn't tested what, who changed what on the system. Steve Gilde:                       30:00                     Unfortunately we see that at times where folks say "I don't know how that data element got changed. I don't know who changed that. Somebody did, but I don't know who". So, having the capabilities to audit that and stay on top of it and management is just something that you have to deal with. Going back to when regulators come in and look at your books, you want to be able to say "I know exactly who did what, why they did it, when they did it", those types of things. And finally, for a lot of our customers, they have their downstreams, they test for their downstreams, they test for their own customers, and being able to have reports that can be managed and maintained longterm to prove that you did test what you said you were going to test for your customers, and survive an audit with that aspect of your business as well. It's security, it's risk, but it's all part of making sure that you protect your business. Scott Anderson:               30:50                     Fantastic. Bill? Bill Stutzman:                     30:51                     Yeah. So, transferring that information from one place to the other is a very secure area. And so, we have always looked at PCI compliance as our number one. We always try and be out in front that if it's changing two or three years then we do at a year or two early and try and keep that going. Same with internal security, always trying to make sure that however all the data centers and everything is put together is always fully secure. And then what we're introducing here at the show this week is that we've partnered with a company called Eclipse and there's some folks here from there as far as the technology agent, to provide a full end-to-end key encryption system from the ATM to the cloud. And so, to stop jackpotting or mend the middle pieces, it's eliminated that piece that was never encrypted from the machine before. Bill Stutzman:                     31:41                     And so, we're looking at introducing how you can integrate that into your Diebold product and we're talking working with Diebold and how to run that through their managed services program. And so, we're very excited that if you want to stop by and talk to us about that, the ability to fully encrypt from the machine to the the data center and then move that on to the processors to the Cheque Imaging and everything else we think will be sort of groundbreaking. And so we're really happy to kind of introduce that at Intersect this week. Scott Anderson:               32:08                     Fantastic, thanks for sharing that. Shai. Shai Stern:                          32:10                     Yeah. Vanessa mentioned Square. So, one of the things that I wanted to mention is that all financial institutions, when you read the Wall Street Journal, then the news, you constantly see our Fintechs taking away business from banks, is that the fear of the banks and the Fintechs, and how they're going to battle one another. And one of the things that we try to do as... Some people call us an old company because we do process checks, but as well we are a Fintech company and we actually look to invest into new startups in the Fintech space and be able to offer them to our clients. So [two 00:32:42] for example, we're an investor and bank [inaudible 00:32:44] . It's a mobile banking company and also another one called [inaudible 00:32:47] that is a cutting edge technology and cybersecurity and helping financial institutions protect their card data in the dark web. Shai Stern:                          32:55                     So these are things that we're constantly thinking about. And I think a financial institution, it's incumbent upon all financial institutions. And when you have the previous speaker speak about diversity and thought processes, it's about "Yes, we have regulators and yes, we run a payment businesses and yes, they need to be secure". But how can we go ahead and take what we can learn and what is available today from the newest technology and be able to go ahead and have them live together? And I think that's something that it really... Everyone should be thinking about. Scott Anderson:               33:22                     Fantastic. I'd like to express my warm thanks to the individuals up here on the panel and the contributions they've made for the success of this gathering and this conference. So if you wouldn't mind, please give them a warm thank you. I appreciate your time. Speaker 1:                           33:36                     Keep checking back on iTunes for new topics from COMMERCE NOW.  

Summary:  Guest Ben Hammersley speaks on his take on how you need to be present today, so you can be future ready for tomorrow. Resources: Hammersley Futures Website Ben Hammersley LinkedIn Profile Diebold Nixdorf Website Transcription: Amy Lombardo:                00:14                     Hello and welcome to COMMERCE NOW, your source for  FinTech conversations and emerging trends. Today, I have the unique pleasure of talking with Ben Hammersley. He's a globe Trotter and an author an adventure seeker, and he has the most wicked handlebar mustache you've ever seen. And today he's going to give us his take on how you need to be present now so you can be future ready. Sounds easy. Right? Well wrong. Let's get Ben's thoughts. So, Hey, welcome... Ben Hammersley:            00:56                     Thank you. Such a pleasure to be on COMMERCE NOW. Amy Lombardo:                                                Oh good. Thank you for that plug. All right, so I'm not gonna be able to do you justice. So why don't you tell us a little bit about yourself? Ben Hammersley:                                            So I'm one of those annoying people that disappointed my parents over the past 20 years by not having a job, they can describe, I'm currently a futurist or is a strategic foresight person. So I run a company called Hammersley futures, and we work with corporations and with governments and some high net worth individuals to sort of help them understand the future and specifically to help them understand innovation and the methodologies behind innovation. And that has come from 10 years of doing that. But, before that I was a technology journalist and I edited wired magazine in the UK and I was a war correspondent in Afghanistan and I've done many, many things. I run a digital studio making digital things for couture houses and luxury brands. And so I have this very strange background, which has come together into this one thing which is helping people understand the nature of innovation. Amy Lombardo:                01:57                     Okay. And, and what inspires you about your work? How, did this whole being of Ben Hammersley come together? Ben Hammersley:            02:06                     I think what inspires me is sort of two fold. There's this, there's the selfish reason, which is that it enables me to be increasingly eclectic and, and taking lessons and taking influences from, from lots of different things, which is very selfish because I'm, you know, I'm fundamentally sort of unemployable and the regular day job or you know, I'm, how would you put it neuro atypical. And so, so being, having a career where I can travel a lot and taking a lot of input and then synthesize it into something else is a great privileged but also the slightly wider thing. I think the thing that really inspires me over the past couple of years is that I think we've come to a set of methodologies and an approach to our work, which is genuinely helpful for people are at as sort of a holistic level. It's helpful for them in a business point of view, but it's also, I think it's genuinely helpful for them sort of personally and that sort of pastoral care aspect to it. If that's slightly weird way of putting it. Yeah, Amy Lombardo:                03:13                     no, that's a unique identifier. Yeah. Ben Hammersley:            03:16                     Is actually is very satisfying because, because I get a lot of people coming to me immediately after I get off stage routes out of a meeting or comes to me six months later and say that thing, that approach really changed the way that that I think and it's made my life or my business or you know, whatever it is that they're particularly interested in has made it better. And that's, that's incredibly satisfying. So that's, so I get to, I get to go away and be weird, which is, which is helpful and I, and I get to help people, which is great. Amy Lombardo:                03:47                     All right, so we're at a banking conference here. Intersect 2020. So can you give me some examples of areas you think banks are missing the boat? You know, opportunities that they can be capitalizing on. Ben Hammersley:            04:08                     So I, I think actually that question really highlights the difference between my approach and, and other futurists or other technologists approaches to these things, which is that I don't think there is a boat as it were or a collection of, of large boats that people are missing or not missing. It's very easy and I am very typical of the sorts of conferences and not just banking conferences but any, any industry conference to say, ah, you know, if you are not paying attention to, you know, subject X or if you're not paying attention to new technology Y then you are than you are falling behind and you're missing the boat as you say. And that's almost universally bullshit to be honest. In the vast majority of those conferences. And the vast majority of those subjects very specifically are things which are overblown and misunderstood and probably aren't at least right now relevant to the, to the individuals in the audience. Ben Hammersley:            05:12                     So instead of thinking about the world as in terms of innovation boats that you can get on or not, and if you don't get on them, then you're going to be left behind to continue the imagery. Instead, what I try and teach people is to, is to look at the boat and see if it's something that is suitable for their business in the context of their business. Okay. So another way of looking at this is that the vast majority of futurism that I do, where I, in terms of when people ask me directly, you know, what are the new technologies that we should be paying attention to? Almost all of those technologies aren't things that don't exist yet. They're technologies which do exist and are being used a lot, but they're being used in another place. Okay. And so in a lot of industries you can be very, very innovative literally just by being up to date. Ben Hammersley:            06:02                     Right? Banking in the U S is a good example of that. In that, in that if you compare banking in the U S too, as specifically consumer banking, if you, if you compare consumer banking in the U S to consumer banking elsewhere on the planet, you could very easily innovate massively radically for the U S just by being about five years behind Europe or you know, or 10 years behind China, right? Like if you really wanted it to be up to date, just big, just go and do what the Chinese are doing 10 years ago. Those sorts of things. So there is, there is a saying that William Gibson, the science fiction writer said that that the future is already here. It's just not evenly distributed. And that I think is very true. But, but all of these or this sort of talking around this highlights the thing that I like to talk about, which is that innovation is not a step change to a new future that everybody agrees on. Ben Hammersley:            06:54                     Instead, it's a methodology of continuous improvement based on your own personal context and the context of your business. And that takes, that looks at those new technologies. It looks at those big boats as you say and says this, the suitable for us is does this, you know, yes, this is getting the front covers of the economist and everybody's very excited about it or whatever. But it isn't necessarily the thing that our customers are most likely to benefit from the most or our business will benefit from the most. And so what do we teach you is a much more holistic and continuous practice of continual mindful attention giving innovation on a daily basis rather than going, everybody needs to be on the blockchain or we're all dead. Amy Lombardo:                07:41                     Right? You know, you have this unique thinking on this concept of being present or recognizing what is right around you and you have to be able to capitalize on that before you can look ahead and you maybe unpack that a little bit for me and just give a little more examples. Ben Hammersley:            07:58                     Sure. Maybe like some concrete examples of what you see in your business. Sure. So, so let's start actually from the beginning of the talk I just gave, which is that because of the exponential rate of change that we have at this time on the 21st century and rate of change in everything. And you know, as I as I said on stage that that technology and society and culture and business are all interlinked in a fundamental way. When one changes then all the others change in the olden days. So 20 years ago, 30 years ago, technology was, was this specifically technology was the sort of layer on top of business. So you have business and then you have the technology that comes in and makes it a little bit more efficient. Right? Like this fancy bolt-on. Yeah, exactly. And you know, fancy precisely that. And, and the, the CIO of the business or the CIO. Ben Hammersley:            08:48                     So the business was probably not even on the board. It's probably one level down at the same level as say the, you know, the facilities manager, something like that. Whereas today, specifically in, in data-driven businesses and financial services and banking are perfect example of that. Your business is what you do with your data and what you do with the data is fundamentally technologically driven and so everything is tied back to the technology, but that technology is so intertwined with the rest of the world that everything changes. Everything else, everything is as a codependent uprising and everything changed. When one thing changes, everything else changes because technology itself changes at an exponential rate because of phenomenon like Moore's law, which is this phenomenon that for roughly the same price every year, you can fit twice as many components onto an integrated circuit, which means that again, speaking roughly every year, computers get twice as powerful for the same price or the same power computer harms in price roughly every year. Ben Hammersley:            09:47                     Because of that exponential growth and because exponential growth is itself incredibly difficult for human beings to comprehend because technology grows like that, the rest of the world changes at the same rate and therefore for a futurist like myself, making strategic forecasts, saying what the world's going to be like in 10 years time, I am completely lying, right? I'm just making shit up at that point because it's impossible to do so. And I think we only have to look back over the past three or four years or certainly the past decade and see how society has changed in the past decade or the last 11 years since the launch of the iPhone to today in every aspect of of human endeavor, whether you're talking about business or culture or society or politics or everything, all of that is now utterly unrecognizable compared to where it was 10 years ago. So if I come up to you and say, Hey, this is what the future of banking is going to be like in 10 years time, I'm [inaudible], I'm just making things up and I might be right. Ben Hammersley:            10:39                     In which case in 10 years time you'll think I'm a genius, but I'm not going to be right. Right. And nobody's going to be right. And so if we, if you start from the basis, the fundamental basis that, that, that five year plans or 10 year plans are just wrong, then there has to be another way of living your life. There must be another way of actually doing your job if you're a member of the leadership team of a, of a bank. If your job, what to be on the board is to guide this organization into the future. And yet it is structurally impossible for you to predict what the future is going to be like, then you're going to need another way of doing it, right? And so what we came down to in terms of our work is that that other way of doing things is doing it as a continuous process one day at a time. Ben Hammersley:            11:24                     And this isn't necessarily new. In fact it's, it's something that was in manufacturing. For example, Toyota invented the Toyota system in the 50s and, and that's what made Toyota. And in a cultural and religious context, you have a lots of people's spiritual practices, which are about continuous improvement. And you have lots of physical practices like yoga for example, where you can't win yoga, right? There's no end game of yoga, but it's a practice that you do every day and you get better at it, but you're always going to get back. You know, it's something you just do unless you're doing very yoga or wine yoga. Well indeed, but that, that, that does actually that's Dan, it [inaudible] other than that magnificent sounding activity, there's, you have to be in the States. This is what we do. It's exactly that. Goat yoga [inaudible] get tired after awhile. This is the thing. Ben Hammersley:            12:19                     But the thing of the thing about all these prints is that they're continuous practices. And so we try and look at what would it, what does it mean if innovation is a continuous practice rather than a continuous [inaudible] gentle practice rather than a kind of violence every five years we take on the, the, the new technology and an upgrade to it or half upgrade to it because everyone's confused by it, which is the standard Silicon Valley model of innovation, which is every five years they invent a new thing and everyone goes around and stands on stage and says, if you want us embracing this new thing, then you're all going to die. And so whether it's blockchain or the cloud or big data or AI or whatever it is, and of course those things aren't, that's AIDS, it's just not true. But it's also just not a sustainable method of innovation. Ben Hammersley:            13:09                     Right? Yeah. So, so I try and help people do that gradually. And so then the question is how do you do it gradually? And to do it gradually, you have to do it by really asking quite fundamental questions about what it is you do on a daily basis ordinarily and why you're doing them and who you're doing them for and who you're doing them with and how best can you serve those people or how best can you structure your teams or structure your internal processes so that you can put yourself in a position where you can better serve those people. And that involves things like employing more cognitively diverse teams. So you guys as many ideas and as much as much sort of empathy within your organization as you can. It means talking to your customers a lot more. It means paying attention to all of the processes you do and asking yourself on a, on a daily basis, why aren't we doing this in this way? Ben Hammersley:            14:08                     Because a lot of the things that many companies do, I've done that way because somebody decided and then that person left and nobody can remember why, but that's way the way they've always done it. And so now that that approach is actually much more uncomfortable than doing the same thing for five years. And then having somebody turn up and say, Hey, now you need to do the blockchain thing. Or Hey, no, he needs to do the AI thing. It's much less comfortable in that everybody fit many people. And I think most people actually through human nature kind of prefer to just sit around doing the same thing and then just to be told what's due next. It's much more complex and much more uncomfortable to be continuously, continuously asking, am I doing the right thing and what am I, what am I? Yes, and what am I assumptions. Ben Hammersley:            14:56                     Yeah, exactly. But it's also, it's a daily practice of what am I, what assumptions we make. Eating is what we thought we were doing is the concepts that we had 12 months ago. Are they still true? And asking yourself these fundamental questions. But if you do that, if you do that practice, then very rapidly you bring yourself as an individual and your team and your organization right up to the cutting edge of today. And once you're there and it's become a habit to be there, then the future takes care of itself. And in the vast majority of industries, just being up to date pots, you in the top three and in many industries that puts you into the top one. Because most companies, you know, when it's 2019 you know, in the world it's like 2002 inside the organization. Yeah. Yes. And if you just bring your organization right up to 2019 and you know precisely what it is that you're doing and who you're doing it for and what they want and what you, what you can provide and all of those sorts of things. Ben Hammersley:            15:57                     And you get there by asking these quite difficult questions and making these sort of mindfulness practices as it were. If you can get yourself up to that level, then you're profoundly well positioned in a way that all of your robots won't be. So one last question for you. Sure. And you're probably not gonna like me for this question because you just can't predict the future. But I have to ask this question because I want to get a different perspective. Sure. Because you are not a banker. So what do you think the future of cash looks like? So my personal assistant is Chinese and she was on holiday for the past two weeks and she just came back and she went back to her family in China and going Joe. And she was, she was telling me about this a couple of days, you know, a couple of days ago at time about the whole day, you know how it went. Ben Hammersley:            16:47                     And she was saying that not only did she never see any cash like physical cash throughout the whole trip, but also she never saw any credit cards either. And this came to the head when she tried to pay for it. She went out for lunch with her brother and she got her wallet out and she'd got her physical credit card out and her brother started laughing at her and she, and she was like, why are you laughing? You may and he lifted up the tablecloth on the table and other than this tablecloth under the glass tabletop was a QR code and he'd already paid the bill by scanning the QR code on the tabletop with the, with WeChat, which is the dominant app in China. And so in China it's, it's incredibly rare to leave the house with any form of wallet or credit card and certainly with any cash now this changes many things. Ben Hammersley:            17:38                     It changes fashion, right? Because you only need one pocket, which is the pocket for your phone. You don't really need a handbag apart from other things. Right. But you don't need a purse, you don't need things for carrying money cause it's all on your phone and everybody from market store holders to beggars in the street to the Chanel boutique, take the same payment platform, which is through your phone. That's one possible future. Okay. Yeah. And in some places I can see that becoming, you know, 100% in China and some bits of the U S I can see that being 95% of your day at this if not we chat. But something like Apple pay and contact lists, you know from my, I bought loads of things this morning and bought it with my watch, you know, of through Venmo. Exactly. All of those go out. You just pay each other that way. Ben Hammersley:            18:25                     Precisely. And you and you know, and certainly in the UK where I'm originally from contact lists, Apple pay, whatever you want to call it, is pretty much universal everywhere. However, you know, I live in Brooklyn and or on planes or in hotels or in corporate headquarters. And for me to live my life cashless solely through, you know, Apple pay and or my sort of platinum Amex or something is totally doable and perfectly, perfectly understandable future. But whilst my assistant was on holiday, I was moving house from Los Angeles to Brooklyn and I drove across the U S and I drove through the Southern States of the U S and certainly that pigeon forge Tennessee goes cashless will be a good 10 years after Brooklyn, New York or Venice beach, California where I'm sure, and so when you have a conference like, like this for example, which where the audiences are bankers but they're, but they like regional and local bankers as well as like your, the mental image you have, when I say the word bankers, right? Ben Hammersley:            19:30                     Those guys, their version of innovation around something like cash or payments or something is going to be different and will be just as innovative, but it won't be the grand myth of a capitalist society that say the cashless society vendors are putting forward. Yeah, right. Yeah. But it will be a bit, it'll be the dominant thing in their region that they correctly work for that work for that thing. Micro society. That's right. Yeah. And then Mike, Chris is, it might be 10 million people. It might be 100 million pieces. Okay, that's fine. And so we'll see. And this is, this has been the same everywhere. You know, if you look at M-Pesa, for example in Kenya, that's been a mobile cash solution that's been there for 1520 years and has been as a major part of their economy. And then you have things like local cash systems where we, a friend of mine again lives in Kenya and is currently doing it, setting up her own currency for a local, for a region. Ben Hammersley:            20:26                     Oh wow. And there's quite a few of these around the world where it's physical cash, you know, it's real, the real bank notes, you know, and they're only accepted within that community. And so it keeps economic flow going around the community. And so they're not dollar rich or shillings rich or whatever, you know the Kenyan currency is, but the rich and the local, you know the economic movement hat. Yup. Yup. And again, that's now that's also a solution to the question about what, what does society, what does cash look like? Because that invites you to ask the question of what is cash in the first place and why do we have cash and what is it for and what is the definition of a, of a healthy economy in T? Is it the number on a spreadsheet or is it the movement of money? Is it the fluidity of money rather than this rather than a, a stock somewhere living in a bank account or not moving. Ben Hammersley:            21:19                     And any economist who's gotten past the first year will tell you that that is the flow of money. That's the important thing, not the stock of money. And so cash is a pretty good thing to flow around. And so again, the reason I'm being like giving you five different answers, the question is because there are a million different answers to that question or around that every different context and the why is organizations will look at their context of their marketplaces and if they're small organizations will go well here in this place with this group. And when I've spoken to my customers, they've expressed what they want to do and I'm providing them the solution to the thing they want to do. And it turns out the best solution, the thing we want to do is QR codes or the best solution is our own local currency or the best solution is more ITMs. Ben Hammersley:            22:06                     And again, this taps into is not a technological thing. It's always a social thing. So having moved from the UK to the U S five years ago, the instant thing that I noticed is the 3% on a bad day, 1% on a good day, you know, surcharge to all ATM withdrawals, right? That's illegal in Europe. Literally illegal. Right? And so one of the features of cash will be, it won't cost anything for me to get cash, for example, because that's because that's a 3% tax on being poor. And in terms of social inequality, that's unacceptable actually. You know what I mean? Spot-on. So, so will you, do you only get to that realization when you start to question actually what is this for? Right. The same thing for, for contact lists, I have the, the Apple cart from Apple and from a product design point of view, the whole process of applying for receiving, activating, using the Apple card, both a digital thing on my watch and on my phone and as a physical artifact when they shipped me the actual metal card, the product design of that, the service designer that is in is astounding. It's, it's a good 10 years ahead of everybody else, right? In the U S beautiful. There's a process, and I've used it a lot today to buy coffee and things, but that's not the future of payments because the future of payments cannot depend on somebody owning a thousand dollar device in their pocket. Right. The future of payments has to include like my five-year-old you turned five two days ago and is now getting an allowance. She gets 50 cents a week because my wife is stingy. Ben Hammersley:            23:52                     Earn that 50 well yes, and she has chores to do it. Exactly, but she's not going to have a cashless. If I went to her and said like, yes, I'm going to, I'm going to credit your contact list. You know I'm credit. You're in contact with that physicality, right? Yeah. And she can't park. There are no gumball machines that we'll take. We'll take like Apple pay and gumball machines. That's right. And gumball machines is her big thing right now. And so she's obsessed. And so like for her the best payment solutions is coins, whereas for the nation, the penny makes no sense. Right. For example. Right. And for the user, the U S bank notes are a disaster. They're all the same size and color. Somebody used to redesign those, but now, and I think we're good there [inaudible] it's like it's an impossible question, right. Ben Hammersley:            24:50                     Which is why I sort of blooded a path it for what photo booth but to come to this solution. But to answer that question, you have to answer it as an individual and the [inaudible] for an individual and for the companies that services individuals, you can come through, you can come to an answer. It won't be the same as the guy down the street or the person in the one state along. And certainly it won't be one person's four States along any other direction. But for your 100 million people it will be perfect. I think this is a good place. Ben Hammersley:            25:18                     Do we have any other impossible solutions? Disposable problems? No. Unless you've got something else up your sleeve, you think fun there. No, I mean, well other than I think this can be an interest. One of the interesting questions as well, once you start these new technologies come along, they do invite people to rethink the fundamental nature of the transaction. Yeah. And once you start to rethink the fundamental nature of the transaction, you then start thinking, well, why am I doing this transaction with this company? And so there are organizations out there and I think the Apple card is the obvious first one of these where if I was a bank I will be terrified that organization deciding to offer those services and this is what we saw in China with WeChat and the other equivalents, but not necessarily with cash accounts like you know consumer banking. Ben Hammersley:            26:10                     But something like insurance. Amazon knows everything I have in my house because I basically bought most of it from Amazon. So why I don't have my rental insurance around Amazon is literally a thing that puzzles me on a weekly basis because they could offer it to me immediately. They know, you know, they know where I live, they know about your other thing, right. They know the value of my stuff. They know the end and they also know from that they know all the demographic information they have. I have a 1516 year purchase history with them internationally. I have all of my banking details like they know the risk and everything from all the demographics or there's this thing they could underwrite that trivially will be easy for them. Amazon doing household insurance. I know Facebook has a banking license in Europe. I think the next big thing coming along down the line will be people just going, well I gave all my money to Apple anyway or to to T mode or bottle. Ben Hammersley:            27:06                     I don't have that much savings. You know I only have a few hundred dollars in like in the cotton account, you know my checking account anyway, I never write checks. I'll just hold a positive balance with T mobile and I'll just close down my bank of America account, something like that. And it's from an individual person point of view for the vast majority of people will make no difference whatsoever. That's really, I think any of my true regulatory approval because of that. It might not happen here, but it will certainly happen in other places as it has as it does in China. Amy Lombardo:                27:36                     Cool. Well thank you for sitting down with me today. This was fun. I feel like I could talk to you for hours. You want to do one more plug for me for COMMERCE NOW. Oh beautiful. Alright, follow him at, @Ben Hammersley and stay tuned for more episodes on COMMERCE NOW.  

With $48b in assets, Banco Popular is the largest financial institution in assets and deposits in Puerto Rico. In this podcast, you will hear from Moisés Pena Reyes, VP, Digital Banking for the bank. Moisés is responsible for driving and managing the ongoing evolution, innovation, and strategic direction of Banco Popular’s digital banking platforms by meticulously managing their customers’ journeys via mobile, online and ATM. Hear how his unique “digital-first” approach to their transformation journey has allowed the bank to have more active devices in use to engage with the bank, than actual customers.   Resources: Banco Popular Website Moises Pena Reyes LinkedIn Profile Diebold Nixdorf Website Transcription:    Amy Lombardo:                00:15                     Hello again, this is Amy Lombardo and I'm your host for this episode of COMMERCE NOW. We're coming hot off of the stage from our last keynote presentation at DN Intersect, where Moisés Pena Reyes, from Banco Popular, hope I said that right and did you justice, Moisés . He presented the bank's digital transformation strategy. And so I'm lucky enough to be able to pull him aside for a few minutes here, and be able to share with our podcast universe, your story. It was fantastic for the group that was here, but I couldn't let you get away without getting in my hot seat here to talk to me. Moisés Peña:                     00:54                     Let's do this. Amy Lombardo:                00:55                     Moisés is responsible for driving and managing the ongoing evolution, innovation, and strategic direction of Banco Popular's digital banking platforms. So that's enough from me and let's hear it directly from him. So, welcome Moisés . Moisés Peña:                     01:10                     Thank you, thank you. I'm excited to be here sharing one of my passions with you. Amy Lombardo:                01:15                   So what I learned is you have 17 years at the bank, and 2008 was really when you started on this digital journey. So talk to me a little bit about how you came to this realization and what were the factors that led you to realize that digital is really the place to be for the bank. Moisés Peña:                     01:36                     Yes, I think that ... 2008 was the year that I arrived at the Internet strategy team, and our customers loved to online banking, and we measured that. And seeing how the volume of transactions were literally making a dent in their behavior and monitoring the tendencies and the new stuff that was coming out, for me was truly engaging to embark on that journey. In the beginning we were just a small group, that admires an alternate channel but we persisted and continue to challenge the way things were done. And day by day, we started to launch new services, transform experiences to the place that we are today, with over a hundred people actually looking out for the top strategy in the bank. Amy Lombardo:                02:37                     And you said something that was interesting because you said channels, but really you don't want to think in channels, that word isn't even in your vocabulary. Right? Moisés Peña:                     02:47                     Imagine that. Alternate channels, no, it's our experiences, our customers and their expectations are the ones that are going to choose where and when they want to do banking. Amy Lombardo:                03:02                     Right, right. Because customers say, "I need a bank." Moisés Peña:                     03:05                     Yeah. Amy Lombardo:                03:05                     They don't care. They're not going to say, "I need to go digitally pay my bill." It's just the experience. Moisés Peña:                     03:12                     Experience and context, it is all about the context of the journey that our customer is going to embark. Amy Lombardo:                03:18                     Right. Moisés Peña:                     03:18                     Yeah. Amy Lombardo:                03:19                     Right. All right. Moisés , so you talked a little bit about the journey itself, but can you share some of the innovations that the bank actually deployed? Moisés Peña:                     03:27                     Yes. We run on a custom core and everything that we want to build, we literally have to build it. So that's a great opportunity for us. We have been at the forefront of iterating our new services. For example, we were between the top five banks in the U.S. to launch Apple watch support. So is really through the different skill sets that we have and do an innovation with them. And in a couple of weeks, we had our mobile app tailor for the Apple watch. Balances, transfers, transactions, payments, and we were in the first five banks in do that. Our cardless cash service, it has been truly revolutionary because of the way that we offer the service to the non-customer. So we did it also ourselves also with the help of our technology partner. And the beauty of it, is that our customers can send money to anyone, even if that person doesn't have a bank account. But we did it the way of making them interact with our app. So they will enroll in our app and get access to their cash but I can truly offer them new experiences via that app because they allow me to send them promotions and cross sell opportunities are beautiful. Amy Lombardo:                04:48                     Right. Moisés Peña:                     04:48                     Yeah. Amy Lombardo:                04:49                     So you mentioned something interesting in terms of, okay, "We were one of the first banks to do this," but sometimes that can have the reverse effect because consumers aren't ready or they're not trained, they can't adopt the technology. So how receptive was your customer base to the different phases of this digital transformation? Moisés Peña:                     05:10                     Yep. I live by the principle that our customers don't wake up in the morning saying, "I want to do banking today." Amy Lombardo:                05:20                     Right. Moisés Peña:                     05:20                     Right. Amy Lombardo:                05:21                     Unless of course you win the lottery. Moisés Peña:                     05:23                     Yeah. But we are competing not with other banks. We are competing with what their expectations are with the ecosystem of applications that they interact with day in, day out right? So in our case, digital adoption is robust. Over 90% of our customer base is enroll in digital banking. So our customers are great in that they are fast adopters, right? So we will try stuff, for example, the Apple watch example, it has a low usage and we learn from that. We did experiment, we [inaudible 00:06:00] the teams collaborated and we monitor their performance and the usage. And we saw that, "Hey, people will still wants to use their phone to do it not the Apple watch." Amy Lombardo:                06:12                     I'm going to throw you a little bit of a curve ball here, is there anything that scares you about the pace of change? Moisés Peña:                     06:21                     Oh yeah, totally. And because of that ... because we are not competing with other banks anymore and we are a big bank on ... honestly, I want to move faster. But obviously Google, Amazon, Apple had a lot of more resources than we [inaudible 00:06:42] and a huge customer base. So what scares me is that we don't move fast enough to be part of that journey for our customers and lose business because a bigger player did it fast than us. So yeah, we keep pounding the rock and iterating and listen to our customers. That important thing. Amy Lombardo:                07:06                     So maybe the goal we'll have here is, you know, we hear all about the Amazon effect or you know, you say you Google something, Google became a verb and maybe we'll have the Banco Popular factor right? And people will think about it that way. Moisés Peña:                     07:21                     Exactly. Amy Lombardo:                07:21                     Yes. Okay. You mentioned Google and in your keynote presentation you said that you are embedding Google analytics into your ATM. I almost fell out of my chair because I have not heard a single banker ever say that. So how'd you come to that? Moisés Peña:                     07:41                     We love to experiment. We do a lot of proof of concepts. We have our own ATM lab in our building and being a group that they're ... our lives has ... have been helping the bank transition that digital transformation. When we started to HTML the hell out of those ATM screens, my senior web developer and on the team is like, "Hmm. HTML, CSS let's embed that we [inaudible 00:08:11] go there and start tracking the journey, the different touch points and," ... and that's the beauty of making your teams collaborate and expanding their skill sets, right? Because the idea came out of the team that didn't have anything to do with the ATM. Amy Lombardo:                08:30                     Right. Moisés Peña:                     08:31                     And that's how it came to be and we implemented it, we tested it. We even have the dashboard seeing it now in ... in a couple of machines and for us that we believe in design and interaction design that help us to understand their conversion funnel at the ATM because it is a transaction and ... and understand the pain points, why a customer it's spending this amount of time in this screen versus the other one and how can I enhance that pain point. Amy Lombardo:                09:04                     Yep. So Moisés , you're ... sounds like you're bringing things faster to your team than they can possibly handle your wacky ideas. So how do you keep those folks motivated? Moisés Peña:                     09:16                     They are part of what we are doing. I approach this in a very open way. I have conversations with them day in, day out. But the important thing is that you have to empower them to actually ... once you share the vision, I don't want to be the one that made that ... that vision a reality because it is impossible for one person to do that. So once I have those crazy ideas, I run the ideas by them and I empower them to make decisions and let them experiment and make suggestions. And that's how it ... it's truly a better conversation. And for example, for this keynote, I run the presentation with them two times. Amy Lombardo:                10:01                     Oh, that's great. Moisés Peña:                     10:02                     And I let them critique me and give me pointers and made changes to the slides. So it is not Moisés' presentation is my team's presentation, right? Because it is not only my vision, we are in this together. That's the model that we use every day, day in, day out. We are in this together. Amy Lombardo:                10:21                     If we talk a lot about the intersection of physical and digital, I mean we're here at our newest flagship event, it's called 'Intersect'. But I think I had this aha moment when you were talking because I was thinking, it's really not the intersection of physical and digital, but it's also this third leg of the stool. It's that human element, right? Moisés Peña:                     10:47                     Yep. It's ... I truly believe that this is not a technology problem. It is a human one. And once you break the silos and you empower your teams and help them get new skills, right. And encouraged them to, "I want you to collaborate with my interaction design," and run by him the idea that you have for that service, and that's when it truly became a richer product in the end is your teams the ones that make or break the customer experience. Amy Lombardo:                11:25                     Yep. Moisés Peña:                     11:26                     Yep. Amy Lombardo:                11:27                     Okay. So last question. Can you give us any hints at ... at what's next? Moisés Peña:                     11:32                     Hmm? Amy Lombardo:                11:33                     For the bank? Moisés Peña:                     11:34                     Well we are ... I think that for me a huge realization was that for the first time all these teams are in the same building. Digital retail, cyber fraud and technology operations, we are on there going our transformation of ... on how we collaborate. So for me, next things is that it's super exciting to see how the ATM structure now is going to reflect the reality that when we merge all these wonderful people and visions, the ... the point of view of what we do explodes service wise. I am super excited on what we are doing with taking our mobile experience and adapting it to the ATM. So my customer would see the same payment flow that he sees in the mobile app. He will see the same flow adapted to a tablet in the ATM. So that truly motivates me and we are doing some interesting stuff with the analytics. Also, we are doing predictive models for cash replenishment also in house with machine learning. Amy Lombardo:                12:51                     Okay, okay. Moisés Peña:                     12:52                     I always says that machine learning, artificial intelligence and cash recyclers, you have the opportunity to have a self sustaining cash replenishment operation. And we're doing interesting stuff with personalization and new services for our commercial customers. Yeah, I love what I do. Amy Lombardo:                13:09                     You do. Moisés Peña:                     13:09                     Interesting times. Amy Lombardo:                13:10                     That passion is recognized. And I thank you for sharing- Moisés Peña:                     13:15                     Thank you. Amy Lombardo:                13:15                     This story with our listeners. So for those of you out there, keep checking back for more episodes from COMMERCE NOW and of course you can always subscribe on iTunes or your favorite podcast listening channel.  

Summary: Retailers and grocers want to streamline the in-store checkout experience and increase conversions. Diebold Nixdorf’s Carl von Sydow tells Karen Webster from Pymnts.com transaction data can help firms find the optimal checkout footprint that fits, on a case by case basis.  Resources: Blogs: Relevant Retail - the New Norm Retail Self-Service: Today, it's WAY More than Self-Checkout Website: Diebold Nixdorf Previous Carl Von Sydow Podcast: Empower Your Retail Customers Transcription:  Karen Webster:                00:12                     Hey Carl, thanks for joining me today. I'm looking forward to having a conversation about data, in-store point of sale, and the insights that retailers can glean from that data. So thanks for making the time. Carl von Sydow:                00:29                     You're welcome, no problem. I'm happy to be here. Karen Webster:                00:31                     So, there's been so much written and discussed about improving the checkout experience in the physical store, and of course we're all familiar with the efforts that a number of players, obviously Amazon at the top of that list, have pioneered to really improve that experience. I'm curious to get your take on, first of all, the the landscape around, then the appetite for, using the point of sale experience, reinventing it and making it a more streamlined experience for the customer. Carl von Sydow:                01:10                     Yeah. Well first of all, retail and grocery retail and all the other verticals, are going through big changes now in in the checkout process. As you just mentioned, Amazon is one example and we have click and collect, we have all different kinds of self-service solutions or other solutions. Customers has options when they go shopping. But we have a great number of stores and retailers that are still working with traditional retail, and the Amazon idea is good for some locations, but there are a lot of retailers they're still expecting, or looking, for solutions that are, perhaps, not reinventing everything but using what they already have and improving the shopping experience for the customer, with not investing in a lot of technology like the Amazon solution. Karen Webster:                02:03                     Yeah, yeah. That is clearly, as you said, for a different kind of a store; smaller format, limited selection and so forth. But your point is a good one, which is stores want to make the experience better. No one wants to see long lines and there are lots of efficiencies that can be delivered within the existing store format today. What are some of the innovations that are helping drive that forward? Carl von Sydow:                02:31                     Well, first of all, when we usually try to help a retailer improve their shopping experience in the checkout area and the efficiency and throughput and all that, we start with looking at the store data, what they already have within retail. One store location can be very different from another one. The customer demographies is different from one side of the town to the other. So by looking at the actual store data for a particular store, you can learn quite a lot about how and where you can improve the shopping experience in that particular store. And the T-log data, the transaction data, that will help us to analyze the customer work, or customer shopping journey, the customer journey.                                                                                 And through the store data that we can extract information, like for instance, the average basket sizes, the different payments options that they are using, cash or card payments, coupons, et cetera. How many transactions are used with age restricted items? That will have an impact on the different solutions for self-service that you can implement, of course. But looking at the data, the actual store data, you can get a long way of analyzing and simulating how you can improve that store without spending too much money. Karen Webster:                03:52                     So what are some of the the insights? I was listening to you talk, I was reminded of an experience a couple of weeks back in a grocery store on a Saturday, and they didn't have that many items so I decided to do self-checkout. And the lines were actually, in the self-checkout lanes, deeper than I had seen them. So a lot of people are opting in. I happened to get into the line where a woman had a pile of coupons. That was painful because scanning those coupons and putting them in the little holder, I was like, is she ever going to finish? But you mentioned that as an example of a behavior that helps stores make decisions about throughput. What kind of insights, and therefore actions, does that one example provide a retailer in how to think about throughput and efficiencies at checkout? Carl von Sydow:                04:42                     By analyzing their own transaction log data, their own facts in a good way. The retailer can optimize the different checkout options for that particular location, for that particular customer demography that they have. Or, like options ... You mentioned coupons, if we look 10, 15 years back in time, we have seen more or less only one type of self-checkout, which is the traditional basket-to-bag self-checkout, as we call it. With a large bagging area, with or without cash, pretty big units. And they accept cash, they accept coupons, et cetera, et cetera. If you look at the T-log data, just as you mentioned, customers with small baskets, typically self-service is very attractive for small baskets, obviously. But today what you can see in stores is that the self-checkouts are for all customers. You can go there and have a customer with 50 items and they are building mountains on the bagging area. And do you just want to go through with three items.                                                                                 So our idea is to look at the T-log data, analyze the different groups of customers that they have in that particular store, and then identify what different self-service solutions, or options, can you add to this checkout area to meet the different customer demands? So the customers with small baskets that just want to go through fast, they pay with credit card, they don't want to wait for someone paying with cash, et cetera. So you should have like a mix of different self-service solutions to meet your customer demands, and that's what the store data can help you to analyze and simulate. Karen Webster:                06:25                     Is that, Carl, something that retailers are starting to wrap their heads around? I mean, this particular store, I won't name the brand, but it's pretty pretty big chain and it was interesting that all of the checkout lanes, self-checkout lanes, were identical. You could use cash in addition to cards, as you described. Any number of items could be moved down the conveyor belt, and of course those coupon things, which I found very annoying because she had a lot of them. So are retailers starting to adopt these new ways of thinking about narrowing the options for self-service in some lanes? Carl von Sydow:                07:09                     Yeah, I would say more and more retailers are doing that. For quite a while the retailers have been working through the thinking about averages, and one-size-fits-all kind of mentality, and that's what we see on the markets today. And now they're slowly realizing that that is not necessarily what the customers want. There is no one-size-fits-all in self-service anymore. And the customers, they are learning and they are developing and they're doing ... They're fast. They are expecting retailers to offer continuous improvements also in in the checkout area. We have seen quite ... Hasn't been so many different developments for the traditional basket-to-bag self-checkout. It looks more or less the same today like 15 years ago.                                                                                 And the customers, they're trying to ... They are expecting something different now and the retailers are realizing that, but they don't really know how and to which extent they would add like fast lanes or express lanes. And then especially in the United States to go card only. It's a pretty bold decision and a lot of retailers are afraid of that. But if you look at the store data, you can easily see that there is a market, if you like, internally, for that store to actually have card only self-service solutions to meet those customer's demands. Karen Webster:                08:33                     What are some of the more innovative options that retailers are embracing who are looking at this data, recognizing that averages don't cut it, and they really do need to be more thoughtful about about checkout options? Carl von Sydow:                08:54                     What different self-service alternatives there is, or what do you mean? Karen Webster:                08:56                     So, when you think about self-service alternatives, and just looking at checkout holistically, what are some of the more innovative retailers doing to try to make that experience better? Carl von Sydow:                09:07                     Yeah, well, what they are doing, they're mixing different checkout solutions in the same store. Some stores, already, still today, only have normal lanes. Then, a lot of stores, they have a mix of normal lanes and traditional basket-to-bag self-checkout. And now we have seen, like Giant Eagle, Kroger, Walmart did some tests, and now Sam's Club is doing, to also add personal self-scanning. Where you have this handheld device that you go shopping with through the store. We have retailers adding smaller kiosk-like fast lanes without cash, and very few items. So some of the more aggressive retailers, they are mixing different self-checkout, or self-service solutions, within the same store. And that is coming more and more, but it goes a little bit slow but I think we will see a big change coming, you know, two years. A lot of the interests that we see right now from retailers on almost any market in the world is particularly towards the smaller self-checkouts, the fast lane type of checkout. Karen Webster:                10:21                     Yep. Yeah. You know, it is also just a wholesale shift right? From from checkout being something that is in the lane, as you call it basket-to-bag, being handled by store personnel to, for the sake of efficiency and convenience, the consumer is willing to take that responsibility on themselves. I mean, and including order ahead and pick up curbside where everything now is being driven by convenience and efficiency. So I can see mixing the format. But you know, most people when they're in the store, they want to get in and they want to get out. And they look for the lines that have the fewest people in it. Sometimes regardless of whether that's self-checkout or not. Carl von Sydow:                11:08                     Yeah, I mean we, when we talk about conversion rates for instance, which means the customers that are buying stuff versus customers leaving the store empty handed due to long waiting lines. So the conversion rates, the retailer wants a high conversion rate, which means that all customers that go into the store should buy something. But if the lines are long, then they will leave the store without buying anything. And to add the opportunity of different checkout options, you will have a higher throughput per hour, or per time. And you will increase your conversion rate. Definitely. I think we have some interesting examples from projects that we have done. One, for instance, we had a project where we implemented a self-checkout, these fast lanes self-checkout, and we had a terrible estimation of 30% adoption rate in the project. After just a couple of weeks we were up to 37%, and now a couple of months in, we are up at 44%. Karen Webster:                12:21                     Wow. Carl von Sydow:                12:22                     So the adoption rate is high. What we have seen at the same time, in that store, is that the conversion rate has gone up, of course, but the average basket size went down. And that, for a retailer, is like a red alarm bell because they want the average basket size, of course, to increase, not decrease. But when we looked at the store data, we saw that, well since the conversion rates increased, but we saw that the customers with few items had increased dramatically because of the faster throughput through the checkout area. So since this store then had more customers with fewer items, the average basket size went down. So actually it was a good sign, but it was an alarm bell that no one really expected. Karen Webster:                13:08                     Well, I would imagine that, you know, one of the explanations, who's to know for sure, is that people are shopping more frequently. So going to the store a couple of times a week rather than once a week with smaller basket sizes to get in and out. So I mean that could be one explanation. But I mean, I'm curious about, in that example, adoption rates going up; what does that say about the inefficiencies of the store overall? I mean, if I'm that particular retailer, I'm thinking, wow, more people are using self-service, that must mean that the traditional checkout it's pretty friction laden for consumers. Carl von Sydow:                13:47                     Yeah, but I think, again, if you look at the customers in any store, they have different customer journeys. A customer with a large basket, with coupons, paying with checks, paying with cash, they look for [inaudible 00:14:01]. Interaction with people, they like to go through the normal lane. But then you have the efficient customer that just wants to go in and out as fast as possible, pay with credit card, no coupons, and they do like the social interaction with people, but the speed through the store is more important for them. And when they go, when they come to the checkout, that's also important to remember, when the customer comes to the checkout, basically the customer journey is over.                                                                                 The only thing they want to do is to pay us as fast as possible and get out of there and go home or wherever they are going. So the whole shopping experience ends at the checkout area. And by offering different options for that, you will make more customers happy. And if you have coupons, if you have checks, if you have cash, then you can go to the manned lanes and go through that part of the checkout area. But if you don't, you want to be able to find a way to leave the store without waiting for people with tons of coupons in their bag. Karen Webster:                15:07                     Carl, I'm curious to get your thoughts on how self-checkout and the opportunity to further, I guess, curate that experience ties to loyalty programs that stores may have. I mean, one of the things that's interesting about the Amazon Go stores is that you have to be a member of Amazon Prime in order to do that. I mean, that's just sort of the Amazon model. But but grocery stores have loyalty programs that most people participate in, and I'm curious to know whether that's been ever considered, or even appropriate, to think about. Certain lanes are available for loyalty club members, or certain experiences are, et cetera. Carl von Sydow:                15:54                     That's a very good question. One of the reasons why we have been stuck with the traditional basket-to-bag self-checkout is that it has built-in security. You have the weighing scale bagging area where the self-checkout will always verify the weight of the item with the weight database that you have. And you can trick everything, of course, but there is a security feature in this traditional self-checkout. However, it makes the whole checkout experience a little bit annoying, especially if you have these unintentional blocks, the weight it doesn't always fit, and you have waiting times for this and that. So the throughput is definitely affected by that.                                                                                 If you leave the security features outside, then typically a lot of the retailers, they want to have some means to identify the customer, and the loyalty program is an ideal way of doing that. So a lot of the retailers that take away security features from the self-checkout, like these fast lane self-checkouts without weight security, they want to add the loyalty program to that so they at least can identify the customer. And the customer will feel, well, the retailer knows who I am, I have scanned my card and then I can use this VIP lane for self-service. Especially handheld, the personal self scanning solutions, are very much focused around loyalty programs for security. Karen Webster:                17:24                     Yep. Yep. Interesting. Well there's certainly a lot of opportunity to innovate. It is something that consumers, in particular the grocery shopping experience, is something people do in the physical store and making that more efficient in any possible way is a welcome experience., Particularly since people do it on Saturdays and they don't really want to be doing it ... spending their Saturday mornings going to the grocery store. So it's a, and maybe I'm speaking from personal experience, Carl, I don't know. It's not my favorite thing to do on Saturday morning. Carl von Sydow:                17:58                     Yeah we will, I think we will see a big increase in self-service solutions in retail, and not only in grocery, we will see it in DIY stores, convenience stores, pharmacists because it is a very convenient and fast way to go through the checkout area. And the customers have said before, the customers are learning, they are expecting self-service nowadays. The adoption rates are really high from the get-go nowadays. 10 15 years ago, it took much longer to reach a good level of adoption with self-checkout. Now it goes, as I said before, really, really fast because customers are used to self-service in so many instances right now. But you have to, it's not one-size-fits-all. That's the main thing.                                                                                 And to do the best implementation of self-service, you should look at the store data, to look at what different types of customer groups, what's the demography in this store? And then simulate different scenarios and build a paper pilot with actual store data. How would it look like if I do this? If I implement this solution in this store? And that's typically what the project looks like today for us. A lot of analysis of data and different alternatives, and then we have a discussion with the retailer. How bold do you want to be with self-checkout, or self-service? How many different alternatives you want to offer your customers? And we are going definitely in that direction. That's my impression. Karen Webster:                19:30                     Well Carl, thanks so much for your time and for the insights about the future of self-service and retail. Obviously grocery being just one, obvious an important use case, but certainly others as you pointed out as well. Thanks again for your time. Carl von Sydow:                19:45                     You're welcome, happy to join. Amy Lombardo:                19:46                     Thanks to our listeners for tuning into this episode of COMMERCE NOW. To find out more about the future of retail, go to dieboldnixdorf.com or click on the link in the podcast show notes. Until next time, keep checking back on iTunes for new topics from COMMERCE NOW.  

Summary: On this episode of COMMERCE NOW, we discuss how cloud-based banking is really booming and what FIs can do to be on the front side of this upswing. Related Content: COMMERCE NOW Site Diebold Nixdorf Site Transcription: Scott Anderson:               Hello again. This is Scott Anderson, your host for this episode of COMMERCE NOW. As some of you have heard, cloud-based IT is booming, even with the core applications of the banks. Scott Anderson:               Although migration from conventional IT infrastructures to the cloud can be complex, once it's done, it offers interesting opportunities, not to mention enormous savings potential. Scott Anderson:               Today, I'm joined by Michael Engel, Managing Director and Vice President for banking software at Diebold Nixdorf. And on this episode of COMMERCE NOW, we will [00:00:30] discuss how cloud-based banking is really booming and what FIs can do to be on the front side of this upswing. Scott Anderson:               Welcome, Michael. Thanks for joining me today. Michael Engel:                   Hey, it's a pleasure, Scott. Thanks for having me. Scott Anderson:               Before we dive in, Michael, I know you quite well, but why don't you begin by telling our audience a little bit about yourself and your background? Michael Engel:                   Thank you, Scott. I'm in the industry for 20 plus years now and always worked in software and financial industry, [00:01:00] so I have seen a lot of iterations of technology. So all the way from the good solid host-based environments that a lot of FIs are still running, to now all these latest technologies driving banks and FI's around the globe. Michael Engel:                   So therefore, I would say I have a good view of the historic aspect, [00:01:30] but also as part of my job, talking to customers around the world, and also to technology providers around the globe, have a fairly good understanding of the dynamics in different geographies and markets, towards what is still under discussion and what is basically real and what is in production today. Scott Anderson:               Excellent. [00:02:00] And really appreciate that you're joining us with that global point of view. And if we target our focus then to today's topic, can you kick us off and briefly discuss cloud-based software and why you think that's been growing in popularity lately? Michael Engel:                   Well when we talk about cloud-based software, it is more than just putting a piece of functionality into a central located data center [00:02:30] that is accessible through standard protocols and is hosted by a central organization that gives basically, a cost advantage based on a dynamic usage model. Michael Engel:                   That is what most people immediately have in their mind, but it's much more than that. It is all around technology around that, so the whole idea of containerization, the whole idea of APIs [00:03:00] to be used and consumed and the whole tools in order to create software, to test software, to deploy software to run and operate. And all of these pieces are now coming from the mobile phone. Michael Engel:                   This is really, really cool and a bunch of nerds across the globe are looking into that. Into it has become [00:03:30] now, into a state of maturity where, now conservative organizations such as banks are seriously looking into that and the front runners are actually exploring that mission critical application, post development and operation and so showing extremely good results. And then that is what brought us to the point [00:04:00] that from being a buzzword and being the cool thing around the block, it has matured into, it is actually real enough and mature enough for a mission critical environment such as special services industry. Scott Anderson:               Interesting. So I know that there are several trailblazers out there globally and you've touched on a couple of their examples and aside from costs, what other [00:04:30] benefits, you know, if we have some financial institutions listening in today, how can you assure them that there are benefits beyond cost with cloud based software? Michael Engel:                   Well, again, let's, let's fundamentally look at what is happening elsewhere in the industry. And then if you look at, for instance, companies such as Amazon, if you look into Amazon, not as a cloud service provider but as a retail organization, then by [00:05:00] and large the entire Amazon platform. So the shop that you see where you go and look for stuff to buy, but also the whole logistic engine, even engine behind that, everything is a very dynamic infrastructure. Why? Because Amazon has realized that they're living in a very fast changing environment and if they're not able to [00:05:30] adapt changes from the market, changes from customer behavior, integration of new products and services into their offering, then they're falling behind and they no longer stay relevant for their consumers. So as a result, they have worked intensively with other technology providers on a end to end, so called continuous improvement, continuous deployment, delivery chain, [00:06:00] tool chain. Michael Engel:                   And as a result of that, they are basically creating an ongoing living organism of software that will evolve itself every give and take 12 months. So basically no code in there is legacy code. Everything gets constantly updated, enhanced, improved, and by that, change. Now that is exactly [00:06:30] how a lot of these smaller fintechs are today operating. They are not better or smarter, they are simply faster. And they are faster by utilizing latest technology in order to adapt to customer demands. And in order to automate servicing their customers, you do this by using software which is obvious. But only if your software infrastructure is able [00:07:00] to adapt the rate of change, then you have a real chance to stay ahead of the game. And that is what if you now think about the traditional bank, one of the biggest headaches that the CIO of the bank has, because by and large, the core functionality of the bank and there are parts of bank sells basically virtual parts, mortgages, [00:07:30] not tangible, consumer loans, not a tangible product. Michael Engel:                   It is basically a digital product. Now if your core infrastructure that creates those products, that manages those products that sell these kinds of products, is sitting on a whole space infrastructure that's 30 years old, and it's very hard to change and very hard to maintain and basically your IT guys are telling you, "Well once or twice a year we can do a minor update [00:08:00] to that system but won't touch anything because it might break." Then this is not really exactly the agile environment that you are looking for in order to compete in a faster and faster moving market. Michael Engel:                   So and that realization triggered for a lot of front running banks, the question of how do I get to a end to end tool chain that allows me in the same [00:08:30] way like Amazon does it or other tech company do it, how can we utilize really an end to end agile process of deployment? Because today a lot of these agile processes stop right in front of production. So you have people in an agile setup developing new functionality but then the host team says, "Well guys, very nice but two [00:09:00] releases a year. Thank you very much." Michael Engel:                   Now how to get there. And then this is exactly where we have worked with major FIs to have a look, the tool chains and the technology from how you define functionality and how you develop functionality and how you test and how you deploy functionality. Michael Engel:                   How to bring that into the context of your requirements of a FI with regards to stability, [00:09:30] reliability and also adding the context of prebuilt microservices functionality for a financial services organization. And that is basically the underlying driving force here. It is not so much predominantly to get the cost advantages of cloud deployment. It is getting into a much more agile way of creating new services for the bank's customers, [00:10:00] and then on top of that be able to deploy the new much more cost effective environment than before. Scott Anderson:               Hmm. So if I think about the conservatism of most financial institutions, at least historically speaking, certainly the CIOs are looking at this with an open mind. But if we, if we think about the paradigm of legacy processes like a C-Systems, you know, this demand to go agile yet [00:10:30] still have happening to be waterfall at the end delivery point. You know, how does cloud based software, how would we articulate this to the people who actually have to do the heavy lifting in the financial institutions? Is this, are we automating steps and making their life easier that have been manual in the past? How would you describe that to them? Michael Engel:                   Well yeah, for a certain time you're actually doing things in parallel. So what you usually do is a step by step approach. You take a certain set of functionality [00:11:00] and you would move that off your existing, cost heavy infrastructure and put that into a much more lightweight or a cost effective production environment. And by the savings you are getting out of that you have so to speak freed up budget for new innovation investments. Michael Engel:                   So, and when I say that it is, it is a process that takes some time and yes, you are at risk in a risk [00:11:30] environment where you need to keep running the bank within the existing infrastructure that you have inherited, while you're building up a new infrastructure that allows you to create in the CICD, the paradigm code and the creation of the code, the deployment of the code, the containerization of the code and then the hardware permission and software orchestration [00:12:00] is at the end of the day fully automated. Michael Engel:                   So a lot of the tasks that have been very manual and therefore costly and therefore a lot of dependencies including all the test and integration work is not really end to end automated. So whenever today developers in our organization create some new code, every night that runs through automated processes, will automatically be packaged into containers, will automatically be provisioned [00:12:30] to the, to the respective part. We're using for instance tangible scripts for the software orchestration. We use open source technologies such as the need is, and then we deploy that really in an open source environment. And then a lot of this functionality that does work for you, in the past was highly proprietary, highly costly. And then in the meantime it is in its majority based on open source and that open source [00:13:00] because it's now used by millions and millions of people has reached a robustness level, a maturity level and gives you cost performance ratio that is really unseen before. Michael Engel:                   And that makes it so exciting. So it has moved from, again, out of that nerdy corner into really mainstream availability and robustness. And this automation [00:13:30] then allows us to step by step, move more chunks on the existing whole space infrastructure over to this type of environment. And you get with every step that you take more and more cost advantages and gain more and more speed. And that is what FI's are now looking into. So what are some of the less mission critical things that I can get some early wins on? Can test the waters, I can get some experience with this [00:14:00] technology. And as it shows improvement in cost advantages, I can basically migrate more and more steps, chunks from my dynamic key infrastructure over to that cloud base environment. Again, the cloud at the end of the day is just the representation of the operational infrastructure. Behind there is much more of the, the adoption of open source technology, [00:14:30] the adoption of that CICD thought process and the adoption of tools and technologies. Michael Engel:                   Just to give you an example, what I mean with that. So if we are addressing topics such as the infrastructure for managing payments within the bank where more of the core parts of the bank to  the retail bank today. Then we usually do that in a very high available, high available fault tolerant [00:15:00] environment. And in order to do that, you usually have effective deployments of those solutions. And as of today, if you want to run really even active/active mode, you need to synchronize data to keep those two sides that run active/active in synchronization. Now there is proprietary, very good software available to do that. But it's also very costly. And as of today we [00:15:30] are able to do this really at a fraction of the cost with open source tools and technology. So we're using, for instance, for the data replication between sides an open source technology called Kafka, which is performing extremely well. Michael Engel:                   Even in the largest installations with the largest data loads that we are working on, even those top tier FI's. So just a little example of in the past, [00:16:00] very specialized proprietary software, very costly, today can be easily replaced by open source technology. However you still need to have the knowledge on how to utilize that technology in order to ensure data integrity and then synchronize data across sites. But again, just a little example of step-by-step replacing traditional very high costly software infrastructure by open source [00:16:30] technology in the cloud. We have done this now with a bunch of FI's globally, successfully and the results are amazing. Scott Anderson:               So if I have my chief operating hat on or chief information officer hat on, you're convincing me of the benefits, but I'm a little reluctant to buy into how easy this conversion would be. Can you talk about what typical conversion processes look like to go from my traditional heavy data center operation to a cloud based operation? Michael Engel:                   [00:17:00] Don't get me wrong. I'm not saying it's easy, I'm saying it's doable. But it takes knowledge, it takes investment and it takes some time in order to do that and the majority of the focus should be really in understanding, managing and operating that true change.  And then that is much stronger as it is doable, but you need to have a set of good people that can help you [00:17:30] with that. And you need to have also a strategy on how to do it in the step by step migration because again, at the end of the day you still need to run a bank. However, the results and the benefits you are getting out of that are so immense, that tt is really worthwhile your. But the caution that I'm taking here is, it's not like snapping a finger and you're there. It is new technology, [00:18:00] it's mature technology, but it is also still a complex thing. If you have some help and you do have some guidance it is really manageable, and again the results are extremely beneficial. Scott Anderson:               So when you keyed on how this can be considered somewhat newer technology and I guess the risk adversity of, of some financial institutions, they have more of a wait and see mentality or I'll, I'll follow the leader, see how they do [00:18:30] you know, what is your view on how cloud based products have become better or more reliable over time? Michael Engel:                   Well again the, the reliability comes through the mass usage because every system is only as good as it is fault tolerant, and how many hours went into usage and finding of bugs and eliminating bugs. And that is to a large extent [00:19:00] the advantage here of the open source technology community and also the cloud based technology. Because of the wide usage, all the cloud technology in production today and also the open source technology and tools around that, due to the fact that over the years now millions and millions have used it, it has reached the maturity level that before only [00:19:30] very expensive, proprietary technology could give you. Michael Engel:                   So you get so to speak, the maturity level and the robustness by the multiplication of usage across the globe and you inherit those benefits out of all the endless hours that went in there. But the same goes for topics such as security because we see that in a lot of cyber-attacks today, that guy sits in the inside, so our systems are hacked with inside know-how and there is only so much security that you can prevent from the inside and in a regular bank, you usually have a team that handles this. This [00:20:30] is a number of 10 people, 20 people, and maybe 100 people. If you look at what organizations such as Amazon are doing, they have 10 times the amount of specialists, engineers and technology in place because of sensitivity in order to protect this type of cyber- attacks. Michael Engel:                   And again in that sense there are sitting men on the outside side versus we usually [00:21:00] have half what we saw over the last years mainly happening. People who are inside the axis attacking problems with those kinds of systems. Scott Anderson:               So just touching on, you did hit the elephant in the room. Security certainly is of major interest I think to most FIs and looking at you know, all the publicity around data breaches and what have you. Just a little bit deeper on that Michael. So [00:21:30] if a bank is looking at this, what are the considerations for public cloud versus private cloud versus maybe a hybrid approach? Are there differences they should be thinking about? Michael Engel:                   At the end of the day, it will always be an individual decision. And it has also to do with regional legislation and certification processes, things like that. So, you have certain countries where it is very clear about the legislator that certain data needs to stay in the country [00:22:00] for various reasons. So there are constraints that will decide whether you go public or private cloud and there are pros and cons on both of that. So I'm not saying that one or the other is the better choice. But again the decision to go public or private cloud again is only looking at the end state of deployment. Michael Engel:                   If we consider what I said before, the cloud [00:22:30] is just a final representation of a fundamental shift on how you develop software, how you use tools, how you use an end to end agile approach to create software that will lead your organization into an agile state of mind that lets you stay ahead with your competition. Then the final decision, [00:23:00] whether you want that on your own data center or that sits on to somewhere else. It's actually a minor, is a minor decision and again, the needs we look at on an individual basis, what the cost advantages versus the certification slash legislation complications are on a case by case basis. [00:23:30] We have brilliant examples for those, we have very large FIs that who operate today, operate only in the public cloud. Michael Engel:                   We have other customers that run on private cloud or in regional cloud type of environment. Either way is fine. The main benefits comes more from the adoption of a fundamental paradigm change, paradigm shift. Scott Anderson:               So with that I [00:24:00] think let's, let's come back to cost reduction. I know we've talked a lot about the other benefits around this, but if we look at the cost of this, what kind of cost reduction volume are we talking about here roughly? Is there an ROI that can be realized in a relatively quick manner? Thinking about this for a, I'll call it a large regional or a national bank, what does that look like? Michael Engel:                   Well, what can you see it, and again, every case has, we looked at individually, but you can take certain data in terms of [00:24:30] how much transaction volume do you have, how much processing capacity do you need? And you can look at your, your legacy environment and there are formulas on how to project that into a cloud environment. But, a rule of thumb, we have seen across the globe a cost reduction for the operational environment, so the platform in terms of MIPS and database [00:25:00] and just space and everything else around always North of 90% cost reduction towards a traditional mainframe based operational environment. Scott Anderson:               So quite doable. Something that absolutely needs to be on the radar for people to look at this. Michael Engel:                   Oh yeah. We had an FI that went recently, even from a host space environment to a already lightweight [00:25:30] cost effective Linux server environment for their production. However, and this is a very large FI running tens of thousands of branches and ATMs and whatsoever. They're current lightweight operational infrastructure right now runs on annual $10 million bill. If we would have put that into a public cloud infrastructure, and we haven't even [00:26:00] calculated the sort of speed that having adoption of utilization into that, but that would go down from roughly 10 million to below 400K just to do ... Scott Anderson:               Per year? Michael Engel:                   Per year. Scott Anderson:               Wow. Michael Engel:                   Just in order of magnitude. From the operational end. Scott Anderson:               So you've touched on seeing examples globally. I'm curious where are you seeing the biggest and fastest move to cloud based banking? Is it a phenomena in certain countries? What's driving that and what can others expect [00:26:30] and when's it going to hit them? Michael Engel:                   What you see is this is a global phenomenon, and you have the technology savvy banks or the first movers already deep inside that process of adoption. They have been so to speak playing around with this since years already. So they have got their feet wet on the whole agile development, the all open source technology [00:27:00] topic, the whole open banking API idea. And now the deployment into the cloud is, so to speak with the final step of putting everything on a new, much more agile, creation of design creation, deployment and operating infrastructure. And yeah, we are talking to banks about that in Australia and Asia, and Europe [00:27:30] and the Americas so it is basically everywhere. And you have much more of the traditional early adopters, fast followers, slow movers type of scenarios in each country. But there is not a particular and geo that is faster than the other. Michael Engel:                   You do see, however, in some countries extreme fast moves because they're coming so to speak from behind. They're catching up and they're [00:28:00] just jumping over a couple of iteration steps in, in technology and go directly to such a quote and quote cloud based type of strategy. Scott Anderson:               Interesting. Michael Engel:                   And by the way, when we say cloud, I always mean a, what some people refer to a cloud native strategy, so it's much more than take your existing application and just apply it somewhere at the central data [00:28:30] center, it is really that end to end idea of how to create, in an agile manner, code that is really designed to be and take advantage of the capabilities of an agile, also agile environment, of a cloud operation infrastructure. Scott Anderson:               Oh that's a good point. I think so it's not just virtualization of a piece of software, it's the whole end to end process around it. Michael Engel:                   Right. I mean in a lot of cases [00:29:00] the just virtualization of an existing application is a good step to get familiar with the subject matter and get some experience but it doesn't change the dynamics and again, the key change that we see here in the dynamics is how do I transform my organization to be much more nimble and agile in responding to market changes [00:29:30] and customer demands. And again, if my production environment that is in its core as it says, 30 years old and I still need to send a program out to a programmer to accept my demands, I am in a tough spot. Michael Engel:                   And that is the dilemma that a lot of banks are in, because they also know that just changing the core banking system [00:30:00] is a very difficult task and cost most of the CIOs their career. How do we get there, how do we get there? And that is where we see to really create a step by step approach that we build up in parallel to the existing infrastructure and by reallocating existing processing capabilities and capacities to cloud, daily cost advantages that allows you to finance and [00:30:30] process over time. Scott Anderson:               Michael, I really appreciate the inputs here. I think it's provided some clarity and hopefully given some food for thought to folks who have heard about this, but not really thought much around how it would impact them and how they could implement. I think at this point, this is a great place to wrap up the conversation. We could talk for hours on this, but thank you again Michael for joining us and thank you to all of our listeners for joining us today. To learn more about topics like these, [00:31:00] log on to Diebold Nixdorf.com or click on the link in the podcast show notes below. Until next time, keep checking back on iTunes or however you listen to our podcasts for new topics on COMMERCE NOW.  

Summary: On today's podcast, we welcome Joe Skorupa, editorial director and feature blogger for RIS News and Ensemble IQ Media Portfolio. Recently RIS News released a targeted research study and article on streamlining the store to simplify shopping. Today, we  discuss this research and some of the main challenges retailers are dealing with in their shopping journey's. Resources: Infographic RIS News Targeted Research: Streamlining the Store to Simplify Shopping Blog: Retail Self-Service: Today, its WAY More than Self-Checkout Relevant Retail: The new Norm Scan, Bag and Go - Self-Scanning Technology Empowers Consumers to Shop with Ease COMMERCE NOW Site Transcription: Jerry Langfitt:                    Hello, I'm Jerry Langfitt and I'm your host for this episode of COMMERCE NOW. On today's podcast, we'll welcome Joe Skorupa, editorial director and featured blogger for RIS News and Ensemble IQ Media Portfolio. Joe is frequently named as one of the top influencers in retail and technology and is also frequent speaker at conferences such as NRF, Big Show, amongst others. Welcome to COMMERCE NOW, Joe. Joe  Skorupa:                     Hey there, Jerry. Glad to be here and I'm looking forward to our discussion. Jerry Langfitt:                    I am too. Joe, you recently did a [00:00:30] study and article on streamlining the store to simplify shopping. We're excited to listen about this research, but let's start at a higher level and talk about the trends affecting the industry right now. What are the main challenges retailers are dealing with? Joe  Skorupa:                     Yeah, Jerry, the study touched upon the fact that shopping is really a journey for consumers and honestly any friction they feel, anything that doesn't smooth things along and speed things up and make things more convenient for them [00:01:00] is not going to provide high customer satisfaction levels, and we know that retailers are searching for that. So from a macro level, this study, I believe, resonated with two big challenges that retailers are facing today. And the first is fast moving consumers and rapid fire changes in shopping behavior. And by that what I mean is that shoppers move onto the next viral trend or the next influencer or tech innovation before retailers can catch up. And essentially the pace of change is accelerating. [00:01:30] And this has significant consequences, especially for slow moving retailers who are dealing with falling foot traffic in stores, empty malls, and of course they're dealing with Amazon and Walmart growing ever larger. Joe  Skorupa:                     I mean these are giants to begin with and they're not catching up to the giants. In fact, the giants are growing bigger. And I have nothing against Amazon or Walmart. I think they are outstanding retailers and exemplaries of what to do and how to change. But it is effecting [00:02:00] all the rest of the retail industry. Joe  Skorupa:                     Now the second big challenge for retailers, I believe, is that they must recognize that they have to continually make investments in their businesses to keep up with consumers. Just because you have a brand and it's working, and it worked for a long time. The challenge is that you have to continually reinvest in your business. And if a retailer can't implement new innovations and new technologies and do them profitably [00:02:30] ... See that's the key. It's not investing, it's investing efficiently and profitably. And if retailers can't do it efficiently and profitably, then they're just increasing their debt, increasing their risk and squandering precious resources. Joe  Skorupa:                     So to sum up, my two main points are, it's a fast moving, accelerating consumer marketplace. And secondly, the challenge is finding the right way to do investment to reimagine your business. Jerry Langfitt:                    It's interesting that you that, because this kind of [00:03:00] leads right into one of the first questions I had where one of your first figures, key findings in the study is that retailers are split on the topic of self-service technologies. The ratings of the question gave everybody a five out of 10 then it would almost make you think that self-service technologies is not very important, but underneath the data, that kind of, it kind of told a different story, didn't it? Joe  Skorupa:                     Yeah, it did. And Jerry, I do data analysis all of the time. And I also [00:03:30] believe that the RIS news readership represents the entire retail industry. So when I pull data points together, I look at it as a retail industry. And you're right, the average score came out kind of a middle of the road score on the level of importance. But then I looked into it and there are patterns that you can find when you dive into the data and filter it. And when I filtered this data point by [00:04:00] revenue size, I've found that there were two large camps, two blocks of retailers. And retailers with less than a billion dollars in revenue were more likely to rate self-service in stores lower than tier one retailers, the bigger retailers. And so the question then becomes why. And because every net new technology requires net new investment, well that represents a challenge in itself, especially to slower moving and conservative retailers who [00:04:30] are established in their ways. Joe  Skorupa:                     Now, larger retailers have to support the vast size of their enterprise in a different way. They need constant reinvestment and innovation and and just moving forward. Because if they lose their momentum and lose their relevancy with a large part of the population, which is their shopper base, they're going to fade in the shopper's mind and the shoppers will move elsewhere. So large retailers have to stay relevant on a broad national [00:05:00] level. So they're constantly testing, developing and researching new technologies. Joe  Skorupa:                     And during this process they have learned about the value that self service technology offers to shoppers and to their stores financial performance. Now are those same things at the large retailers learned also true for smaller retailers? Yes, there are, there is value to self service technology and it does provide shoppers with a streamlined experience and it does help the store's financial performance. But the smaller retailers are not doing [00:05:30] all the due diligence that the larger retailers are doing. Jerry Langfitt:                    That's really interesting. It would almost seem to think that the larger retailers would also drag the industry in a certain direction and- Joe  Skorupa:                     Absolutely true. Jerry Langfitt:                    Almost force, or at least make it hard not to change, to go in that same direction. I mean we see that right now with with McDonald's, installing kiosks across their entire footprint. It's kind of a watershed moment where then other retailers, QSRs mainly would have to say, okay, if I want [00:06:00] to compete I have to do, not just a me too, but I have to do something. I can no longer sit on the fence or it's gonna affect my revenue stream. Joe  Skorupa:                     Absolutely. Yes. So talk about having it your way and maybe that's the theme of a different QSR, but nevertheless it fits our discussion here. Having the ability to do self service is the ultimate have it your way experience. Jerry Langfitt:                    Now, so look forward. Let's split this into two groups then. The two groups you pretty much indicated. What are the benefits [00:06:30] they are getting from more self service? Joe  Skorupa:                     Well our study found that the primary benefits delivered to shoppers. And we asked about benefits to shoppers and benefits to retailers and they are different questions and they got different answers. So the primary benefits, I'll start with shoppers. There are three primary benefits and they are checkout, payment and price checking. Joe  Skorupa:                     Now each of these things makes a shopper experience quicker and easier and [00:07:00] also it has to be said that shoppers feel like they are in control of the experience and all of these things are very positive for the shopper in any sort of consumer experience in a store. Joe  Skorupa:                     Now the benefits are different for a retailer but possibly even more important. For a retailer, there is an improved level of customer service. Let's face it, this is something that a customer might need, might want, [00:07:30] and there it is. They're able to use it. That is customer service and also when that happens, customer satisfaction metrics are going to be increased for this store. All of these certainly stimulate return visits and that is a key to success for retailers. Joe  Skorupa:                     And speaking of metrics, by the way, I mentioned customer satisfaction metrics. Another big benefit that retailers get is the ability to gather in store customer data through these touch points. Now self service devices are interactive [00:08:00] touch points. The consumer is actually giving the retailer information by the behaviors that are occurring on the self service device. Now this behavior can be examined and tell a retailer about something about how the store operates, about how the shopper's responding to promotions. It tells retailers, you know, what the impact of technologies are in the stores and potentially all of this information can be delivered to headquarters [00:08:30] in a real time or near real time. Joe  Skorupa:                     And you know that's just the beginning. Many other data points can be gathered and just leave it to your imagination. You can add them to the self service process or not. But the choice is up to you. Really, it's an infinite horizon for retailers. Jerry Langfitt:                    Now, I kind of see it as a couple different ways of why they're getting a benefit too and moving in this direction. One, technology advancement. To name the McDonald's story, again, everyone has iPads. Even my mother has an iPad, so it's a [00:09:00] much more approachable device at this point. And then cost points have come down that I can take it across 14,000 locations and it's no longer cost prohibitive. Jerry Langfitt:                    And then the second is people are more used to this kind of technology as well. So cost of technology is coming down and everyone is a bit more adaptive to it. And a lot of people talk about the Amazon effect, and I don't want to talk about Amazon Go, but it's more about going on Amazon or going online and being able to [00:09:30] do what I want and do what I need when I want it. And it seems like self-service and ... a colleague of mine said the psychology of self service is, it just empowers you. Jerry Langfitt:                    And if I'm standing in line and I can just do it myself, it's better than standing in a line. So that again I think ties back to the customer satisfaction as well. It's like if you're giving me a path to take care of myself, I'm going to be more apt to come because I want control of my life more than I normally have [00:10:00] it. Are those two points something you could agree with and think the data kind of points in that direction? Joe  Skorupa:                     You know, empowering the consumer is definitely a sure way to increasing their return visits. And that is clearly what is happening with this technology. And the other point you made is that the general population is tech savvy at this point. And I think that's absolutely true. I mean, I think we probably won't even have this discussion much anymore. [00:10:30] And honestly, if a retailer even brings up that point in a board meeting or in any interdepartmental meeting and saying, well, you know, my customers, they won't, they don't even know how to use technology. Well, I think pretty soon that retailer is going to get laughed out of the room because we've just crossed that line. We are tech savvy. Tech is embedded into everything part of our lives, homes, and work. So I don't think that's going to be a much of an issue. Jerry Langfitt:                    Well, [00:11:00] and I always use my mother as a great example because when she can text me a cat video or send me an Amazon gift card electronically, I'm like, oh, we're definitely in a new age. Joe  Skorupa:                     Absolutely. My mother's playing games all day long on the computer. So it's just amazing. Of course she's retired so she can do that. Jerry Langfitt:                    All of our goals. So we talked about those moving ahead. Let's talk about those dragging their feet or just aren't ready for it yet. What do you think some of the challenges they're looking at to move forward with technology that can help? Joe  Skorupa:                     [00:11:30] Well yeah, you know the study shows that there are foot draggers out there or feet draggers, as the word may be. Almost 50% of the retailers in our study show that they have change management issues. Joe  Skorupa:                     And what does change management resistance mean? Well I think that in many cases it starts at the top. I think that there are C level executives that are not [00:12:00] green lighting some of these capital investments projects. But I don't think it's just that. I think that the other points in the study data show that some of the resistance is found in the stores. Joe  Skorupa:                     And two of the points that store operators bring up where we find this resistance are due to operational requirements such as re-engineering store formats to accommodate the self-service technology and re-engineering associate processes as well. But I don't ... Even [00:12:30] though this is a large group of retailers, you know, a little less than than half in our study, I just think this is an old story in retail. Joe  Skorupa:                     In other words, this resistance to something that is, you know, net new and how they've always had their stores. And this resistance shows up so frequently that that's the reason that many of us in the industry, many who are looking ahead at where retail is heading, we follow the trends and the leaders. They're usually a couple of years ahead [00:13:00] of the rest of the industry and the rest of the industry follows. Joe  Skorupa:                     And as you pointed out, there are leaders in retail right now that are deploying self-service technologies. That is increasing. And the numbers that we show here, where the resistance is strong, is certainly going to be that resistance is going to be a broken and the barrier will come down. And this will happen in the next year or two and we'll see a different number then. Jerry Langfitt:                    I wonder what they need to convince leaders. I wonder if their back [00:13:30] office systems can support it. Are we dealing with antiquated technologies and system processes? You know the old way of retailing. Because we're seeing at Diebold Nixdorf, we're seeing self-service going into areas that we never would have dreamed of five, 10 years ago. I think people still have an idea of self service, self checkout is the grocery store and that's it. And we're seeing it in fashion. We're seeing it in convenience stores and we're seeing, even in groceries, many different ways self-Service [00:14:00] comes out. Curbside pickup, order online, order on my phone, delivery, scan and go. Walk through the store and scan myself. It feels like the industry is still now much more flexible in saying, okay, I'm going to separate my consumer base out and take care of each journey and find out what technology can serve them better rather than one self checkout is a one size fits all. Joe  Skorupa:                     You know I have a, a story that I can quickly go over. I've been covering technology [00:14:30] a long time. And one of the areas that I was covering for awhile, a while ago, you mentioned quick service restaurants, and there was a time when, it's hard to believe, but zero quick service restaurants ... I'm talking about the McDonald's and Burger kings and Taco bells of the world could take credit cards. I mean it's hard to believe, but this is only like 17, 18 years ago. None of them [00:15:00] anything but cash. And to be honest with you, there was tremendous resistance for being able to take credit cards for two big reasons. One, it required technology in the store, not that much, but nevertheless. And then the other thing was that it costs them money. It wasn't cash. There's a cost to it, to accepting credit cards. Joe  Skorupa:                     And that industry went from zero to 100% in just a few years. So that's what happens with resistance. You know, Jerry, [00:15:30] it's there, it's there, it's there. And then suddenly it's gone. And I think that's what we'll probably see. Jerry Langfitt:                    Oh, fantastic. So one of the questions I've had and that I get from a lot of people is, well self-service is taking jobs away and all this is is one large labor play, for large industries. Now I will say there is a labor savings with self-service. I can now do more, but that's the difference. I can now do more with the same people. It's not something that I'm going to suddenly slash everything in half and I'm [00:16:00] going to go to the cashier-less, attendant-less store. Because I think as we march towards more self service, more personal service becomes even more critical. That you don't want to just go into a store and not have a chance to talk to anyone or feel that you're all alone. At least a theory of mine is always self service allows retailers to redistribute their employees and I've always felt that more employee customer interaction [00:16:30] creates better customer satisfaction. Is that something over the years you've seen that if we can increase the human interaction with self service that we'll get better footfall and more repeat visits? Joe  Skorupa:                     Yeah, absolutely. Honestly, I've always saw the ability for retailers to deliver better service through self-service work. In a practical way. When I often go to a Home Depot, not to single that out, it could be Lowe's or anyone else, and there is a person, [00:17:00] a employee that's at the point where there are the self service technologies. And that person becomes a service person, particularly with home improvement goods. Joe  Skorupa:                     I mean there is a lot of little things and a lot of SKUs that aren't easy and tricky for people to manage through the self service. So that's one level of service. But the other level of service is, the person is just there. I can't tell you how many times I've done it or I've seen other people do it. Just simply go up to the [00:17:30] person and ask them a question because they're there and they get ... Solving a customer's problems is usually not something retailers think a lot about. And I wish they would, but I don't hear people talking about it. Just think about that when a shopper needs a problem solved in the moment that they're there to shop and buy something, that is a critical piece of information they're seeking. And if you can't provide it and solve their problem, then you're certainly going [00:18:00] to be missing sales. So I think that they can be problem solvers and provide better service. Joe  Skorupa:                     Now let me get toss in something else on this topic. It's a tight labor market right now. I think where the national level, you know well below 3% unemployment and I think it's closer to two and a half percent. And retailers simply can't hire the way they used to and there's a lot of turnover and they don't want to deliver a shopping experience [00:18:30] that has less customer service and is less efficient. And they're looking to do that. And they can do that with self-service technology. Joe  Skorupa:                     And the final point I want to make is the loss of business. And you know, a retail day as you go through it, has peaks and valleys. And during the valleys, everything works smoothly, there's enough staff, there's enough service. But during the peaks you just have no idea what you're losing. I mean you [00:19:00] might say to yourself, you know, I hit my target that day, but during the peak you might have had 10, 15, 20% people walk out without buying because they couldn't get through. They could, they couldn't meet their timeframe. Their quick timeframe for how they have to buy. Joe  Skorupa:                     So this gives you the ability, self-service technologies, gives you the ability to accommodate those peak timeframes and get business that you're actually losing. And you have no idea how much that is until you put it in. Jerry Langfitt:                    That's an interesting point. I mean, you [00:19:30] unpack a lot here with what you've said and I've noticed that in the convenience stores and in the grocery stores, everything gets hyper busy too fast for a store to react. Jerry Langfitt:                    Because all of us has been in this situation. You either walk into a gas station and I need a quick soda and I need a quick snack. And suddenly six other people had that same idea and the store has a single tenant working and they just can't react quick enough. Joe  Skorupa:                     Yes. Jerry Langfitt:                    For my own tastes and I think for a lot of people because then all of a sudden the five of us [00:20:00] finally check out and it's done. It's gone. Whereas self-service allows, an always on checkout experience to where it's like okay that can kind of take care of that. Joe  Skorupa:                     Yep. Jerry Langfitt:                    And that's your peak and valley. That peaks happens so rapid and customer satisfaction can drop like a stone if I'm sitting in a line. I've watched my wife do this, I've watched her do abandonment's as well where it's just like we go up to the line and she just, "Never mind. None of this stuff in my car is worth that line." To experience that, it's funny to see that. Jerry Langfitt:                    Now the other thing I was kind of curious what [00:20:30] you had said is with staff in the store, employees in the store. I come from a point of purchase background. I design a lot of point of purchase displays and we always used moment of truth as very, very important. The decision time when you make your purchase decision, it's not at the checkout, it's already passed at the checkout. Jerry Langfitt:                    So I can check myself out and I just want a good clean experience. But the staff can actually influence those moment [00:21:00] of truths and they cannot influence at the checkout. So I just feel like a self service can enable more customer staff interaction and that's going to give you a much greater hit rate, conversion rate at those moments of truths. Joe  Skorupa:                     Right. I've seen that many times. Jerry Langfitt:                    I won't look for somebody if I have a question, but if you're there, the convenience is okay, since you're there, I'll ask you. Jerry Langfitt:                    So let's talk for a second. Lets go future state. We're talking self-service. There's a lot [00:21:30] more things that everyone's trying to come up with to make it even smoother, frictionless. If we want to use that word. Where do you think they're going to find the biggest improvement in the self checkout experience? Is it with the Amazon Go video analytics? Is it with video analytics just on a self checkout that helps you decide on your purchase what you purchased with cameras? Is it facial recognition? I mean what is your experience been in a direction of the trends? Joe  Skorupa:                     [00:22:00] Well all of those are in play, but if I were to pick one that is the most practical and certainly the shortest horizon line, and I do have some study evidence showing this, is that a checkout on the customer's own device is something that is not really that far away. I mean, I think that my internal data shows that retailers have placed that on a two year horizon line that that is actually relatively [00:22:30] short for a net new technology. And so I'm guessing that we're going to see checkout on a customers own device very shortly. Joe  Skorupa:                     I don't think we're going to see the Amazon Go experience outside of Amazon and a few others. And that's, as you indicated, that has to do with several technologies. One of the main ones is video and image recognition. There are others associated [00:23:00] with it. It's really a cluster of technologies honestly including product recognition, but you can't really ... you have product recognition with that facial recognition as well and those technologies are actually templated and available. So that's part of it. Joe  Skorupa:                     So I think facial recognition checkout is actually possible. I just don't think that customers are going to be comfortable with it. But I do think yeah that checkout on their own mobile device, you know if you [00:23:30] go into a Whole Foods and you want to use the Amazon checkout capability, I think that's going to be something that we're going to see a lot of. And then of course retailers are going to have checkout on their own mobile devices and that's going to be a big one as well. Jerry Langfitt:                    Do you think taking the self checkout lane that we would consider traditional and enhancing it with ... I know Ikea's testing this, where I just slide my stuff [00:24:00] across ... and kind of taking what a more controlled Amazon Go look ... and it's just like I'm just going to set my stuff on this basket and it's going to then scan everything for me, either with image recognition or RFID. Two things that seem to have been in the industry for a couple years now, but you think that will reach a tipping point sort of like iPads and McDonald's. Do you think that would be a stepping stone to making self-checkout more efficient? Joe  Skorupa:                     You know, I have to smile when I hear about that image [00:24:30] recognition. I went to an IBM, who was no longer really in this space, a lab, back in more than 15 years ago when they had image recognition checkout. But of course it wasn't ready for prime time, but it's certainly a technology that is really on the cusp today. Joe  Skorupa:                     So yes, I do see image recognition in many ways being a major component of the retail shopping experience and checkout [00:25:00] is definitely one of them. I also think that that there's a lot of benefit to image recognition there a way for shoppers to actually have a better shopping experience with doing their research, doing their comparisons, in a way that is kind of better than barcodes in some way areas. Particularly in fashion, there's a way for image recognition to really to improve the shopping experience by getting recommendations [00:25:30] based on color, based on the style, and things like that. Right in the store that could come either on a customer's device or on a self service device. And so image recognition is going to open up a big area for retailers to get interactivity with their shoppers and shoppers feel like they're getting a better shopping experience. Jerry Langfitt:                    So, only a couple more questions. I was curious, I was looking at your report and again looking at the laggards and the people ahead and everyone [00:26:00] seems to be installing something. I wonder if the retailers are using all of the data they have at their own hands. You had said the data collection and analytics is very important and this enables that. I wonder if they're truly looking at their transaction data and saying, okay, what should I do next? How do I follow my consumer? Jerry Langfitt:                    Do you feel like the analytics realm is ripe for retailers to be leveraging more of that? This is data they've always had. It just doesn't seem like they are leveraging it to make their store as efficient [00:26:30] as possible. Especially with the changing in the 70s ... 60s and 70s and 80s was all about cookie cutter pattern and making sure I can go across the country with the exact same store. Jerry Langfitt:                    It feels like that I need to follow the consumer within regionalities as well, both from a card and cash usage and the types of journeys. Do you think that's something that we'll start exploring more and more to try and make better decisions and less risky technology decisions? Joe  Skorupa:                     Well, I think [00:27:00] data is an asset and I think that it's an asset that in some instances, and I can point out a couple of segments in retail where it is underused and under utilized. And I think the the reason for that ... Now I'll name one segment. I just did a in depth analysis of of grocers and the grocery industry and investing in analytics is one of the things that they are behind the curve with other retail segments [00:27:30] and retail industry in general. Joe  Skorupa:                     If you looked at, as I frequently do, just the average of all the respondents without filtering out what segment they're in, grocers are definitely behind in investment in analytics. Now why is that? It's there, it's data they already have. But when you think about the self service capabilities of self service technologies and touch points in the stores, there's more data that they already have. Joe  Skorupa:                     So why would it be that they're not optimizing that and maximizing [00:28:00] the use of it? And I think it's just that they're racing, grosses in particular, are racing ahead at full speed. They have so many competitive challenges to deal with. And they have a consumer that is basically shopping them because of a necessity, but then the consumer has the ultimate wide choice. So I think they're keeping up with the consumer but they're not looking ahead using the data. And I think that's the big, critical issue that they're missing. And certainly, [00:28:30] when they take advantage of that data through the self service touchpoints and through other areas that they have data coming in, I think that you're going to find that their 1% margins and their growth rate, which is well below the rest of the industry, will actually increase. Jerry Langfitt:                    How interesting. So just to kind of wrap up a little bit, I was reading your article and you close with the most successful retailers design their stores to strike a balance between full service function and self service options. If you had [00:29:00] to sum up your research in a couple of sentences, how do you think you would say what you most learned with this study? Joe  Skorupa:                     Well, let me sum up by giving a couple of key recommendations that I believe emerge from this study. And one is that a recommendation to deploy self-service kiosks now, to think about it now. And this is for those retailers who don't actually have them. More for retailers who have them and are considering adding them to their store camp. And the reason [00:29:30] I am recommending it is because 48% of retailers in our study are actually in a preliminary phase of deployment now. So this shows that in next year or two a huge number of retailers is going to come online and making this a race toward mainstream adoption for self service technologies in the stores. And I call this a recommendation because if you are behind that curve, and this curve is coming, this is something that I'm recommending you [00:30:00] think about and actually consider adding it to your one year plan or two year plan or two years to do list. Joe  Skorupa:                     And I also am recommending that you focus on checkout and that sounds pretty obvious, but if you're going to be building a business case, focus on checkout. And as I pointed out, not only does that help the shopper, but it helps the retailer gain potentially lost business. As I mentioned, the thing that a self service technology will do in [00:30:30] your store is to make sure you are fully manned at every throughout the day. In other words, the peaks and valleys that service is there when your peak hits and when you're stressed. Every one of your staff and associates operating at full speed and perhaps not operating as efficiently as they can. Well this helps make sure that any overflow is not lost and that your shoppers aren't walking out [00:31:00] of this store unhappy. And as you indicated, Jerry, that sort of this increases your conversion. Joe  Skorupa:                     And then the final recommendation I would say is build your business case on improving customer service and satisfaction. This is going to help your loyalty. This is going to help your return visits. And what we find is that 76% of retailers feel that customer service and customer satisfaction are the primary benefits of self service. [00:31:30] And if that is the case, then I recommend that you use self-service to increase those. And also, as we just talked about a minute ago, gathering that customer data which you can use to help improve your store operations and increase again, customer service satisfaction. Joe  Skorupa:                     So those are kind of recommendations I would end with. And then one final comment, Jerry, is that as you indicated, I believe the most successful retailers designed their stores to strike a balance [00:32:00] between full service functions and self service options. Self service is not going away. It is only going to increase. So retailers have to decide, what's the balance they're going to choose. And while the line will differ for each retail segment and customer base, I believe there is no doubt that balance is shifting toward an increase in self service capabilities in today's stores to stay relevant with consumers. Jerry Langfitt:                    I think this is a great place to wrap up. Thanks again Joe. This [00:32:30] has been incredibly enlightening. Some great data points that you've provided and some great insights. To learn more about retail topics like these, log on a dieboldnixdorf.com or click on the link in the podcast show notes. Until next time, keep checking back on iTunes or however you listen to your podcasts for new topics on Commerce Now.  

Summary:  Today, we're going to discuss when it's appropriate for FIs to implement ATM video solutions. As we all know the banking industry continues to transform and FIs have to transform along with it, but this doesn't always mean that the same solution will work for every FI. Video solutions can be tricky and may or may not be the right solution for your customers. Our panel today will discuss how you will know whether or not video is right for your environment. Related Content: Blog: Interactive Video Teller: Another Dimension of Self-Service Blog: The benefits of looped Cash Cycles: A Conversation with Volksbank Albstadt COMMERCE NOW Website Diebold Nixdorf Website   Transcription: Scott Anderson:               Hello, I'm Scott Anderson and I'm your host for this episode of COMMERCE NOW. On today's podcast we welcome Diebold Nixdorf's Chris Gill, Senior Director of Global Advisory Services, Dawn Winston, Senior Product Manager DN Banking Teller Products and, Brendan Thorpe, Senior Global Demand Lead for Banking Software. Scott Anderson:               Today, we're going to discuss when it's appropriate for FIs to implement ATM video solutions. As well, we all know the banking industry continues to transform and FIs have to transform along with it, but [00:00:30] this doesn't always mean that the same solution will work for every FI. Video solutions can be tricky and may or may not be the right solution for your customers. Our panel today will discuss how you will know whether or not video is right for your environment so let's dive in. Scott Anderson:               Dawn, I'd love to start with you to sort of set the stage here. Can you give us a quick overview on the video solutions that Diebold Nixdorf has brought to the table today from a product standpoint? Dawn Winston:                 Yeah, absolutely and Diebold Nixdorf is committed to [00:01:00] offering several different video teller solutions to financial institutions, banks, and credit unions and really we want to be able to offer what makes sense to a financial institution's business model and branch concept model. So if you, as an institution, are more interested in furthering your customer or member experience and making sure that you have that personal touch or the interaction with an employee at your [00:01:30] institution, then you would be more interested in something interactive video teller. Dawn Winston:                 And that interactive video teller, essentially, allows the teller to drive the entire transaction session with the consumer standing at a service device, with the consumer just offering input or approving transactions, and that does allow the teller to have that longer touch time with your customer or your member. So they can do things like [00:02:00] improving that customer's experience or even doing things like upselling to your customer or member. Dawn Winston:                 And then we do offer another solution that really is more about switching your staffing model. So maybe you want to transition some of your teller staff to do other roles like selling or marketing some of your products and you're more concerned about efficiency of your financial institution, so in that scenario they're not spending as much [00:02:30] touch time processing transactions. They really are focused on doing things like cardless authentications or overrides and approvals of checks and the transaction at the consumer's end switches back into a self-service mode freeing up more time for your branch staff or your central office staff to work on other roles within your institution. Scott Anderson:               Great stuff, thanks for sharing that. And given some of the capabilities that our portfolio offers today in the marketplace, Chris, I'd like to [00:03:00] ask you from the perspective of our advisory teams and the customers you're speaking with, what are some of the more common use cases for the deployment of video by banks and credit unions today? Chris Gill:                             There are really three different categories of use cases that we've seen in the market. Chris Gill:                             The biggest one is really around improving branch operational efficiency and in this case the institutions are looking to impact the staffing costs in the branch where they're servicing the drive-up, and they may have certain tellers that [00:03:30] are servicing the drive-up. Whereby replacing the drive-up lanes with ATMs with two-way video, they can impact the staffing levels in the branch and reducing the costs of operating those branches. At the same time, sometimes, there are some branches where the drive-up area is removed from the lobby area, and it creates some inefficiencies in handling branch traffic, so a video solution there can again, help with the operational efficiency [00:04:00] and require less staffing. Chris Gill:                             We do see there are some instances where there are certain types of branches where the use case is more compelling. We've had a couple customers that are looking at in-store supermarket branches where they're eliminating the teller counter and replacing it with ATMs with two-way video. That way they can focus in those branches on opening up new accounts and interacting with people in the store and not doing transactions so that's kind of [00:04:30] one use case in this category. Chris Gill:                             Another one would be where they have branches in smaller markets or remote markets, where the low transaction volume branches, yet they still have to maintain a certain minimum level of staffing to handle transactional activity. And in those cases again, they could really eliminate the teller role but still provide the routine transaction capabilities but with video agents instead of tellers in a branch. So for the most [00:05:00] part improving operational efficiency is really the primary business case. Chris Gill:                             Now, I think the use case around institutions that are looking at expanding their branches into new markets or to fill gaps in their existing markets, but they're looking to do it at a lower cost. So we've had discussions with a number of organizations that the opportunity here is to build a branch where they can still provide routine transactions using video, and they [00:05:30] have a couple people in the branch that are there for customer service and opening up new accounts. So it's perceived as a way of not having to spend as much money on a new branch, but they can still provide that face-to-face service albeit over video. Chris Gill:                             And then the last kind of use case that we've seen is around improving customer convenience and hours of operations. So some institutions have video tellers that are available until [00:06:00] let's say 7:00 PM or even 10:00 PM, that provides a competitive advantage in the market where they can provide teller service at longer hours of service. Or we've seen a couple institutions that are in markets where they are competing against institutions that are seen in stores that are offering longer hours and so their competitive response is offering video to match their competitor's hours of operation advantage. Chris Gill:                             So in North America, I would say those are really the key use cases. Now in, [00:06:30] outside of the US, we've seen, typically in the Middle East, where they're using video primarily from an expanded transaction set point of view. So for example, the Middle East where they can provide greater withdrawal amounts in cash leveraging video rather than enabling at an ATM, so they can provide longer hours for that but provide that capability leveraging an ATM with video. Chris Gill:                             So again, in some markets they're looking at the [00:07:00] ATM with video as an opportunity to provide additional transactions that cannot be done on a standard ATM. Scott Anderson:               Interesting, so lots to think about for financial institutions who are trying to make some decisions around what video might look like as part of the retail banking strategy. What do you think some of the key criteria that institutions need to consider when they're contemplating video as part of their retail banking strategy? Chris Gill:                             So I think there are really three different areas that institutions need to consider when contemplating [00:07:30] video. Chris Gill:                             Number one, is looking at their customers and members, currently serving or in the markets that they're looking at serving. So we've done some research in this area around consumer acceptance of self-service and video and not surprisingly younger consumers tend to be more self-service oriented and so they tend to have a higher level of interest in video than older consumers okay. So looking at your existing customer [00:08:00] member base, or the markets that you're in, it's important to really look at the characteristics of those consumers and are they more open to using alternative methods to doing their transactions than other segments are, so I think that's number one. Chris Gill:                             Secondly, is important to look at what kinds of activities are they doing, are you doing in the branches and again, to some extent, the customer mix. So are you doing fairly routine deposits and withdrawals in your drive-ups [00:08:30] or in the lobby that can be easily moved over to being done over video, or contrast, do you have a lot of business customers coming to the drive-up and they're making large deposits that involve coin, or do you have a lot of check cashing transactions at your branch where customers or members are looking for cashing checks to the penny. If that were the case then that maybe, that would probably, be less attractive as an option for a branch to deploy video. Chris Gill:                             And then [00:09:00] I think the third thing is you need to look at branch specific factors from a location and site point of view. So for example, if you have a branch that's located on a high traffic road where there's a lot of road noise, that may not be a good candidate for video just due to some of the issues around the engagement, and the customer experience over a drive-up ATM, maybe less conducive to an area where there's a lot of noise for example. So I think it's important to look at the characteristics of [00:09:30] your existing branches as well when determining whether it's the appropriate location for video. Scott Anderson:               Great, thanks Chris. Brendan, anything you wanted to add to that? Brendan Thorpe:              Just to pick up on some of the points that Chris was making. One of the key things around video is making sure that users have a great customer experience when they're actually using the video solution. There's a couple of key factors that will play into that. Brendan Thorpe:              One of the key messages Chris was making was really you've got to think about what it is that you're actually going to deliver [00:10:00] using video. Typically, it's not going to be your general transactions. It's going to be transactions where something's either gone wrong or somebody needs assistance with something. So straight away you're pushing it down into some of the lower volume transactions, some of the more difficult things. Brendan Thorpe:              So obviously one of the key things is once you get to that point you're either frustrated because you can't move forward, or you're in a situation where you really do need help. The system needs to be responsive, so the teller needs to be available to come online. [00:10:30] So you've got to look at the type of transactions, what the volume is going to be of those transactions, how you're going to staff it to make sure that consumers aren't standing at an ATM blocking it from other people but aren't getting frustrated because it's not getting responded to quickly. But also making sure that the teller on the other end is capable of actually delivering the transaction that they're looking for. Brendan Thorpe:              If you get that mix wrong, you're going to end up in a situation where people will try video and then will fall away. They won't use it again. So for [00:11:00] video to be successful, it's got to deliver something that you can't do with a card and a pen. Something that's a little bit unusual. It maybe at a stress situation where you've lost your wallet, and you need access to cash services quickly, and it's a great way to do it or it could be, as Chris says, drive-up ATMs where typically you may have had somebody using vacuum tubes and a glass tube but now you've got a machine there. They still get the same kind of experience and it's immediate. Brendan Thorpe:              However, you do it have a clear vision of what it is you're trying to deliver, the transactions [00:11:30] that you're trying to deliver, and understand how you're going to staff it and make sure that customers get a good experience. Brendan Thorpe:              I don't know if you'd add anything to that Chris? Chris Gill:                             I think it's really important to understand typical consumer behavior and the typical consumer that maybe using video. Chris Gill:                             So in today's environment a customer that comes to a branch, their mindset, is they're going to either park their car, walk inside, and do a transaction at a teller or they're going [00:12:00] to drive up to an ATM lane and put their transaction in a tube. So in the latter, the first case, they're expecting to walk inside the branch and so if you've got an ATM in the vestibule that's running video, but you have a teller inside, a consumer is not likely to stop at that ATM and use that for video teller when they can walk inside and use the regular teller. Chris Gill:                             So one of the things that we've seen is if you give customers options, one of which they're already very comfortable with, and the other that they've never experienced, they're always going to default to [00:12:30] the option that they're most comfortable with. And we've seen some institutions that have deployed video in the lobby or the vestibule, but they also have full-service traditional teller services inside and that has resulted in very low transaction volume using video because they're giving customers an alternative or different options, one of which they're very comfortable using already. Scott Anderson:               So Chris, with all of these criteria and the different options that FIs have to consider, what are some of [00:13:00] the key drivers to finding an accept rate of investment on video? Can you share some examples of what might be required to achieve an acceptable ROI? Chris Gill:                             So there are a couple factors there. One is really around the staffing ratio for the number of video agents per video ATM. So typically, we will see 1.5 to 2 video units per video agent. Going with that kind of a ratio you need to have some cost take out on the teller side in order to balance that. So [00:13:30] quickly we have to say for every video agent you need to reduce this 1.5 to 2 teller staff in order to get the appropriate ROI. Chris Gill:                             So the staffing ratio is very very critical into achieving the ROI. Yet, at the same time, critical in that if you don't have the right ratio you could lead to a suboptimal customer experience because the customer will be waiting much longer than desirable for a video agent to become available. Chris Gill:                             The other key factor is really [00:14:00] the scale of deploying video terminals. So what we have found is that given the upfront investments for video, it's important to deploy video at a minimum of six to eight locations, if not more, to really get that full ROI on the solution because if not, then you're looking at a much much higher cost per transaction then you would by deploying it at multiple locations. Scott Anderson:               Got it. Thanks so much for that. What in your opinion, Brendan or [00:14:30] Chris, are some of the characteristics of institutions that have been most successful in deploying video to date? Brendan Thorpe:              So from my perspective the ones who've done video the best have all had a clear understanding of what it was they were trying to achieve from a customer experience perspective. They knew the transactions they were trying to deliver and they were very focused about it. Brendan Thorpe:              I think it's also important that at the end of the day video is a multi-channel activity. It's one of those things that generally covers a whole range [00:15:00] of different channels. You can deliver video on mobile. You can deliver video on a self-service terminal. You can deliver video at kiosks in branch. Brendan Thorpe:              However, you do it, delivering something that is purely just self-service, in isolation, and not integrated into the branch environment, which are the ones that have been really successful have done, is leading yourself down a route where you're going to basically build a lot of costs that's not going to deliver the kind of return that [00:15:30] you're looking for. Brendan Thorpe:              Chris, I don't know what you'd add to that? Chris Gill:                             The most successful deployments are where it's really an integral part of their strategy and achieve certain objectives and they really have defined the use case most effectively and then deployed the right configuration of video. Chris Gill:                             I would say the other characteristics of leading institutions are they really demonstrated a high-level of execution of the video concept. So they thought through [00:16:00] the people that are working that are handling the calls. They well thought through the transaction set and the desired experience. They are measuring the right things in evaluating whether they're getting the return on investment. Chris Gill:                             But I think, as a side note, I think what institutions really need to recognize is that most consumers have never had an interaction over video from a banking point of view. So from our experience, the imperative is on delivering a great experience [00:16:30] the first time they use the technology because if they don't have a good experience, they will not use it a second time. So all too often institutions that have rolled out video haven't executed very well and as a result they're not getting the user take up and user adoption that they're hoping for with respect to video. Brendan Thorpe:              As Chris says, that's one of the key symptoms of poor implementations, and we've seen that in some very very large implementations in the US. [00:17:00] Where it's just been deployed for general transactions without having a clear vision of what they're actually trying to deliver beyond the different experience, and it does deliver a different experience, but you don't get the repeat usage and that's critical to making video successful. Scott Anderson:               So with all of this in mind, and as financial institutions are grappling with do I or don't I consider video as part of my strategy, Chris, what other alternatives do we have versus investing in video [00:17:30] that might achieve similar objectives and what should they consider before going down a video path? Chris Gill:                             Well, so I think there are a couple different options, and I'm sure Brendan can chime in after as well. Chris Gill:                             First, is the objective really is to prove operational efficiency and reduce operating costs at the branches. Then making sure that the institution has appropriately leveraged their existing investments in ATM, online, and mobile functionality that improve customer convenience [00:18:00] and migrate routine transactions to self-service. Chris Gill:                             I would say a majority, a high percentage, of institutions that we work with have not fully taken advantage out of investments in deposit automation on the ATM or mobile deposit or things like person-to-person payments for example. So I think the first step is to really make sure you're getting the most value out of the investments you've already made in self-service and digital channels. Chris Gill:                             I think secondly, [00:18:30] is if you're again, looking at migrating certain activities to a lower cost channel, is looking at the functionality of your existing ATMs for example, and it maybe a better use case to increase the functionality of your existing ATMs, which could therefore move additional transactions to that channel, rather than laying in the additional costs of the video infrastructure. And to that end, we're seeing institutions that are doing core integration, [00:19:00] adding additional functionality to their ATMs, that can achieve that objective. Chris Gill:                             And then last but not least, I would say some institutions are looking at tablet integrating where for certain kind of exception transactions like over the limit withdrawals or enhanced funds availability on a check deposit for example, that could be enabled via tablet integration. Where someone in the branch could get alerted that there's someone [00:19:30] at the ATM and wants to get a thousand dollars in cash. They can approve that transaction without requiring a customer to interact with a video agent. Chris Gill:                             So I think there are a number of alternatives to investing in ATMs, video ATMs, that actually offer a more compelling return on investment than the video route. Scott Anderson:               Brendan, anything to add to that? Brendan Thorpe:              Yeah, just to pick up on a couple of points Chris made because there's some really good good ones that he made there. If you look at, let's [00:20:00] just pause video for a second. Let's look at branch. Brendan Thorpe:              Branch, at the end of the day, irrespective whether somebody's coming in via self-service, somebody's coming in via another mechanism, the most powerful thing you can do within that environment is start to link up those systems so that they can all work and adding video to that adds another dimension to that system in terms of the ability to make sure that customers are getting service quickly, easily. They can use the channel of their choice, and they can interact with the financial institution [00:20:30] in the way that fits them best. Brendan Thorpe:              Now, for some demographics that means going to the teller. For other demographics, that means they'll always choose self-service. Others will do everything they can through mobile. There will be a very strong place within that for some form of self-service transaction whether somebody is doing that through mobile, somebody's doing that through a traditional self-service device in the form of an ATM, where they need assistance and that assistance can be provided either by somebody walking up to them saying hey, can I help you, without [00:21:00] using a tablet, or it could be provided remotely by somebody using a video solution. Brendan Thorpe:              One of the things that DN brings to this, and I think this is absolutely unique in the market, is that when we look at how we deliver that solution, it's delivered using the same base technology. To give you an example of this, if you were at a self-service device, and you hit a help me button and that help me button is connected into our systems, it goes into the same queuing mechanism irrespective of whether it's being directed to a tablet, because the [00:21:30] branch is open, and you're going to get assistance from somebody walking up to help you, or if it's out-of-hours, it's going to go in that same queuing mechanism and then get allocated to a video teller who can then interact with you. Brendan Thorpe:              So all of this technology is connected and integrated into a solution that's focused on one thing and that's giving consumers a great experience within that financial institution's systems and that's really important. Scott Anderson:               That's great. That very important point Brendan and a wonderful segue. Dawn, I wanted to sort [00:22:00] of present you with the last question. We have some fantastic perspectives and needs in this marketplace around assisted service, video in particular, so what does the future look like for video solutions within our Diebold Nixdorf Portfolio? Dawn Winston:                 Yeah, so we are not really changing what we will be offering from a consumer standpoint so what the customer or member necessarily will be seeing. We'll still be offering both incarnations of the solution that I mentioned at [00:22:30] the top of the podcast. Either the full interaction throughout the entire session if a teller or a representative at the FI or just the video assist option where the teller or the employee comes into give overrides or do that cardless authentication. Dawn Winston:                 What we really will be focusing on the future at Diebold Nixdorf is our, kind of our Commerce Now slogan, Beyond Omni-channel. So we want to make sure that, as [00:23:00] Brendan mentioned, if they want to start a transaction on a mobile device or start it on their online banking or what we've been mentioning so far here, start it in a self-service channel. We can easily pause a transaction or hold on to that transaction and resume it in another channel, and because we have the advantage of a common transaction processing engine, we have the infrastructure built in order to be able to easily move [00:23:30] seamlessly from one channel to another so that you can pre-stage transactions. Dawn Winston:                 You can start out with a transaction you think is not so complex but suddenly becomes very complex, and bring in that financial institution employee, so the Teller or the Customer Service Representative, to do those assistance type functions or completely take over the transaction and complete it for your customer or your member. Dawn Winston:                 So that's what we're focusing on now and for the future [00:24:00] is making sure that we are making that omni-channel or that multi-channel experience seamless to your end users, to your customers and members and providing a better experience because we can have that common transaction processing engine and common infrastructure on the back side connecting all of our channels together. Scott Anderson:               That's great. Thanks so much Dawn. Really interesting, that from a Diebold Nixdorf perspective. We [00:24:30] thought long and hard about this and we've got solutions in place that aren't just single use alternatives here. That we've really thought about how we can leverage this across the infrastructure and enterprise up in FI. I do think this is a great place to wrap up and thanks again for all of you joining us today. Scott Anderson:               To learn more about topics like this logon to dieboldnixdorf.com or click on the link in the podcast notes shown below. Until next time. Keep checking back on iTunes or however you listen to our podcasts for new topics on Commerce Now.  

Summary: In this podcast we discuss the utilization of self-service and teller automation technology and the implementation of recycling to drive more efficiency and to improve the overall customer and staff experience. Resources: Self-Service Reloaded Guide Diebold Nixdorf Website Blog: Rethink the ATM-Reload Your Self-Service Strategy Webinar replay COMMERCE NOW pocast website Transcription: Scott Anderson:               Hello. I am Scott Anderson, senior director of Evangelism, and I'm your host for this episode of COMMERCE NOW. On today's podcast, we welcome Diebold Nixdorf's Jim Flannery, global advisor for Banking Channel Transformation and Tim Hoover, principle product manager for System Solutions. We're together today to spend time talking about how cash automation, and in particular, recycling can have positive impacts on today's branch environment. As we all know, the cost and controls around handling cash is a major factor in branch economics. [00:00:30] Tim and Jim have joined me to discuss the utilization of self service and teller automation technology and the implementation of recycling to drive more efficiency and to improve the overall customer and staff experience. Let's kick this off. Jim, I'd like to start with you. As you spend time with financial institutions of varying size and location, what opportunities do you see to streamline the cash handling processes for both customer and staff journeys? Jim Flannery:                     Yeah, so any cash automation is going [00:01:00] to provide tremendous upside for a bank or credit union. Something like teller automation, which has been around for quite a while, we've seen lots of customers see efficiency gains, throughput improvements not only reduce cost but also provide a better experience for the customers, shorter queues, obviously shorter wait time, so those type of things. I think it gets a little more interesting when you start talking about self service recycling. Jim Flannery:                     In [00:01:30] the US and in Canada, we'll say it's been a little slow for the banks to adopt that, but we're finally seeing enough cash coming in where the migration of transactions from the teller line to the device, which have traditionally been on the more costly side for the banks to do, it's finally hitting that tipping point where we're seeing an opportunity to attack that CIT cost, that high cost of cash in transit, which has been a sticking point for many FIs that they want to see maybe reduce. Scott Anderson:               [00:02:00] Excellent, thanks very much. I think when we consider what's been happening over the last I'll call it five, ten years, technology has really come a long way in this regard. Tim, perhaps you can share with us your opinions around how recycling ATMs can augment the branch transaction processing. Tim Hoover:                       Sure, Scott, and essentially let the technology do the work. There's now, with this technology, the ability for accounting, denominating, bill fitness sorting, counterfeit [00:02:30] detection and all that can be done at high speeds like 10 notes a second through this technology. In addition, this technology is now coming on the fourth, fifth generation of product, and it's very secure, efficient and reliable. Scott Anderson:               Now that we've got technology and Jim, as you've said, there seems to be a little bit of take up hear in the North American space in particular and certainly this has been very prevalent globally, especially if we look at some western European [00:03:00] countries. I think about what traffic we see in the retail branches and some of the segments who place some real heavy demand on branch cash processes, really small and medium business come to mind in this regard. Tim, what advantages do you see with technology such as recycling ATMs compared to how we typically manage the segment over the counter or even with teller automation? Tim Hoover:                       Well, Scot, we've seen some surveys, recent surveys that have shown that merchants now are more willing to use this self service [00:03:30] technology for their daily or even weekly withdraw needs. They would expect and they've mentioned that there would be less waiting in lines at the branch during peak hours or Fridays. It would allow for immediate credit for their cash or check deposits and then this technology ... And for merchants, there would even be the possibility even to promote for this SMB customer segment that maybe [00:04:00] the use of technology at 24 by 7 vestibules that are let's say close proximity to their business may be in malls or outlets, those types of places. Scott Anderson:               Interesting, so really would I think probably improve how this small business customer would perceive the financial institution as giving them a little more access to automation to allow them to handle some of those cash deposits on a more frequent basis, so that makes a ton of sense to me. Jim, assuming [00:04:30] we have this opportunity to leverage recycling systems more holistically and to drive more transactions to self service, what positive impacts do you see for staff productivity and even consumer engagement? Jim Flannery:                     Yeah, so industry wide, we see roughly 30% of deposits are occurring at a self service channel, so for the most part, consumers have become comfortable with depositing checks either at the ATM or more recently on their mobile device, but [00:05:00] historically, cash has always been somewhat of a sticking point, getting consumers to deposit that cash for whatever reason was always more difficult. I think some of the it goes back to the envelope deposit days of ATMs, where the trust factor of not have a valid count or inventory of what was deposited was something that consumers just wouldn't part with. Jim Flannery:                     Now with recycling and having a growing set of consumers that are okay with cash deposits, we're seeing quite a few of those traditionally [00:05:30] cash deposits that were happening at the teller line or through the drive up teller now moving to the ATM. I think that really opens up two interesting points to be made is one, fewer transactions at the teller line allows the banks to be more judicious in how they staff their teller line, so being able to take potentially a small reductions in head count, which will reduce the cost of servicing. But I think the broader point is freeing up more staff time to spend with customers, having conversations, doing [00:06:00] investigative dialogue, where they can uncover potential gaps in products that consumer may be looking for, so really using that time that they're not spending head down, counting cash as a lower value transaction, now becomes an opportunity to cross sell and really have a more productive conversation that can deepen the relationship and hopefully create more satisfied customer. Scott Anderson:               Interesting. Just to play on that, I think one of things we probably need to consider then [00:06:30] in the branches is some good lobby leadership so that the small to medium business customers who are coming in with bulks of cash understand that the self service devices now with larger acceptance and even recycling can support them. Anything you would add to that sort of thought process? How important is it for banks to be thinking about, banks and financial institutions, around lobby leadership and directing these consumers to the right use case? Jim Flannery:                     Yeah, I mean clearly you need to understand the needs and the expectations [00:07:00] of the different segments, so in the research that we do, what we find is that generally younger consumers with above average income are kind of target audience for more advanced self service transaction and then as you get into older segments, and to some degree, segments of more modest income, their dependence on the attended teller, primarily the channel that has that extra help is going to exist. Jim Flannery:                     Your point on lobby leadership is spot on. Being able to identify [00:07:30] who would be a good candidate for introducing or demonstrating the self service deposit versus some consumers just aren't going to change their behavior and they're going to expect that I guess we'll call it hand holding for even a routine transaction. Jim Flannery:                     Now I think it becomes more interesting with the small business segment because traditionally when you look at the lower end of it, it's often the principle of the business that's doing most of the banking and their time is so important because they're running a business [00:08:00] and banking is not something that they enjoy doing. And when you think about recycling and having the ability to perhaps forgo standing in line at a busy time and use that device for despot is pretty intriguing. I think it becomes even more interesting when you start looking at other things that could enhance that, whether it's cardless or one-time use pins where they can send a runner to do the deposit where they'll get some sort of notification where they don't even have to go. They can send somebody else and it can be after hours or it could be during busy [00:08:30] and you won't have that waste of time spent standing in line. Scott Anderson:               That's a great point and I think it's important as the financial institutions think about this for some of those small and medium businesses, getting the message to those business owners, even if they aren't the ones coming into the branch is critical, so it's a marketing this would be important. As I think about some of the things that I've seen globally, I've had the opportunity to witness what I'd call cashless branches or branches where cash is completely automated [00:09:00] in parts of Europe and Asia Pacific. From both of your perspectives, what considerations do you think financial institutions need to be mindful of to ensure this success. Jim, maybe you can start off on this one. Jim Flannery:                     Yeah, so cashless branches in the US or in North America in general, they're not as prevalent for a host of reasons, but I think if you are going to look at that as a potential path for a branch network, certainly having a hub and spoke concept where you do have full service [00:09:30] branches that fill the advanced things that consumers are looking to do, but using cashless branches to serve the more routine transactions. When we look at this for FIs as a service, what we're often looking at is the demographics of the people using that branch is a location where you have that high concentration of high self service consumers that are okay with that. They don't necessarily need that additional attention for simple things. Jim Flannery:                     Making sure [00:10:00] that that's part of the equation, the analytics that's really going to drive the decision. I think also, at the same time, understanding if you're converting a full service branch or a traditional branch too of something of a cashless branch, deciding on the design and how the space is going to be used is going to be crucial, in particular for larger branches, where minimum going from 4,000 square feet to 1,500 square feet, so what do you do with the rest of the square footage? How do you either convert that to something [00:10:30] that has revenue generating capabilities or how do you reduce the size of that branch to reflect the role and function of that branch within the network? Scott Anderson:               Interesting, and I think that's something obviously a lot of the western European banks have already figured out, because of the cost of real estate. North America's really trying to catch up on that I see your points of view there. Tim, what would you add to that perspective and cashless branches? Tim Hoover:                       Well, just not only [00:11:00] the advanced planning on the demographic and the placement and in the size, but then you get into another six months of planning on just the execution, so think about the cash and transit, think about the processes associated with not only cash replenishment but the cash in transit, the withdrawal of that cash and making sure that all those processes are determined, how the balancing is going to occur, because it will be different. Tim Hoover:                       Then even probably the bigger [00:11:30] one is just thinking about the consumer now. This will be a big change. You just don't want them to walk into a branch and see no people or just have a bunch of machines lined up and now clue what's going on. It has been helpful and we've seen in the past a greeter in a lot of cases that can talk to the consumer about, "Hey, we've changed our design. We're now self service. Anything that you could do in this branch before, you can now do through the self service. Come with me. What kind of [00:12:00] transaction would you like to do? Let me show you how you can do it." Tim Hoover:                       That helps in supporting certain consumer transactions if required. We've also seen, and it's been helpful, branches that have been sending out in advance, they're electronic or maybe some physical mailings talking about the changes, what's going on. You just don't want to have the consumer blindsided the first time they come into that location. In add to that even, there are on screen [00:12:30] text modifications or icons that can help a consumer actually do that transaction and we've seen even some labeling, additional labeling help with the consumer. Scott Anderson:               Interesting. I agree. I think swinging the pendulum too far too fast is probably not going to be effective and you need to make sure that the consumer is feeling comfortable, that the typical tell that they've dealt with daily or weekly is still a part of the equation. They're just maybe engaging with the consumer a little [00:13:00] differently and maybe even being a little bit more advisory versus just be transaction processing. I think that's a really interesting point. When we talk about all of this though, I think one of the big elephants in the room is going to be how do these financial institutions begin to process a road map or define a road map and a return on investment for this type of technology and solution. Jim, what are you seeing, how are you kind of guiding some of these financial institutions down that path? Jim Flannery:                     Yeah, so the ROI and [00:13:30] the whole road map is of course extremely important for any transformation exercise that banks undertake and I think moving to something like a cashless branch is definitely a big change for an FI, so clearly being able to quantify as much as you can about the currently what's happening at that branch, what the expect ions are for how much of the volume is going to move to self service and which parts actually may move to other branches. We've often seen that when you do something extreme [00:14:00] like that, a lot of consumers will just go to the next location that has people, so you have to be a little careful making sure that the populist that's going to use that branch are the target segments that are going to embrace self service. Jim Flannery:                     From the ROI perspective, obviously there's some pretty obvious cost saves that most FIs are expecting to see, but I think what becomes more interesting is the things that are a little bit more difficult to measure or monetize, which I think need to be part of that conversation. I think [00:14:30] a lot of FIs get too hung up on just the cold, hard numbers, when in fact there may be additional pieces that really are overall more beneficial to some degree of just that cost saving. Jim Flannery:                     I'm talking mainly about the things that are around the consumer's acceptance and their satisfaction with the new space and also you can't understate the staff's satisfaction as well, being able to create an environment where the employees are more comfortable [00:15:00] and they thrive at their job and you can really get the most out of people who have maybe skills that are being underutilized in a more traditional branch environment. Jim Flannery:                     I think being able to incorporate those pieces also should be part of the equation. At the end of the day the ROI has become, in our opinion, a must have. Every project that we have worked on where we have a big capital investment, the first thing people ask me, "Well, where's the ROI? Let's see the ROI." So being able to create that is definitely going to be [00:15:30] important. Scott Anderson:               Interesting, great. Thank you for that. That's probably the one thing that a lot of FIs need to think heavily about, but it is possible. We've seen a lot of FIs globally be able to achieve this with some great success. Tim, what or technological advancement should we expect from physical touchpoints such as recycling ATMs? What's coming down the pike? Tim Hoover:                       Well, there are a number of ones coming down the pike. Probably the first is serial number capture and [00:16:00] that essentially means on the deposited notes, picking up on the serial number and in the case that it's needed, that can help in aiding any sort of counterfeit investigations or maybe stolen notes that were deposited at a certain ATM, at a certain location, but probably the bigger once is just thinking about predictive analytics, not only from the maintenance side of saying, "Hey, I can see maybe that this one sensor needs to be [00:16:30] adjusted or needs to be changed out," but we can do more from a predictive analysis and then possibly adjust that sensor remotely or definitely then if it's something that can't be adjusted remotely, dispatch a technician in order to perform that repair. Tim Hoover:                       Also from the predictive analytics standpoint, just that the physical tracking and showing how consumers are conducting their transactions, [00:17:00] whether that's in a daily or weekly manner, at times of day, all that can be done now and is all inherent to the technology. Scott Anderson:               Great, so that really helps financial institutions fine tune how theses solutions can get rolled out, which I think is probably another important factor as they're thinking about this in a more holistic way, just making sure that that take up and that comfort with both consumers and the staff is there so that they endorse this. [00:17:30] Really, gentlemen, you've given us some interesting and compelling things to think about today and with that, I think this is a great place to wrap up this discussion for now. Jim and Tim, I really appreciate your points of view and sharing your thoughts with us and thanks again to all of you for joining us today. Scott Anderson:               If you haven't already done so, please check out our self service reloaded guide and learn more by surfing to dieboldnixdorf.com/driveroi for more information. Finally, to learn more about other relevant topics like these, log onto dieboldnixdorf.com [00:18:00] or click on the link in the podcast notes shown below. Until next time, please keep checking back on iTunes or however you listen to our podcast for new topics on COMMERCE NOW.  

Summary: Listen in as Diebold Nixdorf's Jerry Langfitt and Carl von Sydow, discuss how retailers are empowering their customers to shop and check-out the way they want, faster and without friction. Resources: Transforming Your Retail Business with DN VynamicTM Retail Suite Retail Homepage Join the StorevolutionTM Transcription: Jerry Langfitt:                    Hello, I'm Jerry Langfitt, and I'm your host for this episode of COMMERCE NOW. On today's podcast we welcome Diebold Nixdorf's Carl von Sydow, Director of Self-Service for Retail in the Americas. We will discuss how retailers are empowering their customers to shop and checkout the way they want. Faster, and without friction. Welcome, Carl, it's a pleasure to speak with you today. Carl von Sydow:                Thank you Jerry, the same to you. Jerry Langfitt:                    Before we get moving can you tell us a little bit about your background? Carl von Sydow:                Yeah, well, my background is I've been working with retail for [00:00:30] 20, 25 years, and the last 15 has been very much focused around self-service. I've been working with retailers on self-service, from Australia all the way through Europe, Asia, and now I ended up in the Americas. I moved to Columbus, Ohio, last year. I'm from Europe, as you might hear on my accent, but I've been all over the world, talking serf-service. I'm really burning for that concept. I love the fact that the checkout process is something that everybody [00:01:00] is doing every day, but it's still something that evolves. It's a great challenge for the retailers to do this in a good way and meet the customer's expectations. Jerry Langfitt:                    Okay. Well, let's dive in. I'd like to start off by talking about consumer behavior and how it impacts self-scanning. There seems to be a lot of journeys being done at grocery stores now. I can do curbside pickup, I can do delivery, I can do self-scanning. Why do I see an explosion of different ways to shop? Carl von Sydow:                Well, [00:01:30] I always like to put myself in the shoes of the customer or the shopper and look at the customer journey. I'm really happy that we are starting at that point as well. We are not talking products the first thing we do, we're talking about customer journeys, and what makes a customer journey attractive for a customer. If a retailer can meet that then the customers will come to their stores. They will go where they can have their best shopping experience. For me, self-service in general is [00:02:00] of course a very attractive customer journey, and there are many different versions of self-service in customer journeys. Depending on which retail vertical you're in you have different pros and cons for different solutions, but the topic for today, hand scanning, for me, within grocery, it's the ideal customer journey. From a customer perspective, to start with, but also from a retailer's perspective. Jerry Langfitt:                    Let's describe it real quick, just to make sure, since I've just experienced it recently [00:02:30] at a local grocery store. Let's just quickly, for the audience, what is hand scanning? Carl von Sydow:                The concept is that the customer enters the store and at the point where you enter the store the customer will take a device in a bracket in the entrance, and there are two options there. You could have a loyalty-based solution, where you swipe your loyalty card or identify yourself somehow, and you will get a dedicated device with your name on it, basically. It says, "Hi Carl, [00:03:00] welcome to this store." Or you have a different solution where you can pick any device, and you're anonymous when you go through this customer journey. I prefer the first one, of course. There are many benefits with a loyalty-based solution. But you get this handheld device provided by the retailer. You typically could have a bracket on your cart where you can put this device, so you don't have to carry it around when you're shopping. Carl von Sydow:                On that device you will have a big screen, [00:03:30] like on a smartphone, and on that screen you will have what we call a virtual receipt. On that virtual receipt you will see every product that you're shopping. You have an article description and a price and you have a summary and everything. What that means is that the customer will have full control of the transaction. The customer will always see and be aware of how much of my budget have I spent right now, with the products that I have in my cart or in my basket? As you go shopping you pick one item [00:04:00] from a shelf, you scan it with this device, and you put it in your bag. When you have done shopping you go to a pay station. That pay station could be a standalone pay station or you could also go to a normal checkout and pay, but what you do then, depending on the solution, you scan a barcode at the end, or just put this device that you have been carrying around, you put that device back in the bracket on the wall, and then the system [00:04:30] automatically will recognize you and your transaction, and you will pay at the pay station and leave. Jerry Langfitt:                    Now, that seems pretty interesting, because I know that when I'm shopping I rarely keep track in my head what I've put into my cart. This really does provide the consumer information that directly affects their purchase. Do they buy more? Do they buy less? What do we see in the industry? Carl von Sydow:                Well, across Europe, hand scanning is very a known concept. It's difficult almost [00:05:00] to find a retailer in Europe that do not have hand scanning as an option. There have been a lot of different studies made in Europe about hand scanning. There are a couple of significant messages in these reports, one of them being that the average value of a transaction in hand scanning is between 10 and 15% higher than a normal basket in a normal, manned checkout lane. We see the same [00:05:30] trend in hospitality, where we have kiosks nowadays where you can go and order your hamburger. Also in hospitality, with self-service and kiosks, where you have also full control of your transaction, you can do all the different up-sale ... modify your burger to whatever you want. We see a higher increase in hospitality, between 15 and 20%, actually, on the average transaction value. [00:06:00] Empower the customer with the transaction to feel in control, that will increase the transaction. Jerry Langfitt:                    It really seems like it, because I know if I'm shopping with my wife and we're putting stuff in the basket we're usually surprised at the end, going, "Oh my god it costs this much," but if we had a running tally I'd be more apt to go just over. It does give myself, just knowing the information, I think I would probably [00:06:30] buy more as well, because now I'm fully aware as I'm going through this. It can affect my journey probably to the betterment of myself, and the retailer. Carl von Sydow:                That's one of the great benefits with hand scanning is that you're in full control of your spending. You know exactly ... if you have a budget, you can follow it. With hand scanning I can go on forever talking about this, this is one of my favorite solutions for self-service. There are two other main benefits, one very important one being that [00:07:00] you only touch ... whatever you buy, you only touch the item once. That's when you take it down from the shelf and scan it and put it in your bag. If you go through the store in a normal way, to a manned checkout, if you count the number of times anyone, someone, touch your items, it'll be anything from three to four times. You will put it in your bag and you will put it on the lead-in belt at the checkout, then the cashier will scan it, and then you will have to bag it or someone will have to bag it. At least four times, [00:07:30] compared to one time when you do hand scanning. Carl von Sydow:                The other benefit of that is of course ... and if you are a trained user in hand scanning you know all this ... so if you do, as you pack your bag, so you can have the heavy items first, like the milk packages or whatever, and then you put the produce at the end on the top of your bags. You can plan your bagging process yourself, instead of feeling very rushed at the end at the checkout, or have someone else [00:08:00] bag your stuff for you and the eggs are broken when you get home. It's another benefit. Carl von Sydow:                The second big one is that the whole payment phase of a shopping journey is eliminated to like a minute, because the only thing you do when you checkout in hand scanning is that you pay for your transaction. You don't scan any items, or you don't do anything really, you just go to a pay station and you pay with cash or with card. That [00:08:30] typically is less than a minute. Overall, hand scanning is by far the fastest customer journey through a store, independent of number of articles, I would say. If you buy five or 50 it's still the fastest. Jerry Langfitt:                    Now, doesn't this give us an opportunity for either promotion or personalization if I'm using a device and a loyalty program? Carl von Sydow:                If you have a loyalty-based hand scanning solution all options are [00:09:00] available for you. To push advertising to the individual user based on shopping behavior, or previous shopping behavior, or if you scan a particular item and then you have a sale, buy two pay for one, you can push that immediately to this device. You have immediate possibility to push for up-sale, or you can have offers based on shopping experience or previous shopping [00:09:30] behavior. Jerry Langfitt:                    I did see that one, and my experience was it was if you buy four of a particular item or a brand of item, and it showed on the device and said, "Okay, you have one of four, if you buy three more," and when I hit those next three the discount automatically engaged and I was able to get that. That just seems like it's pretty powerful from the grocery store, and the consumer products goods, to be able to push things. Carl von Sydow:                That's a good point, Jerry, because ... I shop with hand scanning. That's my preferred solution. I don't keep [00:10:00] track on all the offers in the store. I'm not that kind of person. When I scan something, I just take a quick look at the display and see if the price was okay. Then, as you said, if they have an offer for the product it will come up on the display. You have bought one, if you buy a second one you will have this discount. Then, yeah, well, I'll buy another one. Without even thinking about it I just bought an item extra because I have this opportunity you told me [00:10:30] on the display. If I would go shopping in a normal way I would never done that. I would never know it. Jerry Langfitt:                    I would see the discount maybe at some point, but the instant gratification you do get going oh, I'll get that, and then suddenly I have four tubes of toothpaste. Carl von Sydow:                And everybody has been at the point of checkout and then the cashier tells you that, well, if you buy another of these you will get a discount. Well, at that point, the shopping journey is ended. I don't want to break that and go and fetch another bottle of [00:11:00] Coke or whatever it is. Then it's too late. It has to happen during the shopping journey. Not at the end. Jerry Langfitt:                    And the coupons they give you afterwards I rarely use, because I don't remember to bring them, but the fact that I have it instantly I am more apt to, well, if I get this then I'll get four more. Let's talk about implementation for a second. Europe is doing it way better, or at least it's implemented more. What is a retailer have to consider when they're doing it here? Carl von Sydow:                Yeah, and longer. [00:11:30] As with everything it's a learning experience. Hand scanning, the first installations, I'm sure it's like 10 years ago or something. The first versions were not as good as they are today, of course. There were some learnings over the first few years that the retailers and the solution providers in Europe have taken into consideration and implemented now in the solutions that are available today. It has taken a few years to come [00:12:00] to the point where we are today, and today the solution is very mature. It works, it has been on the market for 10 years, thousands of stores in Europe are using hand scanning, and they know how to implement it. It's very important ... human beings in general are a little bit reluctant to change behavior, so if you add a new shopping journey as an alternative you have to hold the customer's hand through the [00:12:30] first few times. Otherwise, the customers will not try it. You'll always go with what you are comfortable with. Jerry Langfitt:                    Right, what you know. Carl von Sydow:                What you know. That's very- Jerry Langfitt:                    It's certainly not about just installing tech, you really need to think this through. Carl von Sydow:                ... You have to think this through, and explain to the customer why it's so good, also, for the customer. The customer is not ... like self-service always often hear that you're doing the [00:13:00] job of the cashier and you don't get anything back for it. That's very wrong. As I said, if you use hand scanning, there are a lot of benefits for you as a customer or a shopper by using this system. You have to understand them and someone has to hold your hand through the first journeys, so educating the customer how to work through the first times is very important. Carl von Sydow:                One challenge with self-scanning, or self-checkouts in general, but [00:13:30] particularly for self-scanning, is how you manage produce, where you price the item based on weight. In a traditional self-checkout you have this weighing scale at the point of the checkout, and you pick your bananas from the icon on the screen and then you pay for it. With hand scanning, you have to move that part of that process to the produce area. You have to have a weighing scale somewhere in the produce area so the customer can do that at the produce area. Scan [00:14:00] the item, get the barcode, and then get the right price on the barcode. Carl von Sydow:                I have seen several different attempts here in the US to solve this. Funnily enough, I don't know if they have ever seen how it works elsewhere, because some of the solutions here are very complicated. They are not intuitive, more contra-intuitive some, even. If you have an obstacle like that the customer next time will avoid to go [00:14:30] shopping with hand scanning. If it's too difficult to understand or too difficult to use I won't use it. Jerry Langfitt:                    Yeah, first couple times, and someone's just going to wave off and never do it again. Carl von Sydow:                Then you're done. So it's critical that you implement this from a point where you see ... you have to take away all the pain points during the customer journey and make it as easy as possible for the customer to do these things. Jerry Langfitt:                    Now, doesn't staff really come into it? Making sure that when you're going to do a new technology, [00:15:00] again, you don't just drop a box into a store, you really have to, one, pilot it with the staff because they're going to be the bridge for the consumer. The consumer's going to go to them first. We should train them quite a bit, should we not? Carl von Sydow:                The staff has to be like super-users. They have to know this in and out. They have to recognize and know where the usual pain points are for hand scanning. When they see someone struggling [00:15:30] at their weighing scale at the produce area they have to be very quick in helping that customer to find her way. Or, if you have ... when you scan your item you can easily do a mistake and scan the same item twice. Then you have to take one of them away from the virtual receipt. That has to be easy as well. Or, if you scan an item and then realize, "I wanted to buy that one instead," so it has to be easy for [00:16:00] the customer. For a cashier this is normal operations, to take items away from a receipt, but here we ask the customer to do this. That has to be really easy, so the system and the staff has to help the customer understand how do I do this? Because these are common things that will happen when you go shopping with hand scanning. You will scan the same barcode twice by mistake. You will scan an item and you want to buy another one instead. You will [00:16:30] do that. You have to know how to manage to do that yourself, without feeling awkward or having no one to ask. Jerry Langfitt:                    Right. Internally, you probably need to do a frequently asked questions and make sure all the staff really understands, and be engaging and enthusiastic about it. It really needs to be that kind of implementation instead of just ... it's not just about integration and installation, it's about adoption. Carl von Sydow:                It's about adoption, and then at the end, also a very critical part for the staff is ... we haven't talked about shrink, [00:17:00] but that always comes up when we talk about hand scanning. A lot of retailers are scared about shrink, and if you implement hand scanning it's like the customers would just walk out through the door with the trolleys or the carts full with products and not paying for them. First of all, that is a rumor, it's not fact. The studies that has been made, that I referred to earlier, shows exactly the same risk for shrinkage with hand scanning as with any self-checkout or self-service [00:17:30] solution. So you don't have a higher risk of shrinkage if you have traditional basket-to-bag self-checkout with a security scale, or if you have hand scanning. Carl von Sydow:                If you implement it in the right way, train your staff, have random checks, et cetera, in the system, that monitors what's going on. There are, like in our platform that we have, we have self-learning algorithms that are continuously analyzing the behavior, in the background, of course. How the shopping [00:18:00] process pans out. How many items do you scan after one another? How many items do you take out from a receipt, or put back on the receipt? There are patterns there that could send an alarm that something is not really going as it usually does, or that the shopping journey takes too long or something like that. There are a lot of well-established mechanisms for managing the shrink also for hand scanning. The critical here is the staff. The staff [00:18:30] has to know how to operate and how to use this, and how to explain to the customer why they sometimes have to check if something looks wrong. Jerry Langfitt:                    You almost have to consider, along with a consumer's journey, a staff journey. Carl von Sydow:                Absolutely. Jerry Langfitt:                    Like the staff also is going along with the consumer to help them adapt and help them from a customer-service standpoint. Carl von Sydow:                Yeah, absolutely. In some of the stores where you have a very high usage rate ... and I'm talking like 50% of the customers using [00:19:00] hand scanning ... you can easily see that most of the people that you see that usually were sitting behind a manned lane, a cashier, they are walking around in the store, helping customers with the hand-scanning devices. Helping them when they have done a mistake or stuff like that. They have moved the staff from sitting down in a checkout to walking around helping customers. It's very interesting. If you have a high usage rate that's what you have to do, and that's increase or improve the customer journey as well, because [00:19:30] you have staff available wherever you are if you have a question or a problem. Jerry Langfitt:                    I do like these new journeys that they're doing. I just recently tried it and I found the same thing. Suddenly I'm not in line waiting for my items to be scanned, and I was just interacting at the store level and that's it. Walk in, I grabbed a device, and then I started scanning everything. I loved the tally and I loved getting the discounts. I thought that was really, really cool. I think this is going to really take [00:20:00] over in America. How does a retailer who wants to implement this ... adoption is one of the hardest things to get people to do. What are some of the techniques or items or methodologies a retailer could implement to help with adoption? Carl von Sydow:                Well, first of all, when you introduce something new, of course you have to promote it somehow. There are a lot of different ways to do that. One way is to do it visually. Again, some of the installations, the pilots that I've seen with hand [00:20:30] scanning here in the US, have been not so visual. In my local store it took me a while to even notice that they had a small rack with brackets for hand-scanning devices at the entrance. It was like nine or 12 hand-scanning devices. They were right in the middle of all the other advertising at the entrance that they had. What you can see if you go to a store that has done this in a proper way, [00:21:00] you have like a wall of devices. It's visual, you cannot fail to recognize that, all right, in this store they have introduced a new solution. It's right there at the entrance, you can see all these devices on this wall. Carl von Sydow:                The other thing, bags. As I said earlier, the whole idea with hand scanning is that you ... opposite to what you do normally ... you put your item directly in the bag. You have to have bags at the start of the customer journey. [00:21:30] In a normal journey you have it at the end, right, at the checkout. You have to not only have the brackets there with all the devices, you have to have some shelves and stuff with all the different bag options that you might have in your store. Paper bags, or plastic bags, or bring your own bag of course, that's easy, but if you have bags you have to have them at the entrance. It has to be visual as well, so the customer realize, well, I don't only take the device, I will take the bag and bag my stuff as I [00:22:00] start my customer journey. That's very important. Carl von Sydow:                I've also seen some other initial promotions where customers have been offered discount for the first 10 journeys, or for a period of time, a week or two, then you will have a discount. Or, if you try this, you will have a free of this product when you leave, or something like that. You have to make it fun, you have to make some marketing activities around it to get customers interested [00:22:30] to take the step to actually try a new solution. Jerry Langfitt:                    One more thing on shrink. You had mentioned that there's two ways you can implement this system, with a loyalty program where I have a card and I have to sign in and then get the device, and with anonymous where I can just grab any device. Wouldn't one be better over the other from a shrink perspective? Carl von Sydow:                Definitely, very much so. If you use this anonymous system it's exactly that. It's anonymous. The retailer have no idea if you're a good-behaving [00:23:00] customer or a bad-behaving customer. You will be exposed to the same random checks every time, independent who you are or how you behave. If you have a loyalty-based system ... when you log on at the entrance, as I mentioned before, typically it will say on the screen, "Hello, Carl, welcome to this store." I will know that the retailer knows I'm here. I will be inclined to behave, just by the fact that they know I'm here. I am an honest person, I want to do [00:23:30] everything right. If I do that, the systems that are available on the market, definitely ours, is built like ... if you are behaving you will not be exposed to random checks as often as someone that misbehaves. If you're a good customer you will go through that store more often than not without any random checks or anything. Jerry Langfitt:                    Okay, so let's just do a quick comparison. Typical checkout, I'm in line, basket-to-bag, compared to [00:24:00] this hand scanning. What are some of the benefits that a consumer is getting by taking the hand-scanning journey over just filling a basket and going to a manned till? Carl von Sydow:                It's a good question, Jerry, because I don't see traditional self-checkouts, the basket-to-bag with a security scale, or hand scanning, as being in competition with each other. They coexist, because they have different purposes. [00:24:30] Let me explain. First of all, a basket-to-bag, traditional self-checkout, you have a security scale. The size of that security scale can be different, of course. You have a small or a big scale. Typically, basket-to-bag is exactly that. It's supposed to be a basket of items, and then you bag it. It's a limited number of items, perhaps 10, 15 items, ideally, for a basket-to-bag. You can have a larger [00:25:00] basket, or several baskets, or a cart, and go to a basket-to-bag self-checkout, but that process is quite cumbersome, especially on the weighing scale, the security scale. It's very easy to have unintentional blocks because the security system will tell you to put the item on the weighing scale and you have already done that. The more items the higher the mountain that you build on the weighing scale, the more items you put there, it will just be more complex. Typically, the basket-to-bag system [00:25:30] is for smaller carts or baskets. Carl von Sydow:                Hand scanning, on the other hand, is independent. You can have 150 items. You bag them as you shop, and then you don't touch the product anymore. You can have as many or as few, it doesn't matter. At the point of checkout, when you go paying, you can have two items or 200. The paying process is exactly the same, you just pay and leave. From a customer perspective hand scanning is the only self-service solution that offers [00:26:00] a self-service solution for large carts, large number of items. That's one thing. Conveniently so. Carl von Sydow:                The other thing is that you have this built-in security in the basket-to-bag, with a security scale, because at the point ... that's open for anybody. A self-checkout, basket-to-bag, anybody can go there and go shopping. You have to have this security feature with the weighing scale to control the shrink and to control that process. If you have a loyalty-based hand-scanning [00:26:30] program you don't need that, because the security is sort of integrated in the platform already. You are a known customer, you're a loyal customer, we trust you. You can go shop here, and you can leave. Carl von Sydow:                Those two systems can coexist, so in some stores where you have a high adoption rate of hand scanning you still find a few basket-to-bag self-checkouts, because there are customers visiting, perhaps, from abroad, or from another state. [00:27:00] They don't want to have the loyalty card. They don't have that loyalty card. But your bulk of customers, your loyal customers, they can use hand scanning. Jerry Langfitt:                    It seems like, again, the way we started multiple journeys, you really [inaudible 00:27:13] journeys for different people and different types of journeys. I have one item I need to grab real quick, I have five to 10 items, I have 50 to 75 items. You really want to look at all the ones and find the purpose-built device or solution [00:27:30] that helps the consumer in their journey that they want. Again, empowering them to make their own decisions. Carl von Sydow:                Starting with the customer journey, what different customers do you have in your store? Find different self-service options for your customers. It's not one-system-fits-all, you have to have the ... the customers are more or less expecting options. Another option that we haven't talked about is when you bring your own device, your own smartphone. That's also an option of course. [00:28:00] You don't need to have a store-provided device. You can use an app, the same application that you have on the hand-scanning device basically, but with your own phone. Carl von Sydow:                There are some pros and cons between these two. If you just go and do an app, shop as you go, that's pretty easy. It's ideal for other verticals, perhaps outside grocery where you go shop specialty goods or stuff like that. That could work, you don't have [00:28:30] that many items. In a grocery store, as I said before, if you have a loyalty-based program with integrated security algorithms, self-learning algorithms and stuff like that, you don't really have that in an app, as you go. You just scan and go. There are limited functionalities in the standard shop-and-go app. Carl von Sydow:                What you also can have is, like we have in our platform, you could have the full hand scanning application running on your [00:29:00] mobile phone as well, with all the security features. There's this option as well, but from a hardware perspective there are also pros and cons. The handheld device provided by the retailer is purpose-built for hand scanning. It's easy to hold, like a pistol grip. You have brackets for a holder on the cart, you can just put it there, you don't have to carry it around. The reader is a high-performing scanner [00:29:30] reader on the handheld device. The camera on your smartphone is not as good, it's not reading as fast. The ergonomy of holding your smartphone, scanning, it's not as easy as just holding this purpose-built device. Carl von Sydow:                Another thing, of course, everybody knows, I do, I call my wife for recipes, or, "Should I buy this or that?" I always use my phone when I go shopping, I can't take all the decisions myself. That's just [00:30:00] how I am. So I'm calling home, and if I'm using my phone at the same time, I'm calling someone or doing something else, it just makes no sense to me. It makes it cumbersome, and then if the battery runs out or if I drop my phone because I have to scan all these items, I don't want to risk it. But for a short customer journey, a few items, then use your phone, it's easy. Fast in and a fast out. But if I would go shop a proper basket [00:30:30] or a cart full of items I always opt for the store-provided device. It's much easier. Jerry Langfitt:                    I agree with you, because I know I will either FaceTime my wife or take pictures of the items and say, "Was this what you wanted?" I am constantly in communication with her so I don't get it wrong. I need my phone. Carl von Sydow:                What we have seen also in the countries where hand scanning has been established for quite a while, of course they have added this option of bring-your-own-device to those stores as well. That has been in place [00:31:00] for several years, and the adoption rate for bring-your-own-device is very, very, very low. Just for the reasons I just explained. They are less than 3%. It seems that customers used to using hand scanning, they still opt for the provided device by the retailer, they don't use their own phone for this. Jerry Langfitt:                    There's a benefit to having a phone that does it all, but I still contend there's a benefit [00:31:30] to having a purpose-built design device. It usually gives a better experience and a more reliable experience. Carl von Sydow:                Yes, I agree. 100%. Jerry Langfitt:                    I think this is a great place to wrap up. Thanks again, Carl, for joining us today. To learn more about retail topics like these log on to dieboldnixdorf.com, or click on the link in the podcast show notes. Speaker 3:                           Until next time, please keep checking back on iTunes, or however you listen to podcasts, for new topics on COMMERCE NOW.  

Summary: In this episode of COMMERCE NOW, we are joined by Steve Gotz of Silicon Foundry, and we discuss how banks are increasingly creating new environments and structures to pursue innovative ideas and build new capabilities.  We explore one specific kind of innovation structure: the Venture Studio (also known as a Company Builder). Resources: Silicon Foundry LinkedIn: Steve Gotz Twitter: @stevegotz Blog: The Rise of the Venture Studio Transcription: Amy Lombardo:                Hello again to our listeners. This is Amy Lombardo, your host for this episode of Commerce now. Today I am joined once again by Steve Gotz, of Silicon Foundry, who is a known expert at helping organizations navigate the complex world. Amy Lombardo:                So today we're going to discuss how banks continue to increase and create new environments and structures to pursue innovative ideas and build new capabilities. Amy Lombardo:                So Steve, welcome back to COMMERCE NOW. Steve Gotz:                        Hey thanks Amy, excited to be here. Amy Lombardo:                Great. So it's been couple months here since we spoke last. So what have you been up to here lately? Steve Gotz:                        So, just quick refresher for everybody, my background. I spent a long time launching new ventures for corporations. I've done that as an investor, an entrepreneur, university researcher, and a corporate executive. And most recently I was co-founder and COO of Pivotus Ventures, which was a venture studio I created with Ray Davis at Umpqua Bank. And coincidentally was acquired by Kony recently. Steve Gotz:                        Currently a partner at Silicon Foundry, where I advise large corporations on their new venture strategies. In that role that we're talking about some of the ideas today. Amy Lombardo:                Got it. Okay. So in our last podcast we focused more on transformation strategies. We gave examples, both from banks and even other industries on when they kind of when they hit that wall, that roadblock, and how they partnered with new and other types of organizations [00:01:30] to think about what's next. Steve Gotz:                        Yeah. Amy Lombardo:                So let's shift our conversation here and talk about what an organization knows they need to transform. Kind of this idea of migrating to a new business model, a new environment, and really the intent of Venture Studios. Amy Lombardo:                So maybe we can start with discussing the evolution of this idea of like the Accelerator Business Model. Steve Gotz:                        I think Accelerators is an interesting place to start. So Accelerators, as we know them [00:02:00] today, have been around for about a decade. And they were started during this rich period of famense, right? So it was 2005, a couple years after the dot com bubble. And in many ways, the Accelerators that started back then, and that was Y Combinator, Techstars, would be great examples, they laid the foundation of what's to come today, right? Steve Gotz:                        And Y Combinator recognized that there were some economies of scale to be had by launching start-ups in a different way. And the Accelerator Model [00:02:30] is young teams, lots of bets, and a little bit of money. And when you do that well, you get really interesting companies. Steve Gotz:                        And that's what we've had for the last decade but I think what we're seeing now, is things are starting to change. Technology is starting to change. Corporate strategy is starting to change, which is why now we're starting now to talk about the rise of Venture Studio. Which is a new forum that organizations are using to build new things. Amy Lombardo:                Mm-hmm (affirmative). So does the Accelerator Business Model, does it kind of [00:03:00] compliment the Crowd Storming Idea? Steve Gotz:                        Yeah. So, Accelerators as they started a decade ago, really about bringing young teams together to pursue big opportunities. And at that point if you think about it, right after the dot com burst there was a lot of opportunities so there was a lot of opportunities that the infrastructure had been laid to build things in a cost-effective way. So companies are using Accelerators as part of their innovation strategies. Steve Gotz:                        Now what's happened in the last decade is [00:03:30] a lot of that low-hanging fruit has gone away. The ability to launch a business to scale quickly. The dynamics are slightly different in the current day and age. Because startups need data, they need distribution, they need access to capital. So what we're seeing is that traditional Accelerator Model evolved into the Studio Model. And Studios are different in a couple new ways that we can talk about them but we're entering this period of change when it comes to innovation strategies. And the Studio is just one manifestation [00:04:00] of the change we're seeing. Amy Lombardo:                So talk to me a little bit about this change. Dive into that for me and just kind of talk to me about why and how. Steve Gotz:                        So I think, in Silicon Valley, the era of "Move Fast and Break Things," is over. I think what we're starting to see are more diverse teams, in a broader sense, gender, age, background. I think there's a recognition that launching new ventures requires a diverse skillset. And it needs new kinds [00:04:30] of partnerships. Steve Gotz:                        Launching a start-up by itself as an Accelerator doesn't work as efficiently as it could. Launching a new start-up in collaboration with a corporate that gives you data, that gives you distribution, that helps you access customers. That's really powerful. Steve Gotz:                        So what we're seeing is more and more start-ups. More and more entrepreneurial teams and Venture Studio is coming together, launching new ventures in collaboration with corporates. And that's a really interesting dynamic that we're starting to [00:05:00] observe. Amy Lombardo:                So is it still in these high-tech areas like Silicon Valley? Or where is the Venture Studios? Where are you having the most luck? Steve Gotz:                        Hmm. So this is what's really interesting, right? So Accelerators largely, when they started, were concentrated in Silicon Valley, right? Y Combinator, in the Valley, Techstars in Colorado. What we're seeing with Studios is a dispersion, right? We're seeing Venture Studios crop up [00:05:30] across the country, across the globe. And oftentimes they're locating themselves close to large corporations. Steve Gotz:                        So, High Alpha, one Venture Studio, and they're located in the Midwest. Primarily because the companies that they're building new ventures with are in the Midwest as well. There's another studio in Seattle called Pioneer Square Labs and they're up there and they're looking at really interesting consumer ventures, direct consumer ventures. Steve Gotz:                        [00:06:00] So I think you're seeing the capabilities moving to the most natural place. And that may not be Silicon Valley. That may be somewhere else across the globe. Amy Lombardo:                So even though these corporations might be in these major metropolitan areas, is the talent there as well? Or are these innovators being found then all over the world based on what the need there is? Steve Gotz:                        Yeah, so, it's across [00:06:30] the world, right? Amy Lombardo:                Okay. Steve Gotz:                        It's where is the need? Amy Lombardo:                Right. Steve Gotz:                        And it's launching ventures as close to the need as possible, right? Steve Gotz:                        So a good example would be Heidelberg Cement. So, Heidelberg is one of the World's largest cement companies. They have operations in virtually every continent. And they're launching a Venture Studio and what they're doing is really smart. They're building new ventures in country. Steve Gotz:                        So the problems that you have with cement distribution, say, in Latin America and Brazil, [00:07:00] are fundamentally different than some of the challenges you have in a place like California. So it's natural to take your best people and put them at the edge. Put them close to those problems and say, "solve these problems and do it different ways." Amy Lombardo:                Right. So clearly I know nothing about cement, so I can't even think of the next question. Steve Gotz:                        Nor do I. Steve Gotz:                        But think about this, right. Because there's a lot of similarities between the cement business and the banking business. [00:07:30] Right? Amy Lombardo:                Oh both are important, here we go. Let's get what you're going to say here. Steve Gotz:                        So look. These are both largely commodity businesses, and they're easily swappable, right? You could get a bank account from Wells Fargo, B of A, or any one of the 7,000 or 8,000 banks in America. And largely the product is the product. What can you do with that? Steve Gotz:                        You can innovate around that experience. That's what Heidelberg is doing and that's what most banks are doing today. They're innovating around the experience. [00:08:00] And to innovate around the experience you need to be close to your customers, right? Steve Gotz:                        So creating a banking experience, or a cement experience, in Brasil, is fundamentally different than the kind of banking, or cement experience you want to create in California, right? Did that work? Amy Lombardo:                Wow, wow. Okay. I'm a believer. Because if you were going to go down some path of like brick and motor cement shops closing, I was going to be like, "we're going to be [crosstalk 00:08:28] now because we're not even [inaudible 00:08:33] here." Steve Gotz:                        [00:08:30] And this is why I think banking executives can learn a lot by expanding the aperture and looking outside of the industry for best practices. And it just so happens that what I'm setting is in cement, but we also see interesting things happening in food, interesting things happening in agriculture, right? Steve Gotz:                        So I think there's more that we can learn like breaking down some of the silence and sharing ideas. Amy Lombardo:                Okay so let's go to some examples. [00:09:00] Let's jump ahead there. Steve Gotz:                        Hmm. Amy Lombardo:                You know for people unsure of our business model is, we're working with banks and retailers, can you give me any specific examples of Venture Studios working with banks and retailers? Steve Gotz:                        Yep. Yeah so there's a couple of really interesting examples. So, yeah, one of the ones you know, springs to the top of my mind is what BBVA has done with Dennison. So, three years ago BBVA hired an entrepreneur and said, "we want to build a new business." Steve Gotz:                        They didn't tell them [00:09:30] where he should build a business, they just gave him the free reign to do that. And fast forward three years, and what we have today is Dennison. Which is global bank for expats. So in three minutes or less, as an expat, I can open up a local currency account of one in 20 countries. And if you think about what Dennison has done is they've innovated the customer experience. And that allows them to do really interesting things with global remittances, global payments, currency transfers. Steve Gotz:                        So [00:10:00] a really interesting example of a big, incumbent corporation, like BBVA, saying, we're going to create new ventures, we're going to put structures in place to allow us to build things that probably wouldn't be possible inside of the normal organizational structures. So that's BBVA. Steve Gotz:                        Standard Chartered Bank is doing something similar in Hong Kong with their digital bank there. They just recently received their digital banking license from the regulator, so that's an interesting experiment. Steve Gotz:                        [00:10:30] In the UK, RBS has done really interesting things with S&Me, which is their small business lending platform. So there's a lot of examples and I think what's at the center of all of these examples is corporations coming together with partners to launch new things. Steve Gotz:                        And I think the opportunity for dVault and dVaults customers is to come together and say, "how do we create new experiences, right? How do we take a few bits of the interesting capabilities that dVault has, sprinkle [00:11:00] in a few bits of the interesting relationships that your banking clients have, to create a new kind of customer experience? That delivers value." Amy Lombardo:                Right and you know we think it's always about the touchpoints that a consumer has within a day. And if you think about just financial transactions, it isn't just this one-to-one, I'm going to a bank, I'm taking out cash, I'm depositing checks. Whatever it might be. Amy Lombardo:                It's that you touch [00:11:30] transactions in so many different sets through a day, so how is it that bank can complement that. Steve Gotz:                        Yes. Amy Lombardo:                And provide you with a seamless experience. And those examples that you gave are spot on to that. I love the one about the expat because that could be something that's so laborious, challenging for a consumer, but the bank is adding value there. Steve Gotz:                        Yeah, absolutely. Right. And if we step back a little bit and kind [00:12:00] of think about what's happening here, it's the replatformification of the bank, right? We're creating new ways for the bank to be consumed by customers. Amy Lombardo:                Right. Steve Gotz:                        At a fundamental level, fluctuation doesn't matter for the customer. The customer doesn't really care if you're using distribute ledger or cryptocurrencies to clear the transactions on the back end. They care about what's the experience. And are you making my life easier. Steve Gotz:                        And I think Dennison's a really good example of solving a very complex problem [00:12:30] in an elegant way. Amy Lombardo:                Exactly. Can I get an immediate access to cash? Can I get an immediate access or, you know, what I need to live my life, right? Steve Gotz:                        Yeah. Yeah. And what's really... What I find interesting about Dennison is everybody talks about the unbundling of the bank, right? And transfer-wise, it's often one of those perfect examples that people cite, that you've basically decoupled international payments of remittances from the bank. Steve Gotz:                        [00:13:00] What we're starting to see with Dennison is a replatformification, we're rebundling the bank in new ways that the consumer can then consume. Amy Lombardo:                Got you. Touching on that, unbundling, almost like a macro, [inaudible 00:13:14] talked about it so much in our business models. Steve Gotz:                        Yeah. I think this is a good/. it's good area for you guys. Amy Lombardo:                Okay, so let's say, I'm Mr. Banking Executive and I'm sitting here, and I'm scratching my head saying, "gosh, I [00:13:30] don't know where I need to breakthrough and transform my business. I'm stuck," and I go to you, Steve, or you know the partners that you work with. Amy Lombardo:                How do they begin this process? Steve Gotz:                        So I think there's a couple of points I'd like to make. And so I think the first one is so a general observation, and this isn't restricted to the banking industry, but corporations in general, have a hard time knowing what they have and knowing what the opportunities are. And that's not because [00:14:00] they're deficient, it's just the nature of human biases. Right? Amy Lombardo:                Mm-hmm (affirmative). Steve Gotz:                        When you work at the same place, in the same industry, for a long time, you start to see things in a certain way. The way you break out of those biases is to bring in people with new perspective. Bring in organizations with new perspective. Steve Gotz:                        So I think the first place to start is increase the aperture of your conversations, right? Don't spend time with your peers. Spend time with organizations and executives [00:14:30] that are different from you, right? Steve Gotz:                        So we spoke about cement and banking, there's a lot that can be learned there. So the first thing I would encourage executives and your listeners to do is increase the aperture. Look beyond banking for opportunities to be innovative. Look what's happening in the retail space. Look what's happening in the food and beverages space. Because I think there are things to be learned there. So that's the first thing. Amy Lombardo:                Right. Steve Gotz:                        The second point I'd make in terms of [00:15:00] how to get started is really related to where does innovation live within the corporation? So there was an interesting study a couple years ago where they looked at risk among banks. And what they found was, after a bank appoints a Chief Of Risk Officer, the organization tends to take more risks. And the observation there is, when a job becomes somebody's [00:15:30] function, somebody's role, responsibility now lives with that person. Right? So we now have a Chief Risk Officer, so they're going to manage all of the risk so the organization tends to adopt slightly riskier behaviors. Steve Gotz:                        Now, where this is interesting is with innovation because innovation is everybody's responsibility. Including the CEO. So I think an important take away from this is everybody from the top down and bottom up in the organization [00:16:00] is responsible for doing new things. Steve Gotz:                        Now the nature and scope of what those innovative things may change, may look different, but everybody needs to have a hand in how do we think about doing new things and creating new experiences. Particularly the CEO and the board. Especially when it comes to new things that are potentially really big and disruptive. Amy Lombardo:                I love that thought. So, I'm taking away from this, look outside your industry and everyone is an innovator. Steve Gotz:                        [00:16:30] Yeah, exactly. Exactly. Innovators just don't live in Silicon Valley. Amy Lombardo:                Right. Steve Gotz:                        They live everywhere. Encourage them. Amy Lombardo:                Right. I think this is a good place to wrap up the discussion. Steve, it's a pleasure to have you on and join us on Commerce Now. Steve Gotz:                        Thanks Amy. Amy Lombardo:                And thank our listeners for joining. Amy Lombardo:                So if you've got questions, feel free to reach out to Steve. Either via LinkedIn or via Twitter at @SteveGotz. Keep checking in on iTunes or however you listen to your podcasts for new topics [00:17:00] on COMMERCE NOW.

Summary: In this special episode of COMMERCE NOW, we team up with Pymnts.com's Karen Webster and Diebold Nixdorf's Uli Seeman and discuss convenience stores (C-stores) and how consumers who only ever pause for gas, and never even set foot inside the store, are a major lost opportunity for additional sales.  Content: Pymnts.com Feature Article: Moving C-Stores from a Fuel-Plus to a Plus Fuel Model Blog: Three Ways to Improve Loyalty in Fuel and Convenience   Transcription:   Speaker 1:                           Some convenient stores are great when it comes to innovative experiences. But according to Diebold Nixdorf's head of service station and C-stores, the majority of them aren't. In this payment's original podcast, he tells Karen Webster that while the independent operators that dominate the industry want to innovate into the digital age, they are held back by the lack of off-the-shelf products that make that transition possible. Karen Webster:                [00:00:30] Uli, thanks so much for making the time to be with me today. I'm excited to have our conversation about innovation in a very exciting space in retail, the convenience store. Thanks again for making the time. Uli Seeman:                        You're welcome. Looking forward to it. Karen Webster:                Okay. So let's take a trip down memory lane here, and talk about when convenience [00:01:00] stores first hit the scene. So actually two dates of note 1913, way long time ago when in Pittsburgh, there was a gas station, the Gulf gas station, which became the first gas station to sell food, so that technically checks the box. But from the standpoint of convenience stores that I think many people regard as the C-store experience, that was actually in 1927, when in Dallas, [00:01:30] the Southland Corporation, now 7-11, opened a store, small format store, to sell bread and milk and other things that consumers needed to buy, but couldn't buy because grocery stores had very different hours back in 1927. They weren't open on Sundays and closed very early. Karen Webster:                So the name, convenience stores, were open longer hours and seven [00:02:00] days a week to provide that convenience. So here we are today, and the environment's different. So there a lot of places that are open lots of different times, seven days a week, for consumers to buy things that were once only available to them at these smaller format stores. Karen Webster:                And I guess my question to you, Uli, to start things off is, how do you think convenience stores have evolved to keep pace with that change? Uli Seeman:                        My view to it, [00:02:30] truly, yeah. You mentioned that they started very, very early, providing convenience, providing not only fuel to their customers, but past the implementation of paying at the pump, which is a kind of self-service, they lost a little bit of pace and did stop leveraging innovations and leveraging IT for the advantage. So yes. They are open in many cases 24 by seven, but it's still [00:03:00] the old-fashioned format: forecourt is selling gas, you can pay there, you cannot purchase anything from in store at the forecourt, you have to walk inside and you do your purchases. Uli Seeman:                        No support of anything. Lately they are starting implementing mobile payments and loyalty schemes, and some kind of advanced technology but it's still far behind the rest of the retail industry. Karen Webster:                Yeah I would agree with you, and there are certainly some chains [00:03:30] that have done a good job of trying to integrate that experience and use mobile technology, to do that, and encourage through things like coffee and other convenience items, the loyalty and repeat purchasing by consumers. But why has this wave of innovation left this format behind? Is it that they got comfortable with being [00:04:00] convenient? Because people were stopping for fuel, and therefore they had an opportunity to convert some of the people into consumers in the store, and they didn't think they needed to do any more? Why stuck in the past? Uli Seeman:                        I believe, we have a few very, very good examples of advanced C-stores,  like Bucky's to name a few - Karen Webster:                Yep. Uli Seeman:                        They have plenty of more. They are really advanced, [00:04:30] they provide complete different user experience, than the store on the corner. I believe one of the key reasons they are all large enough to have capabilities to implement these newer services. Because, in many cases, these larger chains are using IT environments, IT solutions, which are coming out of, more out of the retail world than out of the C-store world - where the focus is only to the forecourt, or [00:05:00] mainly to the forecourt and very specific solutions have been installed. So these more advanced ones, they have higher sophisticated solutions, and with tremendous effort in many cases of professional services and customization, they can provide the services they have at the moment, which are exceptional. Uli Seeman:                        They provide kiosks, they provide order terminals, but they are customized and limited to their chains, and [00:05:30] the adoption into the other piece of the industry is quite difficult. Although keeping in mind that about 50 to 60 percent of the C-stores, gas stations, you have are owned by single owner. Karen Webster:                Wow. Uli Seeman:                        So they don't have an IT company, or IT capabilities like the ones I mentioned before, these larger chains. For them it's very, very tricky, to get into such advanced technology. Karen Webster:                So, how are they [00:06:00] able to do that? Because yes, I agree with you that the large chains have embraced technology - mobile apps, and are doing lots of things to engage consumers and to habituate that experience. Not only when people stop to fill up, but for purely the convenience of being able to pop in and pick up things, including now better food than what used to be the case back in the 1970's. But the 50 [00:06:30] percent of those who aren't that fortunate, how are they able to keep up and compete? What kind of technology should they be thinking about? Or are they thinking about? Uli Seeman:                        First of all, to take a little comment on what you said healthier food, food in general - so all of them have the challenge, that they need to find compensation for the declining sale in tobacco. And in some areas which are the margin carriers, for these stores.  So they are trying one way or the other to come up with food, with healthy food, with prepared food, in order to maximize their business. So, now looking on the implementation side, on the solutions side, the focus is for them to find providers with more box solutions. Means where the implementation effort to adopt it to that particular owner or, [00:07:30] small chain is very, very limited and where they can do even where there are low capabilities of IT management. Uli Seeman:                        And where they can do an adjustment in order make it, to customize their solution and have a look and feel for their particular store. On the other side, the IT, that solution provider, they are slowly following that trend, but many are coming out of the larger retail environment, larger retail customer scene, so they're [00:08:00] used to have a model, a business model, which is based more on professional services than on solution sales. So this gap is slowly getting closed, but it's very slow. That's why you don't find any implementations, many self check-outs, or kiosks in this smaller store format today. Karen Webster:                To the point about margins, and the considerations for making these investments. I mean I think we all know that, margins on fuel purchases are quite thin. And so the [00:08:30] opportunity, is to drive people from the forecourt into the store to make higher margin purchases. On top of that there are obviously the labor cost associated with staffing these stores. So there is a lot of appeal, you would think just based on the numbers, for a self service environment. I think it could perhaps even help some of the brand imagery of some of these stores, that need to signal that there are [00:09:00] new innovations awaiting inside. Karen Webster:                But is there such a thing as a turnkey self solution, for these independently operated players who have the most to lose frankly? Because people will stop to get gas but that's about it? Uli Seeman:                        Slowly evolves in this direction. So coming from this big implementation into, like I mentioned before about solutions. Some of the providers [00:09:30] are looking into this, there are some first solutions in the market which are focusing truly to a low cost implementation, in order to enable them. Like you said, you're absolutely right the challenge ahead at the moment is the wage increase. In many cases everybody's discussing this fifteen dollar wages - in many cases it's already there, if you see the signs we are hiring, an attendant is making already in some metropolitan areas thirteen dollars and more, an hour. Uli Seeman:                        [00:10:00] So they have to overcome this hurdle, and new technologies are providing from my perspective, quite sophisticated solutions in order to lower implementation costs, and in order to give them a high flexibility - although, in regards of that business format yeah? One is selling burgers, the next one is selling pizzas, so even that kind of adaption needs to be addressed on a very simple way, to give them the opportunity [00:10:30] to basically buy this kind of solutions off the shelf. And yeah, my perspective is yes, it's moving in that direction, although if you see now in other areas - in other food areas for example - McDonald's is big time - Karen Webster:                Yep. Uli Seeman:                        Emerging, self ordering kiosks systems. And this is driving the industry, from my perspective in the absolute right direction. And it's also showing some good opportunities if you look in food, in quick service restaurants, what kind of basket size increases [00:11:00] they recognize by using kiosk systems. Having not a human being in front of you, asking you if you want to super size something, is really driving the basket size. Which is coming back then, to a benefit for the convenience stores as well, and it's returning the investment into this equipment way faster than they anticipated at the moment. Uli Seeman:                        On the other side, obviously you need to check the store format. Does it really have the capability to provide the option to implement something like kiosks and self check-outs. Not every [00:11:30] store will have that - that size, that format that clientele, which will accept these kinds of new services and touch points. Karen Webster:                So looking at, the broad landscape of C-stores, not just the smaller format guys, but the large chains as they think about competing with...not just other fuel operators, but grocery stores, and the smaller format stores like we're seeing pop up from Amazon and [00:12:00] others; are they looking to other retail categories for inspiration on how to engage with customers? Where are they looking for models, if you will, to bring into their environment? Uli Seeman:                        They truly, they do look into other formats. And they have to look into other formats. If you go to groceries or home improvement or fast food, they all implemented one way or the other, self check-outs [00:12:30] or kind of, kiosk services. And what they also try to do is to have one platform for all their different touch points to their clients, so that it feels convenient to use them and you don't need to adapt yourself to the different user interfaces, touch points. That's how we call them here. Uli Seeman:                        On the other side, that's exactly the area today's convenience store owners are looking into as a reference. They finally, [00:13:00] from my perspective, recognized they have to move in a more modern, more adapted world. Otherwise, they will have a significant issue to attract the younger population. If I talk to my kids, to their kids, what is getting you into a convenience store? Well it's not only the light anymore, it's over some kind of, following the term 'convenient'. When I go in there I don't want to sit in queue, and wait to pay my [00:13:30] candy bar - I want to have the best possible service. The kids are used to go, to a Starbucks for example and pre order a coffee. So how can I transfer that format into a convenience store? That's what the convenience store owner also looking for. You can see that, if you talk to them, yeah Diebold Nixdorf's, you'll see there is a demand, there's really a need and they want to be more innovators. Karen Webster:                It's interesting what used to drive me as a kid into convenience stores were the Slurpee's. From 7 -11. I mean it [00:14:00] was very product driven! Not so much convenience driven but, you know, I think we laugh about this but...you are seeing, where convenience stores are trying to parley convenience plus their own type of product hook to bring consumers in - whether that's coffee, or other food items, I think you're starting to see that kind of affinity and loyalty being [00:14:30] introduced into these formats, or perhaps re - introduced. Uli Seeman:                        Yes, absolutely. And what - we have here a little term, inside of our company; it was in the past fuel, then it became fuel plus - as you mentioned very very early in the conversation here - it was early in the 1900s already, but now it's plus fuel. So you go there, because hopefully, in future, you create a kind of destination to make people go in there. One of my most favorite examples [00:15:00] and best examples, is if you come to Texas or it's going now in the states around here, is Bucky's. They created more or less a destination for people to come; not only because of their clean bathrooms, but also it's more a shopping experience if you go in there for food and other items, than only the gas. Karen Webster:                Interesting. Uli Seeman:                        And I truly believe and see that the trend in this direction is going. [00:15:30] You provide special food in order to drive your customers to your C-store and fill up the car. Karen Webster:                Yeah. Uli Seeman:                        In the other way around, you have to go because the demand is there to fill up the car, and this is the next convenience store. Karen Webster:                Yeah that's interesting. Uli Seeman:                        Yeah I believe that is the trend we will see, in the upcoming years as well. And maybe there will be a little bit of consolidation as well, because like I said the very small format owner - they're [00:16:00] maybe not capable to follow that trend, but time will prove, yeah. You don't see it yet. Karen Webster:                Yep. What is the impact, Uli, do you think of mobile in driving this change, and perhaps putting pressure on C-stores large or small to rethink delivery and this plus fuel mantra that you've identified as the [00:16:30] future? Uli Seeman:                        I see mobile as an opportunity to be honest. Because, at this point many of them have to invest a lot of effort into upgrades, to follow the rules, the EMV compliance - Karen Webster:                Right. Uli Seeman:                        The EMV PCI 5 compliancy. So all around payment. Mobile in the future, will probably give them the opportunity to slowly migrate rather to mobile payments, than to payment [00:17:00] at the pump. And mobile will also give the opportunity if you are in the app, to embed functionality to pre order or order items out of the store. And maybe then, self check-out is the bridge into that - where you either have a kind of same format application running on your mobile, and you can complete your transaction. Because you can pick up stuff at that device, or [00:17:30] you can make a final check out or final payment at that device. So the whole journey is a little bit easier and it's more like you used to do at a normal retail environment; where you may pre order already on your mobile app, certain items, and you go in the store to pick them up only, and not to select them anymore. Karen Webster:                Yeah, I mean it's interesting how all these technologies are obviously very complimentary - but getting back to the origin of the category, [00:18:00] which is convenience, and technology can provide that experience in terms of self service check-out capabilities, mobile through pre order, and staging fuel purchases at the pump. And certainly replicating the curbside pickup, and all the different things that one experiences today in other retail formats. So it'll be interesting to watch that evolution. Uli Seeman:                        [00:18:30] Yes I agree. And it will evolve eventually into such a direction. You made, by the way, a comment about purchasing at the pump. At this point, there are very few suppliers supporting these kinds of functionalities. Karen Webster:                Right. Uli Seeman:                        I recognize it's slowly going into such a direction, in some states you can already buy for example a lottery ticket together with your purchase of gas. [00:19:00] But overall, that implementation that for example you start a transaction during - you fill your car, and then you go ahead within that transaction and order your coffee, your dairy's, whatever from in store. It's more an exception, than a standard functionality and feature. With the new world, having hopefully - not hopefully, we will have android devices and so forth, in the forecourt. And a combination [00:19:30] of mobile payment like you mentioned before, there will be way more flexibility and functionality provided for consumers, in order to have more convenience in a convenience store. Uli Seeman:                        And I believe although that will drive eventually more traffic from the forecourt into the store. Today, more than half, more than 70 percent of [inaudible 00:19:52] I remember, are just coming on site to fill the car. Karen Webster:                Right. Uli Seeman:                        They're not going in store. Karen Webster:                Right. Yeah. Uli Seeman:                        It's not a very high level. Karen Webster:                [00:20:00] Yeah no, it's not. And I think you make a good point which is - there are things that have to change, in order to open the tab if you will, for the purchase of fuel, and adding on to that purchase things that may be desired in the store itself. But that certainly is convenient and I think you can imagine lots of innovators thinking about ways to make that experience that much [00:20:30] tighter. Especially, I know the things that you guys are thinking about with combining self service and technology and mobile payments, to make that experience that much better for the consumer - and certainly margin enhancing for the operator. Uli Seeman:                        Absolutely. We are trying to address exactly that. The increasing cost of labor, the availability of labor - Karen Webster:                Right. Uli Seeman:                        In some cases you can even pay fifteen bucks and more, you don't get anybody, because it's not the most attractive industry. Karen Webster:                Right. Uli Seeman:                        So [00:21:00] to overcome all these hurdles, and attract the stores for the people at the end of the day, let them have a very positive customer experience. Rather than staying in queues, and making it complicated to do your purchase in these kinds of store formats. So yeah, that's absolutely our focus. Karen Webster:                Excellent. Well Uli, it was really nice to chat with you. I was happy to recall my experience as part of this discussion of buying Slurpee's [00:21:30] at 7-11, that was kind of a throwback, to my youthful days! But it's an interesting category and it's certainly exciting to see innovation unfolding before our very eyes in a format that we've taken for granted for many many years, and is now really among the forefront of opportunities for innovation. I appreciate your perspective and thanks for your insight. Uli Seeman:                        [00:22:00] Thank you. Looking forward to the next one. Karen Webster:                Yes, you and me both. Bye bye now. Uli Seeman:                        Bye.    

Summary: Devon Watson and Thomas Karakalos discuss emerging trends in retail and banking services. Resources: Blog: Services for a Connected World Diebold Nixdorf AllConnectSM Services Transforms Bankdata IT Strategy Diebold Nixdorf Website: www.dieboldnixdorf.com Podcast site: www.commercenowpodcast.com Transcription: Amy Lombardo:                           00:00                     This is Commerce Now. Devon Watson:                 00:14                     My name's Devon Watson, chief marketing officer at Diebold Nixdorf. I'm joined this week by Thomas Karakalos, who's our head of the services business in Asia Pacific. So Thomas, why don't you give us a quick background. Who you are, what you do out here. Fantastic to have you on the show. Tom Karakalos:                 00:30                     Thank you, good to be here. So I've been with Diebold Nixdorf for the last three years. So prior to the integration with Diebold, heading the managed services business for Asia Pacific. Devon Watson:                 00:39                     Okay. Tom Karakalos:                 00:39                     My history, my background is deep in the systems integration room. So, heavy in tier one, systems integrators ... did a decade there, then moved into more niche kind of data storage security. Devon Watson:                 00:50                     Okay. Tom Karakalos:                 00:51                     Working in a global role, driving engagement, driving sales, driving project management. From there, a little entrepreneurial blood in the system. Devon Watson:                 00:58                     Fantastic. Tom Karakalos:                 00:59                     So then moved out, did my own thing. Still having in the background, but then it got to the point where I said, "Okay, next challenge." The next challenge was, Diebold was transitioning at the right time. Jump in really help move this ship towards services. Devon Watson:                 01:11                     Fantastic, fantastic. Tom Karakalos:                 01:12                     Yeah. So the focus is all about managed services, yeah. Devon Watson:                 01:14                     Great and that's a perfect segway. And I love the fact that you have an entrepreneurial background because, as I look at how banks and retailers are going to have to navigate all this change that's happening around them, you need some entrepreneurial blood there. Because we're solving new problems, we don't even know sometimes what the next problem's going to be and how to kind of navigate all these forces. Devon Watson:                 01:32                     So talk to us a little about what you're seeing is kind of the emerging trends in the services business in managed services and how our customers, in Asia Pacific in particular, are kind of looking at the partners, like us, that they have to help drive their business. Devon Watson:                 01:48                     What is it they're trying to get out of this general shift towards services? Tom Karakalos:                 01:51                     Well, as we know the whole industry is transitioning. It's transforming at the moment. So an organization, be it either in the financial industry or a retailer, is really thinking about, "What is core to my business?" There are so many moving parts, there are so many technologies and input points that they're interacting with their consumers, that they really have to take a seat of, "Okay, I cannot do everything, I cannot be everything to all men. I need to really focus on what is my core business and I need to trust partners that can come in and support." Tom Karakalos:                 02:16                     So, there is a tendency and an increased tendency towards outsourcing, that's something that we're seeing heavily in the region. We're seeing it on two sides, we're seeing organizations that have never ever outsourced anything that are actually saying, "You know what, I've finally realized, take the whole thing because it really isn't part of my core business." And we're also seeing a lot of organizations come together as consortiums and think, "How can we drive the investment that we've already put into either solution or product or technology," to bring high utilization, a better card holder experience for their people. Tom Karakalos:                 02:46                     So that situation is opening a lot of conversations with us because, from a managed services perspective, when we come in and give them a business outcome, that's exactly what they're looking for. So, they're great conversations what we're having. Devon Watson:                 02:57                     Absolutely, absolutely. Obviously, that storyline around focusing on your core competency and then taking the things that are ancillary to that and pushing them over into the partnership landscape, right to those subject matter experts, like ourselves, that can take that on. It brings a lot of operational efficiency of course, but one of the things that I think is particularly interesting, and I'd like to have you add some color to this, is the agility that that brings, right? So in particular, one of the things that I know we're working with customers around the world on, is things like branch and store lifecycle management, total implementation services, things like that. And to me that's also the cost story and it's a lot more of an agility story. So, maybe shed some color on that. Tom Karakalos:                 03:38                     Absolutely. Well, I'll hit the retail one to begin with because that's more predominant. So if you think about store lifecycle management and our offering, which is new store opening, this is something that is accelerating our customers' ability to go out there and actually dominate and participate in new markets. Tom Karakalos:                 03:54                     So, even here in Asia Pacific, we've got customers, be it H&M, be it Decathlon, be it whoever it is, where, the fact that we're in there with a cookie cutter way of basically getting them from an initial thought on, "I'd like my retail store to be there," to an up and running VIP night, is painless. It's cookie cutter, it's risk free, and we can do the whole thing while they're concentrating on, "Where do I put my products? And which VIPs do I organize for that event?" Tom Karakalos:                 04:19                     So, it is very much a risk component that they're able to shift across to a company like us that has done it time and time again, where we don't have those issues whatsoever. Devon Watson:                 04:29                     Got it. I love that storyline because, to me, that's really taking your physical infrastructure, those branches and stores, and almost turning it into an as-a-service model in some ways, and ... If I think about how our customers are going to compete with online incumbents, right? Being able to take that physical distribution, that physical infrastructure, make it more agile, make it more responsive, change adaptation to the market demand, we can help them do that. That seems incredibly powerful. Devon Watson:                 05:00                     So, we talked a little about the efficiency side, we talked about the agility that we're bringing to our customers ... Maybe give our listeners a just little flavor of what's new, what's top of mind. You know, what are you really gunning for? Tom Karakalos:                 05:13                     Well, one of the big ones that we're really trying to head out there, in terms of being a forefront of power in the industry, is to give a complete end-to-end integrated solution to our customers. So, ATM as a Service, or Store as a Service is something that we're heavily pushing. We've spent a lot of time investing in building this offering in a way that is extremely robust, that gives you the flexibility that you need to deal with the nuances of each retailer and financial organization. Tom Karakalos:                 05:36                     So, an end-to-end solution where they don't have to think about the asset, they don't have to think about the technology, they can disconnect themselves from some of those IT, technical decisions, and they can basically take the position of, "The business outcome we want is x." Tom Karakalos:                 05:50                     We can assure everything, so we can give them the business outcome they need, but we can manage behind the scenes. Everything, in terms of how the technology comes together, how the software layer integrates with the hardware layer and all that kind of stuff, without them having focus on it. Tom Karakalos:                 06:01                     I think that's something that's going to radicalize and really change the way that they go to market. Devon Watson:                 06:05                     Got it. And, if I'm a customer hearing about this for the first time, it's a pretty new approach, right? They probably haven't heard a lot of other partners out in the market place talking about this kind of soup to nuts as a service model. Devon Watson:                 06:19                     So, if I'm a potential customer thinking about that, who are the right people within my organization to bring to the table to explore that with us? Because it's a different way of thinking about an end-to-end problem and an end-to-end customer journey, and that's something that we've talked to the customers a lot about, is thinking about, "What is it you're trying to enable across the spectrum, for the consumer." Devon Watson:                 06:40                     So, what's the right time to engage with us? Tom Karakalos:                 06:42                     So, I think there are a number of people in both banking and retail, where, from a banking perspective, you really need your CTO, your CIO, a lot of that C-level. I mean, these are senior-level conversations that you need to have, right? Because it means that the company has to ... to make a decision as to how much it wants to hold parts of the pie that it will hand across to you. Tom Karakalos:                 07:02                     So, having the technology part of the business, the business itself and having the innovation and information part of the business coming together ... They're the ones that we need to have that effective conversation. Tom Karakalos:                 07:15                     From the retail side, it's really looking at ... the people that are involved in driving the expansion of that business out, and looking at, both the profitability of the stores but also the site location, the placement and the markets that they want to enter into. They're the ones that we want to be speaking to. Tom Karakalos:                 07:29                     If you look at the spectrum of solution that we're providing, it is something that is soup to nuts. It's everything, right? So, a lot of times what happens is, you commence the conversation at a senior level, so that, from a vision perspective, you're seeing eye to eye. And then you see very quickly it trickles down. So it really means that we partner at every level of the organization, be it at a direct, technology level, at an infrastructure level, at a solution level. Even at a business vision level. Devon Watson:                 07:53                     To me that's such a great way of going to market and engaging because, really, it's their team powered by ours, right? And that's just a great storyline. Tom Karakalos:                 08:02                     Powered by Diebold Nixdorf, absolutely. Devon Watson:                 08:04                     Fantastic. Well Thomas, thank you very much. This is a great conversation. Really appreciate the time. I hope our listeners are learning from these and look forward to seeing you again somewhere else around the world.  

Summary:  Anna Istnick, Marketing Director of Global Banking Solutions at Diebold Nixdorf discusses self-service retail banking strategies with Diebold Nixdorf’s Brand Evangelist, Scott Anderson.   Resources: ATM Solution Fitness Assessment Blog: It's Time for Your ATM Solution's Annual Checkup: Take the Assessment   Transcription:  Anna Isnick:                        00:00                     Hello, and welcome to COMMERCE NOW, your source for fintech conversations, along with emerging trends in the banking and retail industries. I'm Anna Isnick, marketing director of global banking solutions at Diebold Nixdorf. I will be discussing self-service retail banking strategies with Diebold Nixdorf's brand evangelist, Scott Anderson. Welcome, Scott, and thanks for joining me today. Scott Anderson:               00:21                     Thanks Anna. It's great to be here. Anna Isnick:                        00:24                     To begin, would you mind telling our listeners a little bit about yourself and your background please? Scott Anderson:               00:29                     Sure. My background, I actually came from a retail banking history. I spent 10 years in a large financial institution, spanning everything from branch, call center, product management, you name it, and had a lot of great experience from a banker's point of view. I kinda get where they're coming from. I've probably spent the better part of 20 years in the self-service industry and working with folks like yourself over the last handful of years and looking at ways to help banks be more relevant in their consumers' minds. Anna Isnick:                        01:00                     That's awesome. With that breadth of experience that you have looking at things, Scott, from the view of the banker, what role do you see the self-service solution, or ATM, playing in the market today in 2019? Scott Anderson:               01:12                     That's a really great question and I think there are a few different lenses that the industry and bankers in particular, or even ATM deployers in general, can really look at the ATM, or self-service channel, through. First and foremost, I think the self-service channel is becoming way more strategically important to financial institutions. In particular, as they look at ways of engaging their customers on what is probably the most frequent touch point, that the customer engages with them physically. In addition to that, there are other financial institutions and deployers out there who really look at their ATM channel as a utility. It essentially dispenses cash. It was sort of the first branch transformation, if you will, 30, 40 years ago. I think what's really important when we think about that, equally to both camps, the importance of the ATM is critical, and the availability of that ATM and that trust factor that unattended 24/7 environment is going to be able to fulfill that consumer's need. Anna Isnick:                        02:11                     Do you see it focusing more on the self-service as an experience? Or you called it a utility as an expense for a financial institution. Scott Anderson:               02:19                     I think it can be both and I think it is both depending on who you talk to and where those financial institutions or deployers are in their journey of bank transformation. My opinion is that it is a strategic asset to a bank. If we look at the world of fintechs today, they are grasping at ways to enter the physical space and the physical world of their consumers. Banks have this huge opportunity to leverage one of their best assets, which is their physical presence being the ATM. Anna Isnick:                        02:50                     So true. How do you feel like, from a security standpoint, that FIs are looking to really ensure that that experience is secure? Scott Anderson:               02:58                     This is one of those areas where banks are grappling with very limited resources to be able to do what they need to do on a day-to-day basis. Security and protection of their brand in their consumers' eyes is critical. That's why I think it's important from a self-service channel perspective that not unlike having a vehicle, we don't let that go without being serviced on a regular basis. We don't let it go without rotating the tires. Most of us aren't even driving cars that are more than five or six years old. I think the ATM channel, because of the importance that it plays as a utility to dispense media and to accept media, but also as a strategic touch point, security and being up to date with security and making sure that that channel is fundamentally trusted by the consumer is critically important. Anna Isnick:                        03:50                     I totally agree with you on that. I was reading recently about cars and how they said now the cars may slowly decline in the world today because with Lyft and Uber and everything going on that there's gonna be fewer cars. Do you see that analogy with ATMs, or do you see them more as that strategic thought? Scott Anderson:               04:08                     I think there's a little bit of both going on there. My point of view is, until that last note or dollar is out of circulation, there really is going to be an ongoing need for ATMs. The management of cash and the ability to automate some of those processes instead of having that manual intervention that we have traditionally seen in the branches, the ATM will play a critical role. I don't think it's gonna go away. The operating model may change slightly. It may be, instead of owning it outright, maybe I rent that capability. Maybe I outsource that capability. Ultimately, the importance of that channel, both to fulfill the consumers' needs for cash, but also as that critical touch point in the strategic digital engagement model is still paramount. Anna Isnick:                        04:54                     You mentioned that cash and how cash is still relevant today. Taking that channel and making it more efficient, do you feel that recycling will continue to grow across the globe and maybe get some pickup in the United States? Scott Anderson:               05:07                     Yeah. That's a really interesting place. I know you spend a lot of time thinking about this as well and talking to some of the customers that you interface with on a regular basis. If we look outside of North America, recycling has really gotten a very large foothold. Because of the fact, most of the branch optimization, most of that getting automated processes off a teller line has taken place. Therefore, the ATM does a lot of heavy lifting for cash. As that becomes more and more prevalent in a certain environment, or an area, of the world, obviously cash management, cash in transit, all of those things that go along with more transaction through put on an ATM require us to think differently about how we manage the cash and the cash cycle with self-service. Scott Anderson:               05:55                     Therefore, I think cash recycling is a critical component to that, not only to reduce operational costs and the like, but also to ensure that when a customer wants to receive cash out of the machine, it's available for them, instead of having to worry about whether or not that ATM is out of cash, it's a long weekend. Looking at the business model to drive ways to say, "Hey. Recycling makes sense in these locations, maybe not this location," I think is gonna be very important going forward. Anna Isnick:                        06:24                     Yeah. That's a great point. I feel that cash is so relevant still. I was just spending some time in Europe. You could see there was a queue at every ATM that we went to, 'cause you always need cash. There was always this queue. When you get up there, you realize that they have different ATMs, the financial institutions: one for recycling, one for dispensing Euros, one would dispense US. It was all different currencies. They had different applications for each. I'm sure that banks are going to start looking at how do we make this more efficient and make more recycling possible. Scott Anderson:               06:57                     That's a really interesting point that you make because most of the industry would look towards Western Europe and the Nordics as saying, "Hey, they're going cashless." To your point, not so fast. I'd say that's a desire, perhaps, for a lot of payments in that environment, but cash still plays a very relevant role in most consumers' day-to-day lives. Therefore, it's important that there's a vehicle that is automated, secure, available 24/7 to be able to deliver that capability. Anna Isnick:                        07:29                     Right. I know that we do a lot together as we follow what they call the dash from cash going forward. We've seen, if you agree, Sweden, Africa, India, Asia, some of them are moving fast, but then they get slowed down a little bit just because of the regulations that have to go around and implementing it. Do you think that that is something that will impact the digitization of cash moving forward? Scott Anderson:               07:52                     I think, again, my crystal ball is cash is gonna be around for a long time. Will it be the predominant payment vehicle in every geography in the future? Probably not, but I do believe that it's going to continue to play a role. We have to look for ways to optimize that so that it's A, easy for the consumer. They don't wanna have to think about how, when, and where they're going to get cash, or make deposits for that matter, which is also critically important. Also, from the deployer's perspective, they need to look at ways that say, "How do I make this a more efficient channel for me? How do I take cost out of the equation?" And turn that model around to say, "Hey, this is actually a strategic value to me because as long as that customer needs to receive cash or deposit cash, it's an opportunity for me. It's a set of eyes on my brand to talk to them and to engage with them in a different way." Anna Isnick:                        08:47                     That's so important, the ATM's role. What do you feel about the financial institutions and the branches themselves? If their branches are going down are they right sizing and then the role of self-service in that? Scott Anderson:               09:00                     Yeah. You and I have talked at length about this and the importance of self-service as a transformative strategy for financial institutions. If we think about what's happened in other geographies that are, perhaps, a little bit more advanced than North America with transformation, such as Europe, the ATM is a bit of a utility in the sense that it's predominant factor is to manage media, so cash, both in and out. When we look at the opportunities are in front of the financial institutions in North America, we are still very much grappling with cost of the footprint, whether or not there's financial viability for a branch in a certain location or certain town. I think the ATM plays in a critical role, because it can be a part of that transformative branch footprint while that branch is operational. Therefore, it's part of being in the branch as part of the cash mechanism and engagement model. When that branch is either right sized, optimized, maybe even closed, it's a great leave behind strategy where the ATM can actually be the branch. With the connectivity that the ATM now offers with middleware capabilities and transaction engine-like capabilities, the API world, we can now connect into various parts of the bank without being bogged down by that legacy of having just a standard protocol to a switch. Anna Isnick:                        10:29                     Wow. You said that beautifully. That's a lot of things that we feel really strongly about, is the ATM in the branch or does it serve as the branch? Serving as the branch, do you feel that with the open APIs it's gonna make automating of more transactions, not just focusing on cash, but really migrating other services and interactions to that self-service device as a more cost efficient way for the FI to operate? Scott Anderson:               10:52                     Absolutely. I think this is where it becomes that strategic touch point, because if it is the leave behind strategy, or if it is the market entry strategy for some FIs who are looking to expand their footprint, it can't just be about cash and dash. It needs to be about an engagement model that says, "Allow me to interact with this physical presence as I would in my digital world with the bank, or even, perhaps, with a face-to-face person in the branch." It needs to have that connectivity to all aspects of the financial services organization. I'd take it one step further. It's more than omni channel in this sense, because we need to start thinking about that consumer may wanna do other things with other third parties, or other apps. The ATM can then be that vehicle that ties it all together and allows them to interact with their financial institution and peripheral or support services and offerings that may be outside of the four walls of the bank. Anna Isnick:                        11:50                     You mentioned something interesting there. You mentioned face-to-face. As our consumers are out there engaging with their financial institutions, they want a lot of different things at a lot of different points. What are your feelings about the video interaction with the ATM and face-to-face? Scott Anderson:               12:06                     Yeah. Look, I think video has a role to play in certain, very specific, use cases and very specific deployment models. I don't think it's a solving equation for mass movement of transactions out of a branch that are card-less. There are other, better ways of doing that, and frankly speaking, more cost effective ways of doing that. Video plays a great role if it's an advisory capacity, if it's an onboarding capacity, or if there were very specific use cases where having that human presence to handle exceptions, to do things such as provide overrides, or even to onboard a customer and validate identity. That's where I think video can play a role. I don't think it has to be a long term strategy for a financial institution to roll that out on mass. Scott Anderson:               12:55                     I think it can be quite prescriptive to say, "Hey. Here's a business challenge that I have and in the short term, video will fill the need while I build out infrastructure in the back to support a more programmatic way of engaging customers who may or may not have a card and PIN to process with, who may be onboarding with my bank or who may just wanna have some of that more human touch as they interact with the self-service terminal." Anna Isnick:                        13:19                     Looking at all that from FIs perspective to get that strategy down and think about all those different points that you made, do you feel like there's still a lot of possibilities to be unleashed? Do you feel that FIs today are leveraging these and are they doing it in a modern way? Because sometimes the life cycle of an ATM can be out there longer than is needed to meet requirements and security as things evolve. Do you think banks are ready to look at that and make decisions? Scott Anderson:               13:47                     Yeah. This is probably the catch 22, because I think a lot of business minded people in the banks, a lot of business owners in the banks, would like to move forward much faster and be able to deliver on some of those journeys and some of those capabilities that we just talked about. The challenge, the dichotomy, that we have here is there's a lot of legacy mired into the channel, mostly from a connectivity perspective and how the ATM is managed for transaction processing. Scott Anderson:               14:16                     I think what's also critical important is hey, if we wanna do some of these strategically important things and engage our customers in more meaningful ways, I need to have an infrastructure in a physical box that is up to snuff, that can actually handle some of this heavy lifting, that I can rely on, and that I don't have to worry about the age of the terminal or security layers on that terminal or the processing capabilities of that device to be able to support consumer demanded engagement, which is much more robust, much more like mobile or online banking environments versus that traditional, easy flow, pick an account, pick an amount, pick a receipt option and get your cash. We need to take it to the next level. I think financial institutions need to think about that and re-examine their investment methodology in the self-service channel and think about it less as that utility and more as that strategic touch point, especially as we look at branch transformation and engaging our consumers in different ways. Anna Isnick:                        15:20                     As you say that, do you even envision that bigger, not just the ATM as the strategic ... part of the strategic channel, but also the back end of their systems and their software systems that are tying together everything? Does that need a refresh also? Scott Anderson:               15:33                     Likely, yes. If we pick on the American marketplace a little bit for a moment, most of the financial institutions are somewhat handcuffed by the processing environment where it is what it is. That's how I process my transactions. If we think about ways that, whether they do it themselves or they look at partnering with others to help them build out that middle layer, that infrastructure, there are so many better ways for us to connect into other aspects of the bank, or outside of the four walls of the bank as I had mentioned, and bring more meaning to an interaction at the ATM than simply cash and dash. Anna Isnick:                        16:10                     Awesome. Well, is there anything else that you'd like to add as we close that you think it's very important for financial institutions to consider as they look at their technology from an ATM self-service standpoint? Scott Anderson:               16:21                     I think if I were to have a leaving thought, it's always a good time to do a look in the mirror and say, "Hey. Am I at the best optimal operating model for my self-service channel, or are there things I could do to improve that?" I think there's no harm in investigating options and opportunities to say, "How could I be better? How could I optimize this environment? How could I make it more cost effective, or perhaps even a better revenue generator for my financial institution?" All of this ties back to, "What's in it for my end customer?" At the end of the day, it's making sure that the self-service channel is part of that strategy to remain relevant with your consumer. My parting thought is, don't just look at this as the odd time the customer comes and touches me to get cash. It is eyes on your brand every time they visit the ATM. We should be treating it as such and involving that in the overall end to end customer journey, regardless of what transaction it is they're processing. Anna Isnick:                        17:24                     That is great information to think about as they look at their entire strategy. It sounds like you're recommending financial institutions to do an ATM health check or fitness check on their self-service network. Scott Anderson:               17:33                     Yeah. Absolutely. I think there's a great, easy tool that we have that people can go through very quickly and share their results internally and build a plan around acting on some of those opportunities to enhance and improve. Anna Isnick:                        17:46                     Yes. For our friends tuning into the podcast, if you'd like to go to www.dieboldnixdorf.com/ATMfitness, you can learn more about your self-service strategy status. Well, thank you so much for joining us today at Commerce Now, Scott. Scott Anderson:               18:02                     Thank you, Anna. It was great chatting with you. Anna Isnick:                        18:04                     Likewise. Thank you to all our listeners for tuning into this episode of COMMERCE NOW. To find out more about self-service in retail banking, go to www.dieboldnixdorf.com/ATMfitness, or click on the link in the podcast show notes. Until next time, keep checking back on iTunes for new topics on COMMERCE NOW.    

Summary: Banks’ investments are leaning heavily toward technology upgrades – especially those that make self-service, digital banking easier for customers, as Karen Webster with Pymnts.com discussed in a recent conversation with Diebold Nixdorf Vice President of North America Solutions Heather Gibbins. Resources: Pymnts.com Article: Diebold Nixdorf: Why Bank Branches Need to Move Beyond the Transaction Blog: Is Your Bank Embracing These Key Mega Trends  Why Digital Is Important Right Now The Future of Payments is Fast Evolving, but the Direction Might Surprise You How Innovative is Your Banks Culture? COMMERCE NOW (Diebold Nixdorf Podcast)   Diebold Nixdorf Website   Transcription: Amy Lombardo:                00:00                     Hello, and welcome to COMMERCE NOW, your source for emerging trends in the banking and retail industries. Karen Webster:                00:14                     Heather. Thanks for joining me today. I'm looking forward to our conversation about branch automation, migrating transactions, and the role of technology in making all of that smooth. Thanks, again, for making the time. Heather Gibbins:              00:28                     Oh, thanks for having me. Karen Webster:                00:29                     So, Heather, I want to start with an interesting proposition. So, it's clear that financial institutions are using data, they're using new tech to keep pace with expectations that their customers have about going digital. Yet, so many studies that we've done of consumers and their preferences for financial services say how much they really love the branch, and how important the branch is to those consumers in making decisions about who they actually want to bank with. Karen Webster:                01:12                     Why do you think there is such a dichotomy between wanting technology to help consumers be more effective, yet the role of the branch in helping them navigate their financial situation? Heather Gibbins:              01:27                     So, I'd probably say a couple things with this. One, when we hear about branch automation, itself, what we're definitely hearing and seeing is that it means different things to different financial institutions, and then what that effect actually has on consumers, itself. I would say in general, the role of branch is transitioning to be less based on transaction, with more of an emphasis on becoming a trusted advisor. And, I think that's where some of the study and research and information that you come back to kind of shows this dichotomy between the two items. Heather Gibbins:              02:03                     So, you have financial institutions that are saying like, "Listen, let's migrate these transactions over to more of a self-service platform." Customers like technology. They're willing to use the technology, but at the same time you've got customers that are saying, "Hey, we want you to help us make better financial decisions for ourselves. Set us up for the future, think about retirement and planning, so that we can manage our finances in a better way." Heather Gibbins:              02:31                     And that's a lot of the research that we've heard and seen, as well, is consumers are looking for financial institutions to basically help guide them and make better decisions with their money moving forward. So, they no longer want them to just hold their money and keep it safe, and maybe get some sort of return on it. They want them to give them their expertise and knowledge to make a better decision moving forward. Heather Gibbins:              02:57                     And, I think that that's where you kind of sometimes have a difference between maybe the actions that are perceived actions that financial institutions are taking versus what you hear in research, but they really compliment each other. It's just really then at the end of the day what's the role of those face-to-face interactions in the branch, itself, going to be moving forward. Karen Webster:                03:18                     Yeah, it makes sense, and your point about self service, I think, is a good one. Not only are consumers comfortable with self service, but they can actually use the services on their own time, so after more traditional banking hours, weekends, holidays, et cetera. So, I agree with that. And given that, that self-service capability is creating less of a responsibility for the branches to engage in those transactions. Karen Webster:                03:49                     You're saying physical branches are really being transformed to create these more one-to-one interactions that build trust and loyalty. What specifically do you mean by that? Heather Gibbins:              04:00                     One of the things that I would say is meant by that is what we're seeing more and more is the role of the branch changing to be, one, trusted advisor, but also to be able to spend more time with what we would consider commercial customers or small business customers. But, you'll see customers like that that are coming into the branch. So, there are these small businesses that are actually getting workspace within the branch. They can conduct meetings in the branch. You've got others that are trying to use the branch space to be more of an inviting place for community members to be able to come in. And, some of them are even showing the local sports games and stuff that are on, holding after hours events there in that space. Heather Gibbins:              04:44                     So, it's becoming much more of a community space, and one that can drive more business within small business owners, itself, or small businesses in general, so that they can have strengthened relationships there and also increase in activity with those businesses moving forward. Heather Gibbins:              05:04                     So, I think that's a lot of what we're seeing when it comes to that, and when customers and financial institutions are thinking about what is that "branch of the future" really look like, those are some of the considerations that they're taking into play as they're designing what that setup looks like versus what you would have seen in the traditional branch in the past. Karen Webster:                05:25                     So, Heather, are these big banks, small banks? I mean is what you're describing, which sounds awesome by the way, something that is particularly characteristic of one type of bank versus another? Heather Gibbins:              05:36                     I think we're seeing it across the board, and some of the larger top ten banks that are out there, they've been playing with this over time, especially in the US, and have been making some headway. Heather Gibbins:              05:46                     We've also seen some that have more of like nische kind of clientele in the market that have gone and moved forward with these types of branches. Where we're seeing a lot of our activity right now, in North America specifically, is in those smaller regional and community banks because number one, they've got to keep up with what some of the others are doing; two, they're trying to figure out how do we really differentiate ourselves from what the competition is doing. Or, maybe how can we kind of get ahead of what they're doing. We are talking about really catering yourself to small business types of clientele and also the community. Heather Gibbins:              06:26                     A lot of that is a way for some of these smaller financial institutions and credit unions to be able to kind of have that personal touch that can give the type of experience in consumer or business journey that these small business owners are looking for that's beyond what maybe some of the larger financial institutions have been able to achieve. Heather Gibbins:              06:47                     And so, it gives them a way to really look at this from a differentiation and competitive advantage moving forward. Karen Webster:                06:54                     Yeah, that makes sense and I think the whole point of the smaller regional community banks is to become more a part of the community and the fabric of businesses. So I can see where that would be something they'd want to really wrap their arms around. But, as with so many things, Heather, technology which is enabling a lot of these things to happen certainly can't happen just because technology is making some of these automation ideas reality. Karen Webster:                07:32                     What are the things that people and business process need to do in order to really fully embrace the capabilities that technology can provide? Heather Gibbins:              07:43                     Yes, so I think that's probably one of the number one things that we tell all of our customers that we're talking to is, if you think that you're just going to put some technology into place and that's it, most likely you're not going to be successful. Karen Webster:                07:57                     Right. Heather Gibbins:              07:59                     A couple of the biggest things that come around that are really like the people and the processes, and probably more important than that, the training that goes along with it. So, a couple of examples, and even in just some of these branch automation or branch of the future type of concepts, a lot of what we talk about as a part of that, yes, technology comes into play there, but when you talk about having meeting spaces and the more open area, and you've got some people that are doing coffee bars and big screen TV's and all that kind of stuff, a lot of it doesn't even involve technology. Heather Gibbins:              08:33                     So, when we get into this more consulting and advisory services, a lot of times they're taking what you consider your tellers and they're becoming more sellers, right? Or, advisory consultants. The thing with that is they must have information at their fingertips when someone walks through the door to be able to enable them to be successful. So, a big part of that that comes into play from a technology side, but maybe less than from what you would traditionally consider is really data. You have to be able to share data from all of your different systems in order to enable what you want your people to be able to do moving forward. Heather Gibbins:              09:10                     The other thing you have to really think about is the training aspect of that of how you want them to interact with customers, how you want them to greet customers, how you want them to take them around, what your new branch looks like. But, also to make sure that they feel comfortable using the technology that you now have into play. I can guarantee you that if you walk into a lot of financial institutions, credit unions today and someone comes in and wants to do just a check deposit, that teller's going to take the check and do the deposit just like they do every day. Heather Gibbins:              09:43                     More than likely, what a lot of executives are probably wanting those tellers to do is to actually either: a) show them how to do it on the ATM so that they can do it themselves, or open up a mobile banking device, show them how to download the app and show them how quick and easy it is to be able to do that transaction at home. And there's so many customers out there today, and consumers out there today that don't even know that their financial institutions have that as an option. Heather Gibbins:              10:13                     A personal story, we had a friend and she made mention that she owns a couple small businesses and she couldn't go to the bank to deposit some checks because they weren't open. It was a Sunday, and I just kind of looked at her and said, "Who do you bank with? I'm sure that you can do it on your phone." And she literally, I walked her through how to do it, not even a member of that bank or anything like that, and she said, "Heather, this is like life changing." Karen Webster:                10:36                     I was just going to say you changed her life. Heather Gibbins:              10:39                     Yes. Exactly. So, it's just those simple things that sometimes some of the financial institutions need to think about, like hey, how do we make sure we're training our people to get the expected behavior we want from consumers, but also makes it a better experience and more convenient for them? Karen Webster:                10:58                     So, you mentioned two things. Tellers as sellers, I thought that was awesome. And there's a training process around that, and that is just any other change management training process, it takes time and it will eventually be successful. But, data sharing strikes me as something that could be a bit more problematic. Karen Webster:                11:19                     How are the financial institutions you deal with addressing that, and getting the right data in the hands of the right people so that all the things we talked about are possible? Heather Gibbins:              11:31                     Yeah, so I think it can go in various stages or phases. Just to give you a real quick example, too. At one point I needed to get pre-approved for a loan. We were going to buy a new house, and I was shopping around from different providers and I decided to take one of my local financial institutions, and go online and fill out the form. And a few days later I had realized I still had not gotten any information back, and I thought oh my gosh, did I just give all my information to someone and I have this security problem now. Heather Gibbins:              12:06                     So, I picked up the phone and I called the call center, and when I called that call center they were like, "Heather, we don't have any information that says that you did this." They said, "Did you fill it out online?" And I said, "I did." And they're like, "Oh, well yeah if you fill it out online, we're not connected to that system. It's a completely different group and so we can't help you. You need to email the person and maybe they'll help you." Karen Webster:                12:30                     What?! Heather Gibbins:              12:30                     So, again, my consumer's journey was not the greatest. I ultimately did not go to that financial institution. But, I think that this is very common. Karen Webster:                12:40                     Right. Heather Gibbins:              12:40                     I don't think it was specific to this one financial institution. So, some of this is just behind the scenes, if that teller can go on and be able to log into the system to see information. Some of that is just a very simple sharing of data. It's not the best use case, but they need to be able to have access into systems to see information. Heather Gibbins:              13:01                     We've got other financial institutions that are saying, "Okay, we want to have full, let's say CRN integration", so when someone walks into the branch, if they go to the ATM, I can see on my tablet exactly who's at that ATM, if there's maybe some sort of value add service that I could offer them, to be able to disclose to them. If they have a CD that's coming up for expiration, and I might be able to go help them renew that. That it gives them the information they need to help. Heather Gibbins:              13:31                     So, we've got many that are saying, "Okay, let's figure out what's the role of these tellers moving forward?" In many cases they're calling them something else, maybe they're a concierge or that type of thing, and giving them a tablet that can help them have better interactions moving forward. Karen Webster:                13:47                     Is part of this, too, training consumers and small businesses that this is just as effective as walking into the bank? I know that sometimes people think that if they go to the bank, somehow service is expedited or availability of funds is faster than if they did something electronically. Is there some of that that needs to be dispelled, too? Heather Gibbins:              14:13                     I think there's some of it in some cases, but at the end of the day when you look at consumer behavior today and think about who are some of the strongest ... And I go to retailers when I think about this, too, and I talk to customers about it because the interactions that consumers are having with retailers, whether it be people like Amazon or even mobile applications that they're using, like Uber, or walking into the Apple store, they're comparing you to that on a daily basis. Karen Webster:                14:45                     Right. Heather Gibbins:              14:45                     Right? And in many of those cases, they're not interacting with someone face to face, right? Yeah, I would tell you I've never interacted with someone face to face at Amazon, yet I would say I have a very strong relationship with Amazon, right? Karen Webster:                14:59                     Yep. Heather Gibbins:              14:59                     Probably the number one thing that I use on a daily basis. Karen Webster:                15:04                     Yep. Heather Gibbins:              15:04                     And my loyalty and trust factor and everything with them is just as strong, if not stronger, than other places that I go face to face. So, I think that's also another thing that these financial institutions need to look at, kind of like you said with the research that you've seen that people want to do things face to face. Sometimes they're doing things face to face, not because they really want to, but maybe because that's the way they: a) have to do it. Karen Webster:                15:30                     Right, right. Heather Gibbins:              15:30                     For some reason it's easier that way or more convenient than another method. And one example I would use is, you go to the grocery store and see the self checkout lane. I'm the type of person that I'm going to go to the self checkout lane. But, I don't go to the self checkout lane if I have a huge cart of things, because I know that that scanner's going to yell at me all day long because it won't all fit in the little spot I have to bag it. Or, I know I have bananas today and I have no idea how to weigh them. Or, I'm getting a gift card and I can't get it activated. So, that's what then moves me back over to face to face. It's no longer easy or convenient. It's kind of the way I have to go, to go to the person at the cashier. Karen Webster:                16:11                     Yeah, some of it is just, as I said, force of habit or a misperception about funds availability and things which are easily remedied through education. You talked about mobile, and the first part of our conversation was about shifting from face to face to self service and adding face to face in a different, more value-added capacity. And now mobile is just another layer on top of that. Karen Webster:                16:46                     What are you seeing, the FI's you're working with, how are you seeing them incorporating mobile into the mix? Heather Gibbins:              16:54                     So, I think mobile is probably becoming one of the most widely asked items when it comes to putting it in the mix. So, we've got some financial institutions that are saying, "Okay, how can we integrate the mobile device with the ATM itself." Right? So, how can I pre-stage transactions? Heather Gibbins:              17:16                     One of the things that also comes up is how do you start using your mobile device maybe to not only pre-stage the transaction, but as an authentication method at the terminal itself, as well. Heather Gibbins:              17:29                     The other thing we have people looking at with mobile is thinking about how do I add other services into that mobile application and that can speak and talk back and forth with the other channels that we have? So, we have a lot of customers that have talked to us, and in my 12 years that I've been here we've always talked about Omnichannel. So, with Omnichannel, how do you get all the different channels that the financial institution owns? So that could be mobile banking, online banking, the ATM channel, the call center, the branch, all working together and kind of sharing information and playing off of it. Heather Gibbins:              18:06                     That could be as simple as if you have online banking and you set up bill pay, and you're paying your bills on there on a regular basis. Then if I go to the ATM, it could say, "Heather, are you sure you really want to take that $300 out? You have these bills that are scheduled to be paid in the next two days, and you're not going to have enough money in your account if you do that." Right? So, again, it's the financial institution advising me through digital, do I really want to do that and if so, oh yeah, send me a text reminder that I need to make a transfer, or I need to think about what I'm going to do. So, it's really getting mobile involved and digital in general coming together with the physical location. Karen Webster:                18:48                     So, when we talk about smart ATM's and introducing mobile and authentication through biometrics, is that what you're talking about? Heather Gibbins:              18:57                     Yeah, that's a big part of it. I mean, what we've seen over time, and if we look globally at some of the global markets, biometric ID verification has been going on for many, many years over there. In the US market, we haven't seen as much adoption, especially around the banking or financial industry, itself. And we've always said, "Oh, it's not widely accepted here in the US like it is in other regions." Heather Gibbins:              19:25                     However, probably anyone that's listening to this, if I were to ask them, "Okay, can you go check your email real quick." They're going to go to their phone and they're going to use their thumbprint to access their phone. Right? Karen Webster:                19:38                     Yep. Heather Gibbins:              19:38                     And this thing, I took my kids to the orthodontist last week. They walked in, they did their thumbprint, and we moved on. I never even had to do anything. So, now it's becoming, okay, it is more widely adopted. Karen Webster:                19:51                     Right. Heather Gibbins:              19:51                     How do we start to transition that adoption into the financial industry. I mean, I'm sure like me, when I go to log into apps on my phone, I'm really annoyed if I have to try to remember my password for these different applications if I can't just use my thumbprint. Karen Webster:                20:08                     Yep. Yeah, no it's friction, friction, friction, friction. It's a mess, and we're all trying to get rid of that. Karen Webster:                20:15                     You know, one thing that we haven't touched on, and I'd like to spend just a minute on is the landscape of risk associated with now having so much of a digital mobile presence within the banking channels. What are you seeing there and how are you helping financial institutions balance digital with managing those risks? Heather Gibbins:              20:38                     I think that one of the biggest things here is I had come across some research not too long ago, and it basically asked consumers, "Who do you trust most with your financial needs?" And the first answer that they trusted the absolute most was who they bank with on a daily basis. Karen Webster:                20:58                     Right. Heather Gibbins:              20:59                     The second item outside of that was other banks and credit unions. And then the third started to get into people like Paypal and Amazon and other spintec corporations. And that's really kind of thinking about ... You start to talk about who are these other entrants coming into the financial space, and a lot of times you're getting into these spintecs. Heather Gibbins:              21:22                     But, I think this is really important information, because for financial institutions consumers are saying, "Hey, we trust you the most." which means, when you start to look at risk and security, they have to stay at the forefront and the top and be very proactive about what they're doing as far as security measures, whether that be at the ATM or through digital and how those all plays together, especially when you start integrating with other spintec organizations in more of a connective commerce-type of ecosystem. Heather Gibbins:              21:55                     And that some financial institutions are really, when we have these conversations, is at the forefront. Everyone's talking about Windows X right now and how do you make sure that you're staying up to date and migrating all your terminals, both from a physical and logical security perspective to stay on top of it. Heather Gibbins:              22:14                     But, this has really become what I consider table stakes in the industry. It's not always the most exciting topic. And, when you go to get approval from a CEO or the CFO, it's kind of like, what is our consumer going to see, and it's not real flashy. However, if they don't do that, it's the first thing that their brand is going to take a hit with and you're going to lose trust, and that's going to open for new entrants into the financial industry stakes if they don't take care of it. Karen Webster:                22:46                     Yeah, a conversation to be had is how consumers perceive innovation within the financial services sector? Because I think, sometimes people think of innovation as what you just described. Oh, it's the flashy, flashy thing that has bells and whistles and people look at and say, "Wow, isn't that so different?" Karen Webster:                23:08                     And in financial services, getting back to the trust factor, consumers want their money to be safe. They want to have a relationship with the financial institution they trust and whom they believe are looking out for their best interests, including keeping their financial information and their money safe and secure. Karen Webster:                23:29                     So, there's definitely, you're talking about dichotomy, there's an interesting dichotomy there as well with perception and reality when it comes to what consumers are looking for and what FI's are providing. Karen Webster:                23:43                     Last question, Heather. It's been a fascinating conversation, but we've talked about a lot of things and I'm curious to get your take on what FI's are doing as they're planning for this migration between branches and automating and self service and mobile, and managing risks. How are they thinking about what I'm doing today, and what I need to be thinking about a little longer term? Heather Gibbins:              24:12                     So I think today in many cases it's the simplicity around transferring the traditional teller transactions onto the ATM itself, or other types of digital devices. In many cases, they're looking at this from a pure standpoint of how do we reduce tellers, how do we improve efficiency? In some cases, how are we expanding the types of transactions that we can offer in a self-service device, which could then allow us to extend the hours? Heather Gibbins:              24:44                     So, they are looking at ways to be able to do that and kind of lower the branch costs, and even in some cases centralize expertise. So, you start to think about how do I not need to have a loan expert at every single location? How can I have them more centralized and be able to have access to many more people in a very easy or convenient way? Heather Gibbins:              25:06                     So, I think those are kind of some of the short terms, like what are they trying to accomplish and how are they trying to do it? I think in the long term, it's a bigger play around how could this morph into something like transaction augmentation where staff can either be remote? Or, in the branch they can have awareness or context into the self service transactions, itself. Heather Gibbins:              25:31                     How can we appropriately interject into things when it makes sense? So, maybe you don't always have to have someone speaking to you face to face, or through video. But, when you do need them, it makes them easy to be there to help you, and that would be with things like exception handling, giving them advice. Again, this goes a lot back to the whole concept of being able to share data across CRN systems, tablets, and that type of thing. Heather Gibbins:              25:56                     We've also got a lot of customers that are starting to think about, okay we've gone through this kind of migration of mobile and online banking platforms, so that you have more one, single digital platform. At least that's the goal for many institutions. Now you have more and more teller transactions moving over to the ATM, but what they're starting to think about is, okay, so what do we do with this teller platform, itself, and how do we bring it up to the 21st century here? And this is where we think there's a big opportunity to leverage the same infrastructure ecosystem between the teller line and the ATM's, itself. To be much more digitized and have a much more fluid consumer interaction moving forward, and make it easier for tellers. Heather Gibbins:              26:43                     So, tellers have traditionally stood behind the teller line and had a PC. Well, in this new kind of branch for the future, all that really should pretty much go away, and it's much more about tablet. Well, how can you just end up using the same platform either across some of your digital channels, or also your ATM and teller platforms and how do those interplay more and more together? Heather Gibbins:              27:07                     So, I think you're going to see also digitization and a collapse of having all of these multiple platforms on all these multiple channels that are siloed, coming together and reducing, which in the end is going to reduce cost for the financial institution, itself, as well. Karen Webster:                27:27                     Well, and they make for a better customer experience. The experience that you, yourself, encountered will be an ancient anecdote when that happens. And certainly from a consumer perspective it can't happen soon enough. Karen Webster:                27:42                     Well, Heather, it's been a real pleasure having this conversation today. I enjoyed it. I hope you did, too, and I appreciate your time. Heather Gibbins:              27:48                     I did. Thank you so much. Karen Webster:                27:49                     Thanks, Heather. Bye-bye now. Amy Lombardo:                27:51                     Until next time, keep checking back on iTunes for new topics from COMMERCE NOW.    

Summary: In today's topic we're going to discuss the very interesting year of 2018 in the retail industry and we'll talk about what's to come in the new year. Resources: Blog: How Self-Service is transforming Fast Fashion and In-Store Retail Experiences Our Mobile Shopping Innovations are headed to EuroCIS COMMERCE NOW (Diebold Nixdorf Podcast)   Diebold Nixdorf Website Transcription: Amy Lombardo:                00:00                     Hello and welcome to COMMERCE NOW, your source for emerging trends in the banking and retail industries. I'm your host Amy Lombardo, and in today's topic we're going to discuss the very interesting year of 2018 in the retail industry and we'll talk about what's to come in the new year. I've got a special guest joining me today. It's Andrew Busby, one of the UK's most influential retail analysts. Hey Andrew, thanks for joining us. Andrew Busby:                 00:27                     Hi, Amy. It's great to be here. Amy Lombardo:                00:29                     Good. Let's talk a little bit about your background first. You have a 20 year plus career in the retail space. How did you get started? And talk to us a little bit about your passion? Andrew Busby:                 00:40                     Amy, my career, I guess started about 20 years ago. I joined Kingfisher, one of the major retailers in the UK, and I was working there for a number of years. Retail I think, is really one of those things where you either love it or you're not so keen on it. And I just love the sector. It's so relevant to all of us. Unlike some of the others, we have relationships with our favorite retailers or brands that we don't necessarily have with utilities or telcos or whatever. So, they become part of our lives, and I think that for me is one of the great things about retail. And also particularly now as I'm sure we'll talk about, there are just so many things that are happening right now in retail, and lot of things which will common both in the US market and here in the UK and Europe, and I think a lot of the retailers are going through the same issues and challenges. Amy Lombardo:                01:36                     Very good. Talk to us a little bit about those challenges. 2018 was a pretty interesting year here. You saw so many different store models go digital, offering different convenience options for consumers. With that said, how would you define the 2018 year for retail? Andrew Busby:                 01:59                     I think that what we're witnessing ... and it is happening. I think this is a real watershed moment in retail that we're going to look back on. I think 2018 and going into 2019, what we're witnessing in front of our eyes is a transition from what I refer to as old retail into new retail. What I mean by that is that the old model, the more traditional retail models are quite hierarchical. They're commanded and controlled from the center, they're top down in a way that they're organized. Andrew Busby:                 02:31                     And of course they were founded long, long before the Internet was ever around, let alone this online shopping and e-commerce that we see today. They've had to adapt. And of course then you get the new retail that doesn't have all the burgage, if you like, and the old and out of-date infrastructure that old retail has. They can build their systems, which are absolutely ... and also their structures, which absolutely fit for purpose around what they want to do. I'm thinking in particular of the pure play online brands, which have a ... I guess have a sense of purpose about what they are in business to do that some of the others perhaps don't, if that makes sense. Andrew Busby:                 03:17                     I think that we're really seeing this transition, and it will continue over the next couple of years. I don't normally like to look too far than two or three years out, because I think the pace of change is so rapid that it's almost impossible to look further than three years out. We simply don't know quite what's going to happen or what's going to be adopted by the consumer. In one word, I would say that it's change, and in five words, I'd say it's change, change, change and more change. That's what we're seeing at the moment. Amy Lombardo:                03:51                     It's interesting that you say you can't predict that far out because there are so many storylines that hit the new cycle this year that you never anticipated. We have everything from smart fridges and locker concepts and then you think, "Okay, well what's possibly next?" And have we created this society that it's almost become so convenience based. Will we ever go back to a simplistic retail model? I don't know. Andrew Busby:                 04:20                     I don't think we will. I think we've got so used to the ease and convenience, which we're seeing right now. But of course the thing to remember there, which I think you were alluding to, is that that's getting even more convenience. Take payments for example, which is in some ways the most exciting part the retail landscape, but also its scenario, which is developing quite rapidly. And we'll get the point within the next few years where we'll see far more invisible payments. Whether you'd be filling your car up with gas, you'll just fill up and you'll drive off because it's automatically been ... payment's been taken. Andrew Busby:                 04:57                     We're seeing far more frictionless experiences. Of course there's Amazon Go, which we know about, and we'll see more of that. I think ease and convenience in whatever way and forms that it takes is going to continue. And of course online and having deliveries to not just at home but to wherever we want, that will rapidly become the norm. And I think for ... one of the biggest challenges for retailers is having the supply chain and logistics capability to deliver very, very quickly to pretty much ... and by very, very quickly, I mean almost within the hour to almost any location. Andrew Busby:                 05:36                     In order to be able to do that, they have to have in real time 100 percent, or as near to that visibility of their inventory, which almost without exception, none of them currently do. Some may come reasonably close to that, but ... so I think that's an area that we're going to see a lot of development going into. Amy Lombardo:                05:55                     It's interesting, we were talking Christmas time, and I think one, two years back, whereby at the beginning of December, you get the messages that say, "Okay, if you haven't placed your order, it's not going to arrive to you by Christmas." Well, that's not the case today. You probably could still get an order on the 24th. I'm sorry for that delivery man or woman who's bringing it to you, but you can still get that delivered in time, right? Andrew Busby:                 06:22                     Absolutely. Yeah. Yeah, but actually one of the other aspects that, which we're already starting to see has come forward is ... and we don't notice it over here, but I understand that the 19th of December for the first time this year, was the national returns day where the volume of returns for the year peaks. It used to be I think one or two days into the new year. That is a reflection on the amounts of trading that happened over Black Friday, Cyber Monday and so forth. Andrew Busby:                 06:50                     But also, it's a really interesting thing for me because that sets quite an insight into us as consumers and our behavior. Returns are increasing, and that puts a huge strain on retailers. I personally happen to think that it's not a good thing, but the problem is it's a question of who blinks first. And of course nobody's going to. In other words, everybody wants ... they want to offer free returns, free shipping, et cetera, et cetera, but it is driving a level of consumer behavior which is quite alien. We're treating our own bedrooms and our living rooms as our changing rooms, and ordering ... and I've spoken to people who order quite regularly up to 20 items and they'll return 18 of them. Amy Lombardo:                07:30                     That's so fascinating that you are saying that, because I know I've adapted to that style here in my own home. I'm over buying things because I'm like, "Well, it's really easy to return it. I don't have to go to a store.", Or for Amazon, I can just drop it off here at their local UPS station." But I wonder what the facts are. Do you have any information on that? Is it more advantageous to the retailer when consumers are overbuying, or does that shipping just totally negate that overbuy? Andrew Busby:                 08:01                     For retailers, it's a complete nightmare for them because a journey of a returned item can be quite torturous, and it can go through up to seven touch points and can take not hours or days, but sometimes weeks to get back to where it should be, if you like, depending on how it's returned. And that volume, that peak that I referred to from my understanding, in the US I think it was 1.5 million parcels were expected to be returned, and during December, a million per day, which is huge. Andrew Busby:                 08:32                     And as I say, for retailers what it means is that their inventory is all over the place, but they're still expected to be able to know where that inventory is to be able to make those commitments to next day delivery when people are purchasing. It becomes a vicious circle for them. But you think of it as a roundabout, and it's spinning ever faster. But it's going too quickly now for anybody to jump off. So yeah, you just got to hang on. It's an interesting one. Andrew Busby:                 09:01                     And as you said from your own experience, yes, it is far too easy, too many ways to return because that's being seen as part of the overall customer experience. It has to be easy to return. You mentioned Amazon. In the summer, they launched their Prime Wardrobe, so you order three or more items and it's delivered free, and it comes in a box, and it comes with a returns delivery label already there. You try on, and you keep what you want at, then you pay for it, and you return what you don't and you just leave the box outside your front door. So yeah, very easy, very convenient. And that's what people expect. Amy Lombardo:                09:37                     Right. One of my favorite case studies right now is Rent the Runway. Because if you think about things, "Okay, I've got to then dryclean an outfit", or "Oh, now I have to think about return timeframes and such." This is an all-in-one experience of pick the clothes, pick the style, look at the reviews, and your purchase includes everything. It comes to you clean, you're sending it back clean, you have a certain timeframe to do it. It's such an easy, frictionless, seamless experience. That buzzword that we said earlier. Amy Lombardo:                10:09                     That's where I want to dive a little deeper into here, because frictionless, seamless, moving transactions into meaningful connections. Those have been such some strong words that retailers and even vendor partners have been using over the last year. Can you give some recommendations here on how a retailer can still maintain that customer, that consumer experience, but still introduce these types of digital and frictionless transaction sets? Andrew Busby:                 10:44                     It's interesting because just a word on frictionless. I think the majority of transactions, we welcome that, and particularly the type of transaction. In other words, there'll be certain types. For example, throwing a dinner party, but you haven't got one particular item, whatever. Dash out, because you need it there and then, to the grocery store. You want that to be as frictionless as possible. You want to get in and get out as quickly as possible because you've got a deadline of when your guests arriving and that sort of thing. Andrew Busby:                 11:12                     Then there'll be other transactions. Let's say that you're buying ... I don't know, a watch or jewelry or something like that, where you actually welcome an element of friction in ... and I mean friction by fact that the whole transaction can be slowed down. You're wanting, you're expecting to have more engagement with the store associates, those sorts of things. But from an experience point of view, it's interesting. What I would say in answer to your question, my recommendation so forth is don't let the technology lead in itself because we're all human and we're all driven by emotion, and we make because we are able to have emotions. Andrew Busby:                 11:56                     What I say to people is first of all, think about and understand your brand and what it stands for and what are the brand values, if you like. Once that's very, very, very clear, then and only then when it's understood, can you then make the sorts of decisions you want about what technology you want to deploy, and what perhaps isn't quite so appropriate for your brand. Because there'll be some which would be absolutely lend themselves perhaps to augmented reality, virtual, mobile and so on and so forth, but there may be others which lend themselves more to much more of a human interaction. Andrew Busby:                 12:34                     But having said that, I think that ultimately, as I said, we're all human. We all want to have a relationship with retail brands on an emotional level, which is why I said at the beginning that retail is an exciting sector to work in. I would say always human first, technology second. Amy Lombardo:                12:53                     Right. It's such an interesting way to position it. The emotion and the relationship side of a retail purchase, or say your favorite store closes in your neighborhood. That is such a letdown because it becomes part of your norm. And yeah, I just think that's a fascinating concept to think about. The emotion tied to it. Andrew Busby:                 13:12                     I think so, because in some ways we're creatures of habit, but in other ways we're not. We're not as loyal as our parents' generations that have gone before us. We do behave for more promiscuously when we're shopping. We jump from brand to brand. But at the same time ... I know it myself. I probably navigate the supermarket when I do my shopping in pretty much an identical fashion every time I go in, and I will go for the same brands of whether it be ... I don't know, shampoo or washing powder or whatever. I'll go to the same, and I wouldn't be drawn to other ones. Andrew Busby:                 13:49                     With a store closing down, you suddenly then are taking away parts of our lives, and we might have to travel a bit further, or we don't go to that particular retailer any longer. So yeah, it is an emotion driven sector in that way. Amy Lombardo:                14:05                     With the traditional brick and mortar branch and that style changing, whether it's hybrid type locations, smaller footprints, specialty shops. Are there opportunities then when retailers can actually partner with other verticals within retail to be able to offer this ultimate consumer experience? Like, "Hey, you can get the two in one now. I can offer you this and that." Are you seeing that there over in the UK? Andrew Busby:                 14:35                     Yeah. I do get what you're saying, and I think that we could well start to see that. But what I am starting to see evidence of is people are starting ... and this is talking about the in-store experience and the role of the store. We know there's all the pressure from online, and that the percentage of their sales is only getting greater and greater. None of us really know where it will plateau out, but we do know that it's continuing to grow at the moment. The role of the store is under the fiercest scrutiny. But what I am starting to detect is that people are rethinking the role. Andrew Busby:                 15:09                     In other words, the traditional role of the store is very obvious. You've got a building and you fill it with stock, put products on the shelves et cetera, et cetera. And you expect people to walk in and buy stuff, and that's the role of the store. We've refined that, but that's basically how it is. They're beginning to have some examples where people actually don't think of a store as selling first. It's a place for people to commune, to socialize. Andrew Busby:                 15:36                     I quite often use the example of Selfridges because as we know, that was ... Harry Selfridge in 1909 opened that store on Oxford Street in London. Of course Harry Selfridge was an american who came over here. But if you read some of his quotes and some of his writing, he was incredibly so far ahead of his time because he could come out with those ... you can quote him now, and it is incredibly relevant. That's exactly what he wanted Selfridges to be. He wanted it to be somewhere where people could gather. If they bought something, so much the better. Andrew Busby:                 16:12                     An example of that is ... and we've seen this more in some of these specialty retailers. Rapha is an up market chain. Not too many of them, but they refer to their stores as clubhouses, and they'll all have a coffee bar, and they just encourage their ... I don't think they refer to them as members. Some people refer to their customers as guests, so it's a reimagining or rethinking if you like, of the relationship. They encourage people to go in and if they want to buy on that particular occasion, okay, that's fine, that's great, but if they don't, it doesn't matter. Andrew Busby:                 16:44                     Lululemon, the yoga and gym gear and so forth, they have yoga classes in store, and they organize events where like minded people can come along, and if they're into yoga classes, if they're into running or as I said with Rapha it's cycling ... it's a completely different approach to the role of a store, and I think that we're going to see a lot more of that, which is really exciting because it will mean we view them in a completely different way, where we gather there, we can exchange views and ideas, we socialize and that's an incredibly exciting development that we're just seeing. Amy Lombardo:                17:20                     Yeah. Alright. Let's look ahead now. Pretend you're holding your magic eight ball, you're shaking it up, what's it going to say for the changes that we're going to see for 2019? Andrew Busby:                 17:31                     To sum it up in a word, well, we're going to continue to see change. That's the first. But then to expand on that, for a lot it's going to be quite troubled and challenging. There are lots of pressures. Obviously we've over here decided to implode ourselves. We've decided to get out of the EU, which hasn't really added too much to anything. But it is having quite an impact now because what it's doing is affecting consumer confidence, and that will go well into 2019, so that's that backdrop. Andrew Busby:                 18:01                     But I think what we're going to see is that retailers are going to develop and cultivate relationships with their customers far more. They are going to understand more about us. They're going to deploy artificial intelligence and machine learning so that they can deliver far more personalized experiences. That's going to be one major trend that we're going to see. Hyper personalization in 2019. Because at the moment, most personalization is fairly basic and fairly crude. It's usually retrospective. It is not in the moment, and it's not relevant to us because we've perhaps already made that purchase. Andrew Busby:                 18:37                     We're going to see that develop, which again, is incredibly exciting because I think that once people get over the feeling of intrusiveness, and when brands deliver real value to them, then I think we're going to welcome them. We'll welcome them into our lives in a far greater way than we do now. That's going to be the main trend for 2019. Another one which I touched on earlier which is going to happen is the final mile delivery. I think brands will come to be defined not by the price of their product, but their ability to deliver to us pretty much whenever and wherever. It will be quite normal that we suddenly find that we need something, maybe we're at a conference, or we're at a sports event, or we're at a music concert or whatever it happens to be and we need a particular item. We just grab our smartphone, and with a few clicks we've got something on order and it's delivered to us within the hour. Andrew Busby:                 19:29                     We'll be prepared to pay a premium for that, but that will become the expectation. Of course as soon as one person starts doing that, then all the others have to follow because it becomes the expectation. The bar is continually being set higher and higher. Another one I think will be the internet of things. Everything is going to be connected to everything, which again is going to lead to more convenience. And all those utility items that we purchase, that will all just be automated as well. I think we're going to start to see that in 2019. Amy Lombardo:                20:03                     That was a lot of answer there. That was a big magic eight ball you were shaking there. Alright. My final question for you today, Andrew is, based on those trends, those predictions, the idea of the hyper personalization, the last mile, execution, the internet of things. Say you're sitting in front of a retailer and they come to you and they say, "Andrew, where do I start here on my transformation? Give me some pointers on at least how to create my roadmap here." Where would you tell them to begin? Andrew Busby:                 20:34                     Depends on the challenges that they're facing, but I think that ... the way that I look at it is every retailer is on the same journey, but they're all at different parts of that journey. I would say that if they haven't ... if it's not on their roadmap already, they need to put artificial intelligence on there, and do that as quickly as they possibly can because all the while that they're not, they're missing out. They will never catch up to their competition. From a technology perspective, that would be one where ... possibly to contradict what I said earlier, but the reason for that is that that drives ... without that, you cannot drive the personalization that I referred to. That's just one point. Andrew Busby:                 21:18                     The other point I think is that as we know, is most retail brands have well over spaced. They got far too many stores. I would say to them, ask yourselves, "What do I want to be famous for?" Is it having a huge store estate? I know that a lot would like to reduce that, but they simply can't because they're locked into long term leases and so forth. But I would say be famous for something. Going a little bit back to what I said about brands and understanding your brand, understand what you want to be famous for, what do you want to be known for. Andrew Busby:                 21:54                     I've mentioned a couple of brands, Rapha and Lululemon, and they're very clear about what they want to be famous for. Another one that's a different end of the spectrum if you like, is fashion retailer Primark, and they're famous for having much, much lower cost items, but offering real, real value to people. And so everybody knows, they understand when you mention that brands to them, that they know what they stand for. I think that applies to all, whether it'd be much, much smaller artists and retailers or far larger. Everybody knows what you mean when you talk about Amazon. You know what that brand stands for. That will be the start point. Understand what you want to be famous for and build from there. Amy Lombardo:                22:33                     Got it. Well, I think that's a good way to close the discussion here, Andrew. It was a pleasure having you join us here as a guest, and thanks to our listeners for tuning into this episode of Commerce Now. To find out more about the future of retail, go to dieboldnixdorf.com, or click on the link in the podcast show notes. Until next time, keep checking back on iTunes for new topics from COMMERCE NOW.  

Summary: In this episode we'll discuss how organizations can keep up, and what is expected in order to stay ahead of their competition.     Resources:   Blog: Services for a Connected World  Silicon Foundry LinkedIn: Steve Gotz Twitter: @stevegotz   COMMERCE NOW (Diebold Nixdorf Podcast)   Diebold Nixdorf Website   Transcription:   Amy Lombardo:                00:00                     Hello again. This is Amy Lombardo, your host for this episode of COMMERCE NOW. This year we've seen some significant technology trends, and we know the knowing your audience and increasing the level of personalization is key to the success to this ever changing digital world. But this can be easier said than done, right? So, in this episode we'll discuss how organizations can keep up, and what is expected in order to stay ahead of their competition. So, listeners I've got a real treat for you today. I'm joined by Steve Gotz who is an expert in working with executives to create impactful corporate innovation strategies. He has over a 20 year background working with a range of global organizations such as AT&T, General Electric, and Symantec, and one thing that you'll be most interested in is his recent work with Umpqua Bank, which we'll touch on a little bit in this discussion. So Steve, thanks for joining me today. Steve Gotz:                        00:49                     Thank you. I'm glad to be here. Amy Lombardo:                00:50                     Wonderful. So let's start a little bit with your background, and just really what keeps you up at night. Steve Gotz:                        00:57                     I think what keeps me up at night is relevance. So, my background. Quick intro. So, 20 years working with big companies like you said in industries that are undergoing change, and a really interesting thing is it doesn't matter what the industry is. Corporations are really in a race for relevance, and whether you're an entertainment company, whether you're a movie studio, whether you're a bank you have to think about ways to be relevant to your customers today and into the future. Amy Lombardo:                01:23                     So, that's an interesting comment. Okay. Race for relevance. Could you dive into that just a little bit more for me, or maybe give me an example of some recent work you've seen on how someone has caught up or stayed ahead maybe of the race for relevance? Steve Gotz:                        01:35                     Yeah. So, I think a really interesting one that I can point to is AAA. The automobile club, right? So AAA is an American institution, and their business model up until now has been predicated on your car breaking down on the side of the road, you're picking up the phone, you're calling them, and them sending somebody there to help you. Now, a couple of years ago they recognized that they're sitting on a dinosaur. That business model isn't going to exist 10, 20, 30 years from now. We have autonomous vehicles, when we have cars that don't break down with us behind the wheel, their business model needs to change. Steve Gotz:                        02:11                     So, what I think they've done is really interesting, right? So they're investing in infrastructure and thinking about how can AAA be relevant inside of the home, and I think that's a great example of an incumbent corporation that's saying, "You know what? We're going to face this head on, and we're going to drive this change. We're going to drive this disruption rather than waiting for us to be disrupted by the market." Amy Lombardo:                02:32                     That's such a great example because AAA is something that I just rely on so heavily in my own life, but I haven't thought about yeah what would be next for a business like that, or thinking back to the stories of like Kodak or Blockbuster or something. Why it did or did not work for them because their business models needed to change with the rate of pace of change here. Steve Gotz:                        02:53                     Yeah. So, the last couple of months for me I've spoken to maybe 200 executives. So these are CEOs, Chief Digital Officers, Chief Technology Officers, entrepreneurs about what's changing in their business, and what's really interesting is we've kind of gotten through this first era of innovation. So, every corporation talks about innovation being one of the most five, one of the most 10 important things that they're focused on. But if you look at the number of ideas that have come from an innovation lab that have found their way to production inside of big corporate, that number is pretty small. But I see happening now and with people are talking about is this second wave of innovation. This more impactful, this more intentional strategy to say, "We are going to build things that are going to change our business." Steve Gotz:                        03:41                     And change our business in a way that is going to make us relevant into and beyond the 21st century, and this is different, right? So I think you said at the beginning. When I started my career, I started at AT&T labs in the music industry, and this was at the beginning of the rise of digital distribution before we had iTunes. When we took this, basically AT&T invented something underlying technology to iTunes, right? Secure digital distribution. And when we took it to the labels, the music labels at that point, their response was really telling. The response was, "We're not interested in this. We sell things. We sell things that spin. We're never going to sell our music over the internet." Steve Gotz:                        04:20                     So, this was in the late 90s, and that was your classic Kodak response from an incumbent. Fast forward 20 years, and when I talked to bank CEO's, they don't talk like that anymore. What they talk about is, "Yes, absolutely. We need to change. We need to create new experiences, and here's how we're going to do that, and here's where we are doing it." Right? So, this idea that the banking industry is facing a Kodak moment, I'm not an advocate of that line of thinking, right? I think the banking industry is responding very differently than some of those other traditional industries that have been disrupted. Amy Lombardo:                04:54                     Right, okay. No, that makes sense. So, in some of my research on you, the work you've done, you've talked about this idea of the innovation theater, and is that what you were speaking to earlier, which is kind of this innovation 2.0? Steve Gotz:                        05:08                     Yeah, that's exactly it. So, if you look at kind of the last 10 to 15 years of innovation, it's very clear that companies are recognized they need to be more innovative. However, the tools, methodologies, and frameworks they've deployed, they resulted in what some people call innovation theater, right? It's really pretty, you go into the innovation lab, you see an interesting application. But then when you pull back the curtain to say, "Well, what's the path to production?" Right? How many customers are using this? That's where you tend to realize there's not much substance there. I think a lot of people have recognized that, and now they're thinking about, "All right. How do we do that?" Steve Gotz:                        05:45                     Right? So, we're seeing this kind of growing kind of drive. An increasing number of corporations that are sending out new company builders, new organizations designed to create things, and scale things up, right? Don't just show me something in the lab, show me how you take what's in the lab, and get it in front of all of our customers, and make us more relevant. Amy Lombardo:                06:08                     Right, right. So, the example Steve you're giving about this innovation theater, almost like the innovation smoke and mirrors, I'm also kind of thinking in banking terms now of what Chase has done with the everyday express branch, and Capital One with the café branch, I mean these are realistic examples of innovation- Steve Gotz:                        06:30                     Yeah. Amy Lombardo:                06:30                     That has now been brought to life, and the results and at least the studies show that consumers are gravitating quite well to these concepts. Steve Gotz:                        06:38                     Absolutely, and especially around banking. The Capital One café, it's a really interesting idea, and I think it kind of gets to this point that physical is still important, right? Being able to bridge digital experiences with physical experiences, that's kind of the next competitive battleground. And I think Capital One, Umpqua Bank, I think we ... And even Amazon with Whole Foods. I think we see an increasing number of organizations getting much more sophisticated at spanning the omni channel experience. Amy Lombardo:                07:10                     Right, right. So you mentioned Umpqua, and that is such an interesting case study here. So, tell us a little bit about the work that you did with that bank. Steve Gotz:                        07:18                     Right. So, Umpqua is really interesting. I got connected up with Ray Davis in 2015, and Ray is kind of an iconic figure in the banking world. He grew Umpqua from $100 million in assets to about $24 billion in assets, and he was really driving the industry, and created a unique customer experience, right? So, for Ray they're not called branches, they're called stores. In those stores, there's a very unique experience when you go in. A store are part of the community, a store holds coffee hours. People could use the store as a co-working space. So, Ray and Umpqua is really kind of the leading edge of the ideas that we're talking about today, and so much so the now Capital One is kind of borrowing some of the ideas that Umpqua pioneered a historic concept. Steve Gotz:                        08:04                     So, I got connected up with Ray in 2015, and in the first conversation he was like, "Look, the bank I built for the last 20 years isn't the bank that I need for the next 20 years, and I need some help to figure out what that new bank is." So, the mandate was figure out how to pivot the bank, right? Ray is a gentleman who likes to name things what they do, so it wasn't a digital adventures lab, it was Pivot us. Easier to pivot the bank. So, we started down this path, and what we got to fairly quickly was the banking relationship is a unique relationship. Money is such a loaded topic for people, for consumers, and 20 years ago the banker was your neighbor. Steve Gotz:                        08:41                     The banker knew your first name, they knew your kids, they gave them a lollipop when they walked into the store, right? There was an experience attached to that, and when we fast forwarded today, and we the state of digital he said, "It's impossible to create that really personalized digital experience right now with the technologies that were available." So, the question was how do we engineer the human in? How do we create that personalized experience through a digital channel? And that's what we set out to build from. Amy Lombardo:                09:11                     I think that's so interesting that you say that because a few years back we had this interesting study, that was how consumers could differentiate their toilet paper brand over their bank brand, and I say that. And of course, the source is escaping me, but- Steve Gotz:                        09:29                     Right. Amy Lombardo:                09:30                     But it was all around the fact that banking had become this emotionless interaction. No, really it was more the transaction. You need to move into an interaction here, and your examples here of putting the human element bank in is a perfect way for banks to be thinking about this. Can you give our listeners some specific technology examples if those are relevant and okay to [inaudible 00:10:00] out here? Steve Gotz:                        09:59                     Yeah. So, before I do that going back to your idea of kind of toilet paper brand and banks. Amy Lombardo:                10:07                     I know you didn't think that what was going to come out of my mouth. Steve Gotz:                        10:12                     If you kind of step back a little bit, and you kind of look at how the industry go to where it is today, what you see is in the pursuit of cost efficiencies, the customer experience has been lowered significantly. In the last 20 years, the industry has done what it should have done, right? Which is use technology to be more efficient. But in the active being more efficient, they've created a customer experience that's not that great, and by lowering that bar so far it's now become really easy for two kids in a garage in Palo Alto to create a new mobile banking experience that can run circles around most of the existing incumbents, right? Steve Gotz:                        10:55                     Now, the opportunity is to change that. There's no reason that two kinds in a garage in Palo Alto should be able to create a better experience. Incumbents can do that, which is where we get to this idea of, "All right. How do we create new teams? How do we create new environments to build these things?" And that's kind of really what we did at Umpqua. Ray's mandate to us was don't go give us some prototypes. It was figure out how to keep us relevant. So, that started with the customer relationship. We said, "How do we take that in-store experience that we have today that really personalized experience when you walk into the store, and create that, and then catalyze the experience in an additional channel." Steve Gotz:                        11:35                     So, when we looked at the technical landscape, what we said is, "The future of the industry is chat based. It's dialog based systems." So, let's think about how we engineer the human in, and do that at scale. Let's think about how we can deliver a chat interaction, a highly personalized chat interaction with a human. So, what we started building is eventually we started using WhatsApp, and some of the existing chat platforms. But very quickly we ended up building our own application primarily for security and privacy reasons, right? So, if you're using Facebook Messenger as a bank to service your customers, if you're using WhatsApp there are potential privacy implications that come along with that, that we were uncomfortable making. So, we ended up building our own technology stack. Steve Gotz:                        12:24                     And essentially what we did was we put a device in the hands of our employees, of our associates in the store, and said, "You now have the opportunity to chat with customers." So rather than make this a call center initiative, we pushed it out to the edge, and the response was phenomenal both from customers, and from our employees. Amy Lombardo:                12:44                     Now, was that a cross-channel application to where that chat feature was available both on mobile, and online? Steve Gotz:                        12:52                     Yeah exactly, and the idea of it. So everybody talks about getting customers to come into branches, and the question is we can't get customers to come into branches now. I don't think we're going to get them to come into the branch in the future. One interesting kind of dynamic that we observed is if the customer knows who they're going to see in the branch, who they're going to interact with, there's a higher tendency to come in. So, the idea was we can use the chat, right? We can use the online interaction with the customer to pull them into a physical experience. So, if the customer needs to have a more in-depth conversation. Maybe the retirement planning, 401k, 529 plan. Steve Gotz:                        13:30                     We can say, "All right. Maybe it makes sense just to sit down and have this conversation in the store, and we can get something scheduled." So, the human interaction becomes a really interesting way to pull people into the store for more engaged conversation. Amy Lombardo:                13:43                     I love the example you just gave me because it speaks so much to what we believe and strive to deliver to bankers, and retailers here at Diebold Nixodrf by delivering connected commerce. This idea that you have this seamless journey throughout various touchpoints that it doesn't have to seem like, "Oh, I'm only engaging in the branch. Oh I'm only engaging on my mobile phone." It's the same experience, and you're giving a perfect example of it right there. Steve Gotz:                        14:09                     Yeah, and I think the idea behind connected commerce is really powerful, right? It's the bank ... The bank almost becomes an orchestrator on the behalf of the consumer, right? The bank captures the intention, the bank understands what the consumer needs to do regardless of the channel, then it helps them do that, right? This is the core of what we saw a couple of years ago. This is what banking used to be. Now we have technology to deliver that experience in new and different ways at scale with efficiency. Amy Lombardo:                14:39                     Mm-hmm (affirmative). Okay, so you just touched efficiency, and that was this one question I was writing down here. So, I've been looking in all these reports as to what are going to be these top pain points for bankers in 2019 and beyond, and what seems to be the top three of all those lists is around creating better operation efficiencies, back end transformation, etc., etc. Can any of your line of work? Do you see that holding true? Is that something that bankers are talking to you about as well? Are there some strategies in place that you can comment on to accomplish that, but still now lose that personalization aspect? Steve Gotz:                        15:13                     Yeah, yeah. So, I think there's ... A lot of people focus on kind of consumer facing, kind of innovations and efficiencies because that tends to be where a lot of the top line growth is. So, sometimes I think back offices operations doesn't get as much attention as it should, but I think there's an equally large if not more number of opportunities in the back office to do things better, faster, and cheaper while you maintain that front office customer experience. And I think ... Again, the idea of what we're talking about here, which is companies can create structures. Companies can create new types of environments to solve our problems. We can look for places where this happened, and I think one of those places would be with Liquid Labs, and the auto group in Germany. Steve Gotz:                        15:59                     So, the auto group is one of the world's largest retail conglomerates, they own a lot of properties. Six years ago they set up an organization called Liquid Labs, which is really designed to solve hard problems for the organization, and the model there was Liquid Labs would have a budget, they would go to a business unit and say, "Oh we see you're losing $150 million." And these numbers are hypothetical. "We see you're losing $100 million dollars a year on return shipments because we've had issues with the address. We can fix that problem for you, we can fix it in a discoverative way, and if we succeed you now have a new capability that improves your efficiencies." And in fact that's exactly what Liquid Labs did for the auto group, and they drove significant efficiency improvements just with the very strategic application of technology. Steve Gotz:                        16:47                     So, banks have those kinds of opportunities in spade. When we arrived at Umpqua, the number of operational efficiencies the word technology brought to bear was substantial. So, the question is what's the right portfolio, right? What's the right portfolio mix between kind of front facing, consumer applications, and back office? Let's make this engine as efficient as we can make it. Amy Lombardo:                17:12                     So, do you have a thought on that of what is that perfect balance? Is that the next project for people to turn to you on? Steve Gotz:                        17:19                     Well yeah. This is I think why kind of proclamations are dangerous. I think this is one of those places where I think it really depends on the organization, and the state of the organization. When we got to Umpqua, they have just been through a core transition, starting to think about other projects that need to get done. So, there were some strategy decisions and said, "You know what? We're going to really focus on that customer experience while we give the organization time to figure out what's going to be the internal digital transformation strategy." So, that was the right mix for Umpqua. I think you have other organizations that are fairly sophisticated on the front end where they could use focus on the back end efficiency. So, that's a long way of saying it depends. Amy Lombardo:                18:05                     Okay. Fair enough. All right. I'm going to throw this one out to you Steve. Steve Gotz:                        18:08                     Okay. Amy Lombardo:                18:08                     So, we talk a lot about this idea of retailing banking. It's not just banking, it's retail banking, and really these two industries converge together. Would you agree with that statement? Have any thought around is banking really retail banking? Steve Gotz:                        18:23                     Absolutely, absolutely. It's retail, and in my view the bank has a role in that, right? Today and into the future. The bank is an orchestrator of commerce, the bank is at the center of that experience. That's a powerful idea that I think is just coming to. Amy Lombardo:                18:38                     Mm-hmm (affirmative). Right. In any of the work that you do, do you find executives challenged with branch closings, and just trying to find that optimal footprint here, and just some of those challenges that are keeping them up at night around branch locations, and branch size? Steve Gotz:                        18:54                     Yeah, so this is a perennial problem, right? And the problem of a branch is a catch 22. Everybody knows this. The branch density is very high in America. That's for a reason. You ask Americans kind of how they choose their bank. At least up until a year or two ago, branch location, branch convenience- Amy Lombardo:                19:12                     Okay. Yeah, exactly. Steve Gotz:                        19:14                     Was one of the top choices, right? Now what's interesting is it's often the top choice, but when you look at the stats about how often do people go to the branch, they tend not to go in. So, they say it's important, but they don't go into the branch. So, this is the catch 22. You start shutting down your branches, you start kind of reducing your branch density, you start losing those deposits because customers have a fixation with the branch. The way we thought about tackling this was, "Okay. They say they want it, but they don't really go in all the time. So, what do they really want?" And what they wanted was a lifeline. What they wanted was a safety net, a connection. Steve Gotz:                        19:54                     So, we're like, "Okay. If we can give them that same kind of feeling with a dedicated digital banker, maybe the physical doesn't matter as much. Maybe we can reduce the density of the branch network, move to a destination branch strategy, take all of that OPEX off the books while keeping the people, right? And the people are important because they're really key to creating this personalized experience of that digital channel. And if we can do that, we can start right sizing the branch network while deepening the relationship with the customer at the same time. Amy Lombardo:                20:24                     Right. Oh my gosh. I have the perfect example just in my home life. Several years ago, my husband and I, we were going through some sort of refinancing, and we had to have a check physically signed by this particular ... The institution that was through our loan. I'm looking online and I was like, "Okay, I live in Ohio, and the closest is in New Jersey." And there was no options other than take this check physically to New Jersey. Nowadays I'm like, "Well, now we have check box features, and video tellers that I could have made that work." But several years ago luckily we just ironically we have a family member that lived there, and we happen to be visiting, and we went out of our way to go to this bank branch. Amy Lombardo:                21:09                     But it was such a hassle, and just to think how technology has come and crossing those channels, that had been no problem today. But that seems like eons ago, yet it was maybe only like two, three years ago. Steve Gotz:                        21:25                     I mean we've trained consumers to kind of have this unnatural connection to the branch. Amy Lombardo:                21:31                     Right. Steve Gotz:                        21:32                     Actually, that's not entirely accurate because at a certain point it was natural. Before a lot of the digital technologies we have today, that branch network was really valuable. We're getting to this point now where it's not so valuable we can right-size it, but the burden is on the industry to weening customers off that expectation, to show customers that we can deliver you the exact same experience through our digital channel, and it doesn't matter if the branch that you normally go to around the corner isn't there anymore because you're not going into it that often anymore. Amy Lombardo:                22:02                     Right. But of course it's just finding that balance of how often do you still need that physical interaction to potential create that emotional connection versus, "I just need the quick, easy transaction here." Steve Gotz:                        22:14                     Yeah. So the idea behind Pivotus Engage, which was the platform that we've built as over time if a customer can chat with the same person over, and over again they're going to develop a relationship, right? A professional relationship, and they're going to start trusting this person. And this is important because bankers used to be trusted. Over the last decade though, that trust has waned. So we're like, "How do we get back to that?" It's the same person, same conversation, interacting with the customer over time, and at a certain point the customer is like, "Yes, I need help here. I need help there." Right? Steve Gotz:                        22:47                     You can almost see the switch flip in the relationship where the customer starts to trust the banker on the other side, and that's when magic can happen because when you're in that trust space relationship with the customer, you can then advise, you can then recommend, you can then orchestrate commerce, right? Which is what we're talking about. Amy Lombardo:                23:07                     Yeah. Steve Gotz:                        23:07                     Then you can be able to play with that relationship, and if you can get there, that's where I think exciting things happen in the industry. Amy Lombardo:                23:14                     Okay. So, Umpqua came up with this or you helped with this engagement platform, and really the idea in general around experience platforms. Of course, there's obviously the personalization aspect, but what also is necessary to enable them? Steve Gotz:                        23:32                     I think you'd be from the top down of the organization. So technology is easy, right? I mean building the underlying tools to create new experiences. That's easy. Our experience is most people that are working in the bank, they want to do more. They want to help their customers. The want to support them. I think the critical element is the will, the drive, and the impetus from the top of the organization. From the board and the CEO to say, "We're going to do this." Right? "We're going to make an investment in creating new experiences for our customers. We're going to make an investment in retrofitting our technology organization so that we can create these new experiences." Steve Gotz:                        24:11                     I think without that kind of top down commitment, you end up with what we were talking about at the beginning, which is innovation theater. Amy Lombardo:                24:19                     Yeah. Steve Gotz:                        24:19                     Because the kind of change we're talking about, it takes time, it takes commitment, it hurts sometimes, right? Because people have to change. That only happens if that commitment is there within the C-Suite. Amy Lombardo:                24:31                     Got it. So, and maybe that's a good closing point here, and just getting that buy-in from the highest level. Is there anything else maybe you'd want to share with our listeners here on ways to think about how they're transforming their business? Steve Gotz:                        24:48                      Yeah. So, I think what I would leave people with is there's this emerging zeitgeist in Silicon Valley, which is we're entering the age of the big company, right? We're entering the age where having a good idea isn't enough. To actualize that good idea you need data, you need distribution, you need customers, you have capital. All of those things live within the four walls of every company out there, every bank in America who has these things, and I think the opportunity is to find creative ways to leverage those assets in new and different ways, right? I think it's somewhat presumptuous to suggest that the banking industry is facing its Kodak moment because I don't think it is. Steve Gotz:                        25:28                     I think the banking industry has never been better positioned to control its own future, and that's what I'm excited about, and that's what your listeners should be excited about. Amy Lombardo:                25:36                     Very good. Well Steve, this was an awesome conversation. I got a lot out of it, I hope our listeners do as well, and thank you of course for taking the time to be with us, and to our listeners for tuning into this episode of COMMERCE NOW. To learn more about this topic, log onto www.dieboldnixdorf.com. Until next time, keep checking back on iTunes or your podcast listening channel for new topics on COMMERCE NOW.  

Summary: In this podcast, Scott Harroff and Dave Phister spend some time looking back on some security related topics that transpired throughout 2018. Also, they touch on a few things that you might want to think about as you're heading into 2019; how to best protect you from organized criminals attacking your ATM fleets and more so your gas pumps.   Resources:  Blog: Security: A Changing Industry Requires A Changed Approach   COMMERCE NOW (Diebold Nixdorf Podcast)   Diebold Nixdorf Website   Transcription: Scott Harroff:                     00:00                     Hello again, I'm Scott Harroff, Chief Information Security Architect for Diebold Nixdorf. I'm your host for this episode of COMMERCE NOW. Today I'm joined by Dave Phister, Director of Security Solutions for Diebold Nixdorf. I'd like to spend a little bit of time here today, walking through some of the things towards the end of the year that we thought you might find to be interesting. And a few things that you might want to think about as you're heading into your new year. Dave, what surprised you in 2018? Dave Phister:                     00:30                     Well, I think the first thing that surprised me, Scott, is the emergence of you as the Diebold Nixdorf podcast hosts superstar. You splash on the scene here from an industry standpoint, and really take charge of the security topic, and help us talk through this very important topic for our industry. So that's first and foremost.                                                                                 Second, realistically, nothing's really surprised, you or I, I don't think. We spend all our days focused on security anticipating forecasting. A couple of things do stand out certainly, as I think back through the year. We rang in the new year with a bang, certainly coming out of 2017, with the emergence of, of jackpotting and malware in the Americas. Certainly, not a new scenario to deal with, but in the Americas it was quite a surprise.                                                                                 So certainly, the beginning of the year was focused on malware and specific to malware. Just a point to remind our listeners it really has exploded onto the scene as we've indicated in previous podcasts, the number of ATM malware variants is expanding almost on a daily basis.                                                                                 As I indicated on our last podcast, this ATM malware, it's available for sale on the dark web. It's in the aisle right next to the stolen credit card information. So it's sold as a technology just like we're trying to sell technology to defend against it. So certainly, I think that's a key takeaway from this year, is really the explosion of ATM malware in this space.                                                                                 Then secondly, Scott, I was pleased, very pleased to see a lot of collaboration this year between public and private industry. I know you have engagements with Secret Service, FBI and local law enforcement. But there were several communications that came out through the industry, the FBI warning. In August there was another warning and October, the fast cash hidden Cobra. I think you remember. I think it's a great example of what's happening not only in our industry, but other industries from an information security standpoint.                                                                                 I think that type of collaboration, that type of awareness, that type of sharing a needs to continue because it's only going to help you and I. It's only going to help our customers, whether it's the banking of the retail space. So just a couple of things that I've taken away certainly from this year. What about you, Scott? Where do you see our industry struggling, let's say at this stage of 2018? Scott Harroff:                     03:16                     Well, first I want to thank you for acknowledging me as the king of podcasts in 2018, Dave, I appreciate that very much. Dave Phister:                     03:24                     It's my pleasure. Scott Harroff:                     03:24                     I have to then therefore knowledge you as the best co-host of these podcasts, and the second most popular person in the world. Thanks to all the other folks that have joined us on the back podcasts. They've really made this more than just a speaking conversation, but have made it very interesting and very dynamic. So thank you very much for that.                                                                                 Relative to 2018, I wasn't really surprised that the organized criminals kept becoming more and more sophisticated. I think our industry, Dave, is struggling around how to share information. If we look at some very large financial institutions, I won't even pull names out of the air, but individual, large financial institution A knows a lot about the fraud that they see in their environments. Large financial institution B knows about theirs, but they really haven't shared anything with A. So even though they could've quote/unquote help each other, that really wasn't in place.                                                                                 What you referred to with private and federal coming together, is really, I think very enlightening and very well received. I've talked to handfuls of financial institutions about this new alliance. By the way, for those that don't know what Dave and I are referring to, we're talking about, the National Cyber Forensics and Training Alliance. That is kind of a amalgamation between FBI and Secret Service and really almost any large financial institution, medium or small financial institution, that can give them data about what they're seeing, so they can do two things.                                                                                 One, respond more quickly to what's happening. The sooner they know about a bad guy being in a certain area, the quicker they can react to the bad guy. And, hopefully either capture them, or at least reduce the losses that could be going on out there.                                                                                 Another thing that I think that we're struggling with is really understanding the dynamics of the fraud. For example, everybody who has an ATM is all focused in on ATM skimming and ATM security issues. They're thinking, Oh, I've got to do all these things at my ATM to keep from being skimmed," quote/ unquote. But one of the things that we've learned, working through the International Association of Financial Crime Investigators as well as the NCFTA, is that guess what, gas pumps have taken the lead over ATMs.                                                                                 Now our average loss on an ATM is somewhere in the neighborhood of $60,000 per skimming event. But if you manage to get a skimmer onto a gas pump and you're effective, you can get $100,000 to $200,000. In watching the videos and these attacks on gas pumps, it's even quicker and easier to install a skimmer on a gas pump. So yep, skimming on ATMs is still an issue, but it's migrating over to the gas pump channel, because it is twice as profitable for the bad guys, and apparently less likely to get caught.                                                                                 So I think that's one of the things is, our industry is looking at itself, and it's not looking into the other channels, like gas pump and point of sale, gift cards, and things of that nature. I think if you're a fraud investigator for your financial institution, I think adding in those other things would be a really important thing to look into.                                                                                 I talked a little bit about where we saw some success, local law enforcement and federal law enforcement cooperating The new exchanges coming out to share information. Some new techniques are coming out. Where have you seen success, Dave? Dave Phister:                     07:02                     Y eah, that's a good question. I believe that, as you know, crisis creates opportunity. Unfortunately, many times it takes crisis to increase awareness, get the visibility, and the recognition that's necessary. So certainly we've seen the jackpotting and the malware attacks that were very familiar with here in the last several months, create an awareness with our customers. That security is certainly very important.                                                                                 We talked about during the ZEro Trust webinar that endpoint security is certainly important. The cash is sitting there off the end of the network, but some of those FBI, the fast cash hidden Cobra attack situation was really an attack at the payment application switch ... Or, actually, that's a masquerading or spoofing attack. That is an indication of the fact that security applies not just to the end point, but it has to apply all the way back to the host.                                                                                 Every touchpoint is potentially vulnerable. I think that customer's users are understanding this now. Unfortunately, we're way behind in the industry from a technology standpoint, because we haven't maintained the technology. But certainly we do see many customers migrating to Windows 10 already, which is a good thing. With this Windows 10 migration, we're seeing technology refreshes being a much larger part of the investment strategy for many of the customers.                                                                                 So I think as they look to migrate to Windows 10, to maintain current operating systems, maintain PCI compliance, they're looking to update much of their hardware. And certainly, hardware and software technology refresh are keys to enabling security controls that would defend against some of the attacks that we're seeing in the marketplace with newer technology. So just an example there.                                                                                 I think, Scott, one thing that I would ask you is your opinion on the number one thing that banks should do to lock down their security in 2019? What would you say to our listeners, the number one thing should be? Scott Harroff:                     09:41                     We've been talking all year long about, there is no one silver bullet that you should have in your gun that you're going to pull out at the right time and stop the attack. It's all about layers. It's all about physical security. It's all about software updates, firmware updates, XFS updates, white listing, hard drive encryption, encryption of data in motion. There's all those different things that we've been talking about. But, if you said, "Scott, what's the one thing, if you only get to pick one thing out of the list?" I would say, "Get an incident response plan together."                                                                                 Imagine that you've got your security controls in place, yet something goes wrong. Somehow a whole bunch of data got skimmed. Maybe it came off a gas pump, or maybe not an ATM, but all of a sudden you start getting all these fraudulent transactions coming back into your system. What are you going to do? Who are you going to call? What buttons are you going to push? What are you going to do to stop that incident now that you see it coming?                                                                                 I think one of the reasons, Dave, I go there, is that there's attacks called, unlimited ATM cash out attacks. The FBI put out alerts earlier this year. It's really not about attacking an ATM in any way, shape, or form. It's really about the fact that some other system somewhere else was compromised. It could be like you were referring to, the host itself was compromised. Or the ATM transaction process was compromised. Or something somewhere in the middle was compromised.                                                                                 But suddenly when dozens or hundreds or thousands of transactions all start flowing into your systems, can you see that huge spike and network activity coming into your core or your atm transaction processor? You might have a fantastic fraud system. You might have controls on the core. But just something as simple as you normally have this amount of network traffic coming in for approvals, and suddenly it doubles, triples, 10x increases. You ought to be able to see that, and you ought to be able to wrap very quickly.                                                                                 For your response plan, what are you going to do? Are you going to immediately disable that account that's now handing out hundreds of thousands or millions of dollars? What happens if suddenly you start getting these transactions coming in from international locations? How many of our banks and credit unions suddenly have thousands of transactions coming in from outside of the United States against one, or a handful of accounts?                                                                                   Think through all the different things that could go wrong, and start planning for who are you going to call? What are you going to do? So that if you happen to be unfortunate enough to be caught in one of these new attacks, you can react fast and limit damages. I think that would be my number one thing is, plan for incidents and make sure you know what to do so everybody's not in a panic when it actually starts to happen. That's Kinda what I would do. Looking ahead next year, Dave, what? What would you expect that we need to be looking out for? Dave Phister:                     13:00                     Certainly, I echo some of the things that you just mentioned. We need to be vigilant. We need to certainly ensure that security is top of mind. We very much would like to see customers in this industry and the other industries consider security as a vital part of their brand. I think if you do make that commitment, then certainly you have the C Suite visibility. Then the investment security investment strategies should flow from there. You can put yourself on a path to migrate your fleet to the protection levels that are necessary.                                                                                 With regard to emphasizing any given security control, you're right, layers are certainly important. We talked about that in the Zero Trust webinar. We have to assume that the top hat will be accessed in an unauthorized manner. If we encrypt information, then we devalue the data, so I'd simply like to emphasize that once more. We talked about it, encrypt, encrypt, encrypt. Whether it's encrypting the hard drive. Whether it's encrypting the internal USB communications to prevent unauthorized access.                                                                                 Whether it's encrypting card reader data from the read head. I think it's very, very important. In addition to encrypting all the way back to the host so that to prevent the man in the middle of the attack. Or a message manipulation all the way back to the transaction processor. So I think looking forward, I do believe that we will see an emphasis on encryption. I think that we will see an emphasis on technology refresh, as we moved through Windows 10, as we move through some of the PCI milestones.                                                                                 Scott, there's a significant movement right now to migrate remote key loading to SHA-256 Hash Algorithm, that requires significant investment, significant partnership. Then along those lines, what I'd like to see moving forward is certainly an emphasis on dispenser security and end dispenser security. Having said that, that's my thoughts, as we look forward. What do you expect from the year ahead, Scott? Scott Harroff:                     15:32                     I'm with you, Dave. I think the word for 2019, is encryption. Whether it's encrypting the hard drive to make sure no one can add unapproved software to it by simply unplugging it. Hooking it up to a laptop, and changing it. Whether it's making sure that they can't just tap into the reed head of a card reader, and do what's called an eavesdropping attack. I think that was probably one of the biggest wake up calls to anybody that had a card reader that didn't use encrypted read heads.                                                                                 These eavesdropping skimmers that you just cut a little hole through the front of the ATM. You add the skimmer inside the card reader, and you put a sticker over it,  really caught a lot of people by surprise. People that thought, "Well, I have a card protection plate in there. I'm good to go. Or I have some kind of jamming. I'm good to go. Or I have some other technology to look for devices around the front of the ATM. I'm good to go."                                                                                 Now, suddenly, all this data is coming right off of the read head, or right off the circuit board, and you're kind of a deer in the headlights. Relative to now what do I do next? Of course, anybody who has Active Edge doesn't have to worry about that But, encryption of data, whether it's in motion or at rest, is of very, very old concept in the IT security space. We all worried about data in motion at rest, but it's just now becoming that important in the US market space, so I absolutely agree with you there.                                                                                 But what all I look forward to? I look forward to folks taking their Windows 10 migration and their terminal software migration, as a point to really sit back, to really evaluate what they did for the last five years. And really use this as an opportunity to say, "Well, maybe I didn't change my [inaudible 00:17:22] password. Maybe I didn't change my Windows password. Maybe my security wasn't as good as it should have been." Really use this as a point in time to say, "Hey, I'm going to be making an investment here in one way, shape, or form, or another in the next one, two or three years just because of the what's going on in the industry."                                                                                 Let's do it better this time. Let's make sure we have more of our security boxes ticked off. I think that's really an important that I see coming down the road. Again. I also really, really hope that the private and public sector and law enforcement spend a lot more time collaborating with each other and identifying and removing these bad guys. I think that would be huge. The fact that we got, law enforcement, the federal, and local level working together.                                                                                 Once we saw how things were unfolding in the summer of 2017, with jackpotting, it spiked if you will, in the winter of 2017. Everybody got engaged, started sharing techniques, started working together, sharing information. And sure enough, in the spring of 2018 FBI, local law enforcement, Secret Service all got together and just basically shut down the jackpotting ring that was operating. Knock on wood, we haven't seen them since.                                                                                 So, again, folks between now and the time these bad guys come back, use it as your point in time to do some planning, and to proactively update the fleet. So that when this does come back, and I have to say when it will come back, make sure you're more ready or at least you're in a position where you've got your response planning, know what's going to happen. I think that, Dave, is the way I'd wrap it up. Is there anything else you'd like to add, sir? Dave Phister:                     19:01                     No, I think the only thing I would say is certainly thanks to you. And echo your thanks earlier to all the other folks that engaged in these security conversations in the past year. A special thanks to the folks at Forrester and Merritt Maxim for the Zero Trust webinar. I think that was very well received. And wish everyone a happy holiday and happy new year and certainly, to you as well, Scott. Thanks for having me. Scott Harroff:                     19:29                     Thank you very much, Dave. I'd like to send a special call out to John Campbell over First Data Star for doing a fantastic webinar with us at Tag Picks. As well as First Data putting on their own security webinars and inviting us to work with them. I very much appreciated that opportunity as well. Dave, thank you for all that you've done as a product manager for security, to give your input and your insight to our customers.                                                                                 Thanks for all the other people that have helped make this podcasts successful, from the marketing teams and everywhere else. With that, this is Scott Harroff, Chief Information Security Architect, Diebold Nixdorf signing off for the year. Please do go back to the COMMERCE NOW podcast. Listen to them all. If you have any questions, please feel free to reach out to your client account executives, or service managers, and I wish you all happy holidays.  

Summary: In this podcast on Zero Trust security; an encore to our November 15 webinar, during which, Dave and Merritt explored the architectural concept of Zero Trust and discussed how it can be leveraged by financial institutions to gain tighter control of ATM networks. Today, we want to take a deeper dive a few of the questions we received during the live webinar and actionable outcomes to consider when it comes to applying this concept to your operations. Resources:  Research Report: The Forrester Tech Tide: Zero Trust Threat Prevention, recently published in the third quarter of 2018. Download a copy today. Blog: Our Commitment to you as our security partner  COMMERCE NOW (Diebold Nixdorf Podcast)   Diebold Nixdorf Website   Transcription:  Scott:                                    00:00                     Hello again, I'm Scott Harroff, chief information security architect for Diebold Nixdorf, and I'm your host for this episode of COMMERCE NOW.                                                                                Today I'm joined by Dave Phister, director of security solutions for Diebold Nixdorf, and guest speaker Merritt Maxim, principle analyst for Forrester. Today, we're going to discuss an interesting concept, zero trust security. This podcast is actually an encore to our November 15th webinar during which Dave and Merritt explored the architectural concept of zero trust, and discussed how it can be leveraged by financial institutions to gain tighter control of ATM networks.                                                                                 Today, we want to take a deeper dive into a few of the questions we received during a live webinar, and in actionable outcome to consider when it comes to applying this concept to your operations. A link to the webinar replay can be found on the podcast show notes. If you'd like to learn more about this topic, we'll give you a little bit more about this in a few minutes.                                                                                 With that, I'd like to welcome Dave and Merritt. We're happy to have you on the show today. Dave:                                    01:04                      Yeah, thanks Scott, excited to be here today as well, appreciate that. And also thanks to Merritt for being with us here again today to talk about zero trust and ATM security. Merritt:                                01:15                     Yeah, and thanks Scott and Dave for having me, I'm looking forward to our discussion here. Scott:                                    01:19                     Right, so let's dive right in. As I mentioned, there was a lot of useful information provided during our zero trust security webinar, but one question was asked by several webinar attendees, which was can you summarize, and give me bullet points, which would provide me a list of the key things I can do right now to help safe keep my ATMs?                                                                                 So where we're going to focus our time today is in looking at that. And we're going to go through each of these individual bullet points. I know each of you have some areas you'd like to highlight. So let's get started with Merritt, and his thoughts on topic one, which is controlled access. Merritt:                                02:02                     Yeah, sure, thanks. So I think as kind of a backdrop to this, it's important to realize that although we are increasingly moving to a cashless society, ATMs are still a relevant part of our kind of daily lives, and we still use them, and have to rely on them for a variety of purposes. But because they're still relevant, it also means they're still active in the public, and they store cash, which is still a useful target for hackers. For all the talk about cyber attacks, and malware, and viruses, the reality is there still are numerous instances of people physically just trying to get access to an ATM to actually steal the cash out of it. A much more kind of low tech way to ... instead of trying to, say, steal credit card numbers or Social Security information online.                                                                                 And what this means is that organizations do need to think about securing the physical asset itself. And this is increasingly, I'd say, problematic because the traditional model where the ATMs are only located within the branch is not necessarily a model now, they're located everywhere, they're in airports, they're in hotel lobbies, they're in convenience stores, or at gas stations, and those are all in the name of providing convenience, but that also means that those assets are now potentially more accessible to a greater part of the population, which may be inclined to try to steal the currency out of the ATM itself.                                                                                 And so what this means is that as you distribute and extend your ATM network, you can't overlook the need to just control and manage physical access to the machine itself. So that can include everything from verifying who actually has access to the system, whether they're going there to do maintenance, or whether the part of the currier that actually is putting new currency, or reloading the ATM at some interval. And also looking at what kind of locking mechanisms do we now need to have in place to actually secure the head compartment of the ATM itself.                                                                                 So again, these are all measures that have been in place for some period of time, and which companies have already been using, but it never hurts to stress the importance of doing this because the ATM is still a target. And from a IT side, you can also begin to look at logging all of your activity of maintenance on those machines as well. There's still the possibility of potential insider abuse, maybe if they actually have access to ATMs that perhaps they may be sharing that credential with somebody else in exchange for sharing the proceeds of a theft, and again, having logging and various analytic mechanisms in place to track and monitor the usage and alert when there is unauthorized access. So if you see a maintenance call on a device beyond, outside of its normal operating windows, you can flag and eventually block that device, and then maybe using the video analytics that are embedded into the ATM itself, use that for forensic purposes to follow up with law enforcement.                                                                                 But these are all, I think, useful things and it never hurts to stress the importance of looking at what kind of measures you should be putting in place to actually control access to the asset itself, because that's ultimately going to help minimize the risk of fraud or attacks against the infrastructure. Scott:                                    05:03                     Excellent. So Merritt, I spent Wednesday and Thursday of last week it Pittsburgh with the Secret Service, FBI, and a lot of really high profile banks and credit unions, talking about the strategic and tactical points around ATM security, and skimming around ATMS, and gas stations, and a lot of different areas. So let's focus a little bit on talking about the end point security aspect. So Merritt, can you share a little bit with me around how end point security should be addressed? Merritt:                                05:40                     Yeah, absolutely. And it's a good point to raise. When we talk about threats to the ATM, we've certainly seen instances of card skimming, or card readers that are inserted into the terminals and used to capture credit card data. But also we're seeing scenarios, there was a large ring that was arrested or discovered last year, mostly in Europe, that were actually attacking the banks back office systems, and using that to actually issue, literally just to spew out cash at designated ATMs at certain periods of time for criminals to collect. So the point is that the ATM is connected to your network, it is a valued part of your network, but because it's connected to the network, it also means it's potentially vulnerable to exploitation, either through skimming type things at the end point itself, or through lateral movement from hackers who have gained access to your network elsewhere, and are trying to move either towards a specific ATM or class of ATMs, and use that to allow it to behave abnormally, that may allow users to them actually extract cash from that ATM.                                                                                 And so this means you need to follow many of the same kind of best practices that you follow for traditional, say, desktop end point, whether it relates to keeping your operating systems up to date and patched, and making sure that you're not running a legacy or outdated code for which a zero day exploit may actually be available, and may be able to be utilized. You could also include at the ATM end point actually hardening the operating system. So there may be certain functionality in that operating system that is not necessary for the safe operation of that ATM, and therefore you may be able to reduce our remove some of that functionality which further reduces the potential vulnerabilities you may face at those systems.                                                                                 And then also applying appropriate network controls, this can include firewalls, micro perimeters, network access control, things like that, to ensure that there's a trusted connection between the ATM and it's only authorized to interact with other trusted parts of the network, so that if it gets a phantom request from some other unknown device, it won't communicate with that, and therefore would minimize the risk of those devices being able to go in and extract information.                                                                                 And lastly, there's ... we've been talking a lot about the technology aspect, but you need to accompany this with the process framework, right? In terms of how you do patches, how you test them, how you upgrade them, how you install them. And also, from a risk and vulnerability standpoint, having a vulnerability risk model in place so you can access based on a given vulnerability as it's identified, A, is this relevant to our organization? B, is it significant, and then C, what's our appropriate counter measure? Is this something that we don't deem to be a significant threat and we can put it as a lower priority, or is this something that requires immediate attention, and we're going to therefore deploy a team to go out and deal with that.                                                                                 So you need to have those processes in place to accompany kind of your overall approach, because that's ultimately how you're going to better defend yourself against this kind of expanding attack surface. Scott:                                    08:41                     You know Merritt, I think you hit it right on the head with all the different points you touched on. And to your point, keeping the firmware up to date on your dispensers, keeping the XFS software up to date, keeping your operating system up to date, keeping your terminal software up to date, and having all this end point security controls in place is really, really important. And I can't agree with you more on all those different points.                                                                                 But what I'd like to do is I'd like to touch just for a second on encryption. And for me, when I look at encryption, I look at two different things relative to anything that has card holder data, whether it's an ATM, whether it's a gas station, whether it's a point of sale terminal. For me, I look at how do we protect data at rest? Whether that's on a hard drive. How do we protect data in motion, whether that's between an ATM, or a gas pump, or a point of sale station, and whatever's actually approved in that transaction.                                                                                 So Merritt, could you give me just a little bit of context around how you think about encryption around these devices? Merritt:                                09:48                     Yeah, sure. Encryption is ... it's not kind of dark magic that it may have been viewed back 15 or 20 years ago, this is a standard capability that can be used in lots of places. And traditionally there would often be a response, "Well, we can't use-"   Merritt:                                10:00                     ... fixes, and traditionally, there would often be a response, “Well, we can use encryption here because the network's too slow, or the hardware can't handle it.” That's not a really valid argument anywhere. You really need to be encrypting everywhere, at all possible, not just for data at rest, but also in transit. Again, the performance impact is pretty minimal, but the benefits of it should be pretty obvious, in terms of it protecting you against various breaches and ensuring that your data's being encrypted appropriately. This does require, just like in the previous section, this does require, still, some process in place around how you do, for instance, key lifecycle management. So, how the keys are created, how they're stored, how they're rolled over. Just saying, “We're going to encrypt everything and we're done with it,” that's a good first step, but you need to have this process in place. Includes, possibly, deploying hardware storage modules, or HSMs, to actually store the key material and having a dedicated team in place that actually manages that key, because encryption is really only as strong as the underlying key managing processes. If you've got poor key management processes, and the keys are just stored on a USB drive in someone's desk, the value of the encryption is considerably reduced. That really puts a premium on making sure that you've got these various types of hardware mechanisms in place, and that you need to have that host ATM encryption, using things like TLS with a message authentication code to prevent against man-in-the-middle attacks.                                                                                 These are all, I think, pretty standard processes, but always worth reiterating, because encryption is a very powerful tool that provides us a lot of value in preventing against these types of attacks. Scott:                                    11:40                     Yeah, Merritt, you've completely nailed it, and I think that anyone listening to Commerce Now should think about contacting whoever does the transaction process for their ATMs. They should really ask their transaction processor, “How do we encrypt the data between our ATMs and the transaction processor?” And, likewise, I think everybody should ask the OEMs, “How do you encrypt data at rest on the ATMs?” That's incredibly important. It shouldn't be overlooked and everybody should understand how that works.                                                                                 What I want to do, right now, is I want to switch a little bit over to Dave. Dave, what I'd like to do is just spend a little bit of time and ask you about, now that we've encrypted data on the hard drive, now that we've encrypted data between ATMs, or all these other point-of-sale, or gas pumps, or everything else, to the hosts that actually drive them. Give me a little bit of your thoughts on runtime integrity. How do we make sure that the software that's running on these devices actually is doing what it's supposed to do? Dave:                                    12:51                     Yeah, absolutely, Scott. It's a great point and Merritt talked earlier about endpoint security. This runtime integrity really becomes a sophisticated version of endpoint security. It's another layer of security that is really an expansion area, in our opinion, in the ATM space. The rest of the world is moving to heuristics and behavioral endpoint monitoring, and this will, eventually, occur in the ATM space, as well. It's already beginning to. Merritt talked about zero-day malware. We talked about that during the webinar, as well. This is ATM specific malware. This is some pretty nasty stuff. We need to move away from solely relying on antivirus. We have to move away from relying antivirus and signatures, and focus on intended behavior.                                                                                 Scott, if we can predefine and authorize ATM behavior, now, that requires us to understand what the expected behavior should be. We can deploy that to the endpoint and then monitor that behavior in real time. We can, actually, detect this ATM zero-day malware without a signature, by detecting this unauthorized behavior. If we take that one step further, tie that post-event operations into the security policy, how they output into an alarm, then, now, we begin to have some real time alarming notification and response capability to defend against the threat.                                                                                 This clearly requires adjusting the framework and processes to avoid attacks that would take controls of the lower level software, that might allow privileges to be escalated and to remove these security policies. But, again, this type of sophisticated application layer security that monitors the actual behavior on the ATM could go a long way to defending the endpoint from some of this zero-day malware that we're seeing continue to evolve in the marketplace, Scott. Scott:                                    14:56                     Dave, I think what you just touched on is really, really important. Because, to me, when I look at an application, again, whether it's on an ATM, whether it's a gas pump, whether it's a point-of-sale terminal, to me, what the whole monitoring concept is all about is in looking at this application saying, “I expect you to do A, B, C, D, E, F, G, and that's all.” At the end of the day, if, suddenly, as opposed to doing A, B, C, D, E, F, G, you do H, I, J, K, L, M, N, O, P, there's a real issue going on.                                                                                 For me, what I want to understand is, when we have an application that supposed to behave in a certain way, and we define criteria for that behavior, and something happens outside of that criteria, for me, what I want to have happen is, I want you, the ATM transaction processor, or I want to have the backend credit unit, the backend financial institution, I want them to understand that something has happened outside of what we consider to be normal, and I want them to do something different.                                                                                 Give me a little bit of context, Dave. Help me understand, from your thought, how we do analytics? How do we determine that something unusual is happening? How do we determine that something unusual is going on and how do we respond to that? And then do something different. Help me frame analytics. Dave:                                    16:35                     Yeah. It's a great point, Scott. Again, another area beyond encryption and runtime integrity where, I believe, the market is expanding. This is all really focused on gathering the data. First of all, we need to have access to the data. So there has to be some centralization. We have to have the components, the clients, the infrastructure, in place to be able to centralize the data. Then we need to focus on correlating that behavior, that expected behavior, A, B, and C, that you talked about earlier, and turning that into a flow, a sequence, if you will, a pattern that we can match.                                                                                 If we see patterns that don't match, then, certainly, the sensors are going to trigger. And if we've established the security appropriately within the security policy, we can, perhaps, stop the next critical operation at the endpoint, whether it's ATM, whether it's in the retail space, as well. We can launch an alert, a notification, if you will. If we are in an infrastructure where we have an alarming capability, and that alarming capability can be tied to a centralized infrastructure, then we begin to piece together a real time monitoring capability that can take a look at transaction flows, use cases. Gather all this data, correlate it, and recognize when an endpoint is doing something that it wasn't originally intended to do.                                                                                 As we move forward, the modules, themselves, the software that you talked about, the transaction area, the hosts, they will begin to include these data components, and the analytics, so that we can do a better job of, not just monitoring the operation of the endpoints, from an availability, or an asset, perspective. Certainly, being able to better understand what's happening from a threat perspective and be able to respond as quickly, as possible. Every operational environment is different, Merritt, touched on that. So it's not a one size fits all, by any stretch of the imagination, but, I think, if we put physical and digital monitoring in place, and we have access to that data, we certainly can do a great deal more to protect the endpoint. Scott:                                    19:18                     I think you really hit it there. When I look at our ecosystem of financial institutions, and retailers, and government bodies, and commercial level entities, I look at a large variation. I look at folks from your large, large, large financial institution has 10,000 ATMs across North America. I think about how that extends all the way down into the small credit union, if you will, that has one or two branches, and one or two ATMs. I think there's a huge variation in how people manage their infrastructure. How they manage their devices. How they handle the monitoring. How they manage the endpoint security and-   Scott:                                    20:00                     How they handle the monitoring, and how they manage the endpoint security, and encryption, and everything else. And to me, I look at it from the standpoint of I might be this huge, huge financial institution that has 50 people that does nothing more than from eight to five, work on my point of sale terminals, my ATMs, or my different kinds of devices, all the way down to this small institution that just wants to have their name on an ATM, sitting in the corner of parking lot somewhere. So help me understand a little bit.                                                                                 When I move from someone that has a financial infrastructure down to somebody that just wants to have their brand on something, help me understand how I can look at ATM as a Service, as something where I just want to have somebody do everything for me, versus somebody that wants this huge environment of controls, and infrastructure, and people wrapped around this thing called an ATM. Dave:                                    20:57                     Yeah, it certainly can be a daunting task, depending on certainly your position in the market and your capabilities. It can be overwhelming from an asset and availability management standpoint, configuration management, typical information security standpoints, not to mention overwhelming from a security policy management, incident management, having to pay attention to what's happening at the endpoint from an anti-skimming standpoint, and what's happening perhaps in the channel with regard to malware prevention, attacks against the host, it can be extremely overwhelming for those entities that really only have a couple of endpoints in operation.                                                                                 And the reality, Scott, and I'm sure Merritt you would agree, technology is moving too quickly. And if we don't maintain pace with technology, then certainly there will be vulnerabilities. And the fact of the matter is, there are experts out there and advantages to subscribing to a managed-service or an ATM as a Service, not only from an availability standpoint, but also from a security standpoint. Merritt, you touched earlier on, when we were talking to Scott about encryption, the key management aspect of it, this is something that is a specialized skillset.                                                                                 It's critical to encryption and if you don't do it right, then you might as well not have deployed encryption to devalue the data. Another area where ATM as a Service, a managed-service provider can fill that skillset, that capability, can manage the keys, manage the infrastructure that's in place to deliver the service with trust. So certainly, larger institutions have the assets, they have the wherewithal, they have the partnerships in place to be able to do this, but many do not. And if they don't, it can be daunting, overwhelming, that's when vulnerabilities start to come into play and attacks occur.                                                                                 And ATM as a Service, it exists out there, and we certainly encourage those entities to subscribe or consider that. What I like to say, Scott, is know what you do and know what you do best. And do that, and if you don't do something well, then you should seek out those who are experts, who do do it well and see if they can't help you. Scott:                                    23:31                     Dave, you've just completely finished my sentence for me, if you will. One of the things that I'd really like the folks that are listening to COMMERCE NOW to understand is, we're talking about all these security controls. We're talking about all these different ways to protect your assets.                                                                                 And what I'd really like to do, is to frame this up from the perspective of, "What am I going to do if something bad happens, when there is an incident, whether I get skimmed, or whether there's some kind of a compromise, that data arrest or data in motion, what's my incident response? What am I going to do? Who am I going to call? What are my next steps?"                                                                                 Because at the end of the day, we can all put all these different controls in place, and these defenses that we're talking about are what I'll legacy or they're aging defenses. But what we really need to do, is we really need to start becoming proactive. We really need to start focusing on what our vulnerabilities are and what our responses are. So anything else, Dave, that you or Merritt like to touch on that could help our audience understand, that if something happens, what am I going to do next? Who am I going to call? What am in going to do next? Can you guys help me out with that? Merritt:                                24:58                     Yeah, I would add, and make this common to all of our clients, is as perhaps morbid as it may seem, is you actually need to practice and plan an incident response. Just like you have a fire drill every year in your building to verify your evaluation plans, the same thing needs to be held, whether it relates to any data breach of your system. So that means, you actually have a documented procedure in place, you have a team identified to actually handle that. So if and when you actually have a breach in some part of the ATM network, you actually know what to do. A lot of companies think, "Well, either we're not going to be hacked and we don't have to worry about it." Or, the worst case, they also create a policy, and they just put it in a three-ring binder, and everyone kind of forgets about it. So I really encourage you emphasize a kind of practice and the human element is to really understand and make sure you've figured out, just like for disaster preparedness. This is something that has impact to your business and your brand, and if you have a plan in place, if and when something happens, you're much better able to respond to it.                                                                                 And more importantly, your customers will be much more forgiving of you if you show that you've got, you're ahead of the issue, and you've got a good handle in place. If it takes you three weeks to get back to responding to this specific incident, that doesn't endear customer loyalty or trust. So I think the need to do drills and plan your teams, at maybe once or twice a year, I think, is definitely good advice to take in your organizations, particularly as you look ahead into your 2019 planning. Dave:                                    26:27                     Yeah, I couldn't agree with you more, Merritt, that the incident management component is often overlooked, certainly by many. We're so focused on the threat and preparing for the threat. Merritt, you and I talked during the webinar about this issue of threats becoming increasing a question of, "When, not if a breach or a compromise will occur?" We don't focus enough on when it occurs, what will we do about it, and I think establishing an appropriate risk management framework is key here, putting the processes in place, as you talked about, Merritt.                                                                                 Testing these processes, recognizing what's at risk when an incident or a breach does occur, so that you know what the risk mitigation steps are and what the appropriate sequence is for those steps to minimize any damages. Ultimately, that is the key to protecting the endpoint, first and foremost, the users and the customers, and then certainly the brand, as well. So incident management is a critical component to any risk management approach to information security. And again, Scott, another component, just to bring this full circle. That is possible from an ATM as a Service prospective on the managed side of things. Scott:                                    27:56                     Again, I'd really like to thank Dave and Merritt for joining us today, and helping us talk about this really important topic. And I'd really also like to thank our listeners for tuning in to this episode of COMMERCE NOW. To learn more about this topic, please download a copy of the research report, The Forrester Tech Tide, Zero Trust Threat Prevention, recently published in the third quarter of 2018. Please visit DieboldNixdorf.com/ zerotrust to download a copy today. Until next time, keep checking back on iTunes or your PodCal system channel for new topics on COMMERCE NOW. Thank you again and have a great day.      

Summary: Devon Watson and Michael Engel discuss all things Connected Commerce. In this episode, both touch on the unparalleled services and technology that are essential to evolve in an 'always on' and changing consumer landscape. Resources:  Blog: Connected Commerce: It’s Not Just for Retailers Exploring the Path to Connected Commerce Advertorial: Michael Engel on Pymnts.com COMMERCE NOW (Diebold Nixdorf Podcast)   Diebold Nixdorf Website   Transcription:    Devon Watson:           This is commerce now. My name is Devon Watson, chief marketing officer for Diebold Nixdorf. Really excited this week. We have Michael Engel here with me. We're in Phuket, Thailand, meeting with our Asia Pacific team and talking about all things connected commerce. So Michael, if you could please just give us a quick intro, tell us a little bit about what you do with the company. You and I bumped into each other all over the world. Uh, give us, uh, just kind of quick background, who you are, what you do. Michael Engel:           Well, my background has been in suffer all my life more or less professional life, um, and in banking. So, um, I've been traveling around the world talking to different customers and my job is officially being responsible for our software sales globally in banking. But the nice side effect of that is that you can talk to customers and you listen to customers and having that privilege, getting so much knowledge from the different geographies and then being able to consolidate all of that and drive that back into our R and d organization. That is the fun part really of the job. So really getting to know what is happening in the market, where the concerns of our customers, but also see the different cultures, the different drivers in those markets really bring together that knowledge that we can then utilize and transformed that into innovations and products and solutions so that that's what it's basically all about. Devon Watson:           Yeah. So you're, you're kind of a really important glue between the customer base and the product slash r and d organization, which is just a fantastic place to be in. You obviously are in a global role. So I imagine that you might have a fantastic frequent flyer mile account. Do you know how many miles he did last year meeting with customers? Michael Engel:           A bunch. So accumulated there probably in the seven digit number. So I'm not truly sure if that's a good number. Yeah, Devon Watson:           it's kind of like winning the, uh, the race that you never wanted to enter. Exactly. Exactly. Well, so this customer connectivity, right? The amount of time that you spend around the world meeting with customers. Can you give us a little bit of flavor about the Fintech Revolution? Right. So, uh, I think last year there was some like $26,000,000,000 went into financial technology, startups and innovation and a lot of the customers that I talked to at conferences and in my travels they're wrestling with how do they respond to that? How do they incorporate that? Can you tell us a little bit about, you know, what you're hearing around the world. Michael Engel:           Well, I strongly believed that fintechs are positive disruption of our industry. The reason why I say this is banks are there to provide the element of trust which very good and very important. However, in the past you to regulations and also the tendency to stick as human beings to the known and that's also in business and the business processes created an environment where although bangs for very sound, organizations that were also very hard to move. And if we look into our society today, then technology has made an amazing seeing happen. And that is the cadence and speed of innovation that we see today. So if you look into the past then you had like every hundred years and major invention then every 50 years, every 20 years, every year, and now we're not talking years anymore. It's really down to months or weeks or even days when you see the new and next thing coming up. Michael Engel:           So that speed of innovation at the same time is a very good thing because it's enabling us today was utilizing that technology. So just think about what you do today with your smartphone or your tablet in terms of ordering your ticket for coming here, checking in, organizing transportation to the hotel, getting recommendations were to die and where to stay. So you basically organize everything that took in the past couple of weeks to prepare that trip. You do that and a couple of clicks. So that enablement is what people like today, this is what people want, but that is also what they know because in every commercial transaction there's this financial element involved. Now expect also from the bank to support that. So this is the big challenge where now these fintechs are coming in and say, okay, here is little sweet spot and we create based on that technology, a solution for that particular sweet spot, which is good because that gives some or bring some dynamic into this whole world at the same time it starts a thought process within the bank to say, okay, we need to be in a similar way like those fintechs. So how can we embrace the results coming out of the Fintech, how can we integrate that into our own it environment and how can we even leverage our strengths of the element of trust being a sound financial organization and that speed of innovation and bring all of that together. That's Devon Watson:           the real trick, right? So, so at a, at a corporate level, you know, we've engaged some different ways in this wave ourselves. So we're a, we're a member of Fintech 71, which is a selarator primarily for financial technology companies, uh, bringing together a bunch of different innovation hubs in the U. S we're also a member of workbench, which is a venture capital and startup, a innovation fund in New York City, and we're working with startup companies and large companies as well in R and d portfolio. Clearly. So, you know, we're engaged in it. The banks are engaged in it. When you talk to a customer for the, you know, for the bankers listening to us, you know, what would your advice be on how our customers and dibels next door can work together to kind of ride this wave navigated as partners? Michael Engel:           Yeah. You mentioned the term glue in the beginning in terms of how we transform, um, so to speak knowledge that we pick up from the market and bring that back into our own organization. If I'm in a certain way, bangs need similar glue because on the one side they, they sit on a wealth of data and information about what we do as customers was any financial transaction that we execute. Well, leveraging that information is still yet to come. Um, second thing is you have all this existing financial, uh, information including the business processes sitting in different core banking systems, but they're very much siloed, so there's not much connectivity between data in one bucket to the data turn, another bucket, and if you think about the evolution of the IT industry is all about taking data, taking processes that are manual today and automate them and really bringing this together as the fundamental idea of what we do in connected commerce. Michael Engel:           So we're kind of the glue bringing all of these elements together and bring that to the end consumer because that's the important thing. So how can we get better, more automated processes to a customer because to me it's beyond the traditional view of you have a bank and you have a Fintech, the Fintech as the innovator that shakes things up and let you think to innovate and to thrive. Now some of the technologies that are used in there, like the whole idea of the API economy, blockchain, all of that. These are just enablers, but these enablers go beyond the financial industry per se. It involves us as a consumer. It involves every solution provider or retailer or merchant that's out there because in any transaction we don't think banking. We think buying a car, getting a new house, I'm traveling to book it now. That is what we want to do and if this consumer customer journey, we need to involve a sort of financial transaction, whether that's buying flight ticket or whether it's getting the mortgage for the house. Michael Engel:           If we bring those elements together through an API economy, that is what really consumers are expecting from us and this is where I also see as the role of the bank being that aggregator, being that glue and as Sdi service provider, we need to provide the frameworks, the components that make that process faster so banks will not start from scratch building that way. So they are looking to guys like us to say, okay, is there something in the box that is open source technology that are prebuilt components that are frameworks, that are tools that are interfaces precertified based on all the government regulations that you have from the world. Services that you can give me to gain more speed to accelerate, to be in the best meaning of the word. More Agile. Devon Watson:           No, that's very helpful. And I think one of the things that I'm hearing kind of loud and clear, you know, talking to clients, talking to you know, our subject matter experts and thought leaders like yourself is this mind shift from thinking in terms of channel silos to now thinking in terms of more holistic consumer journey and how to enable that end to end and play a larger role in that kind of commerce supply chain if you will. Well this has been a great conversation. I always love learning from, you know, our guys that are out there with the customers on the front lines talking to customers around the world and I think that ability to take knowledge from one place transpose it on a global basis is probably one of the more powerful things that we bring to the market. So like kindle. Thank you very, very much. Michael Engel:           Maybe one last word on that. I'm traveling around the world has two aspects to it. On the one side, you'll see all the variety and differences in the different geos and is important for us to understand that there is no one size fits all on the one side. However, there are certain similarities and fundamental elements that we need to provide and to really find a balance of how much standardization infrastructure of frameworks that can be reused globally do we need to provide, which is important for r and d organization, but how can we also be very flexible to put in the regional flavors, what is really needed in a certain society, in a given economical environment. I think that is what we've learned out of history that no, there is not a one size fits all, that we drive from the US, from Europe, from wherever into the world is really understanding the local needs while bringing that together in a standardized set of components and frameworks and that is represented in the whole connected commerce idea. Devon Watson:           Fantastic. No great stuff. Really appreciate the time. This was a fun conversation. I hope. I hope our listeners are learning from these and uh, look forward to seeing you again somewhere else around the world. Thanks.    

Summary: Physical and cyber attacks against ATMs receive a lot of coverage, but they are not the only ways in which criminals can empty an ATM of cash. Transaction reversal fraud is one example of a manipulation of loopholes in transaction processing rules to steal cash, but it requires little to no tampering with the terminal. This episode will cover the latest process/communication manipulation fraud methods and news, as well as how to stop these attacks.  Resources:  Blog: Changing Risk, Risking Change: Security at the ATM A look at how ATM Security has Changed....and how it hasn't Whitepaper: Managing ATM Security COMMERCE NOW (Diebold Nixdorf Podcast)   Diebold Nixdorf Website   Transcription:    Amy Lombardo:                00:00                     Physical and cyber attacks against ATMs receive a lot of coverage, but they are not the only ways in which criminals can empty an ATM of cash. Transaction reversal fraud is one example of a manipulation of loopholes in transaction processing rules to steal cash, but it requires little to no tampering with the terminal. This episode will cover the latest process and communication manipulation fraud methods and news, as well as how to stop these attacks. I'm Amy Lombardo, and this is COMMERCE NOW. Scott Harroff:                     00:43                     Hello, again. I am Scott Harroff, Chief Information Security Architect at Diebold Nixdorf and your host for this episode of COMMERCE NOW. Today, we are live from the TAG PIX event in Las Vegas. I'm joined today by a very special guest from First Data, Mr. John Campbell, Director of STAR ATM Acceptance.                                                                               Welcome, John. I hope your experience here at TAG PIX has been a good one so far? John Campbell:                 01:04                     Yes, it's always a pleasure to be here at TAG's hut. This is actually my 13th year, and I look forward to it every year to get some great information from the vendors and the clients themselves. Scott Harroff:                     01:15                     Yeah. I think I've been coming here, John, for about 15 years. I've probably bumped into you one of those first early sessions. Great seeing you here every year for all those years, year over year. Hey, before we dive into some questions on reducing ATM related fraud, tell us a little bit about your background, positions you've held. What are doing these days? John Campbell:                 01:36                     I spent about 15 years working at Virginia Credit Union. I was a longtime TAG member. In a previous life, I was an accountant who actually settled the debit networks before jumping into ATM operations back in 2005. TAG attendee for 11 years. During those times, presenter and director on the TAG board from 2010 to 2015. Back in those days, I was responsible for the ATMs and debit processing for the credit union. These days, I work for First Data in Atlanta. I'm Director of STAR ATM acceptance for the STAR network and work closely with First Data processing ATM requiring side of the business, [ISOs 00:02:09] and [FIs 00:02:12]. I am currently a member of ATMIA, US Payments Forum ATM Work Group, and the National ATM Council. Scott Harroff:                     02:17                     So what you're saying, John, is you've been around a little while and you've seen a few things when it comes to ATM fraud? John Campbell:                 02:22                     A couple. Scott Harroff:                     02:23                     All right. Having been on both the FI side and now working for a transaction processor, how would you describe the state of ATM security today? John Campbell:                 02:32                     Fluctuating, evolving, and sometimes growing. We are better at what we used to do, but so are the bad guys. When I started in ATMs in the early 2000s, the biggest scares we had were the occasional ram raid and the old webanese loop capturing cards at ATMs before DIP readers came into existence. The move from OS/2 to Windows started bringing all sorts of different degrees of cyber attacks and logical attacks on software that we had never seen. But they were still sporadic and slow. But now it seems that even after all the security enhancements we've done, EMV, encrypted hard drives, point-to-point encryption, the attacks seem almost constant and even renewed. I think some of that's also from the fact that criminals are not just attacking the ATMs logically, but they've gone back to the low-hanging fruit and ram raids and cash trapping. The cashouts that made a lot of news the last couple weeks in the FBI. A lot of it were from best practices just not being followed that had been out there for years. It's still a very fluid environment. Scott Harroff:                     03:40                     Yeah. That's about the same thing I'm seeing. When you say EMVs out there, I just got done talking to customers where they were charged back several hundred thousand dollars, because they had made the decision, "Maybe I won't implement EMV. What's the worst that could happen if I don't spend all that money to do the upgrade to EMV?" I've had quite of few of them where they didn't spend the money, and now what's happening is larger financial institutions are coming back. They're saying, "Hey, we detected this fraud. The only thing in common is your ATM, so why are getting all these non-EMV transactions from our customers that have EMV cards off your ATMs?"                                                                                 It's the same thing with TLS, John. I've watched TLS roll out. Your network was one of the early adopters of rolling out the TLS protocol. But at the same time, there was some really big FIs that are out there that still haven't turned it on. There's some big networks that haven't turned it on. It's interesting to me that some folks are really thought leaders in the industry and gets stuff done, and some others tend to be a little bit more of a laggard.                                                                                 What security risk do you see as they pertain to FIs and processors, or even processes in communication protocols? John Campbell:                 04:53                     Well, I think, first, as an industry, what's really been hampering us is the fact that we have no problem jumping on the barbarian at the gate, but then we go back to sleep behind the walls. We're seeing that over and over again with skimming and then EMV. We ramp up, a lot of the earlier adopters go, and then we seem to just get lulled back into sleep.                                                                                 I take it back to Ploutus coming out with the malware when those were rearing its head in the 2013 timeframe. Diebold and other industry leaders came out and said, "Here's best practices. This is what you need to implement to protect yourself." And it got quiet. In early 2018, suddenly a variant, Ploutus-D, comes out. It hits some ATMs in the country, and everyone's panicking. Everybody's freaking out. "What do I need to do?" And you're sitting there thinking, "The best practices that would have protected you were put out there five years ago, and you just didn't do it." And some of them were physical, of top hat security, and some of them were logical, just default passwords. Somehow, here we are in 2018, and it's still a problem. That really blows my mind and that.                                                                                 But one of the bigger steps I've seen that's actually moving the ATM industry in good spot is, as you were saying, that point-to-point encryption of the data between the ATM and the host to prevent man-in-the-middle attacks. Folks forget that, even in an EMV environment, there's still data that's visible out there. I mean, we're still in a US market that's routing by BIN tables, even though you have EMV protocol having it in the ATM. So whether it's an ISO ATM or a FI, you can still do man-in-the-middle attacks, still attack the data. So seeing MPLS communications at the routers and hosts was great, but now we need to protect those small spots where the criminals are still attacking. Because even with EMV, MFA, and tokenized PAN, there is no reason we should be sending any data in the clear anymore, and it's still happening. Those that have been, before, what you said, First Data and STAR, it's starting to pick up, but I'd like to see it pick up at a faster pace.                                                                                 The ones that's bypassing all these security protocols is account takeover. It's still a real problem, and it truly does bypass that onsite security, whether it's logical or physical. I equate it to ... It's you can have all these gates and cameras and barbed wire, but if you still, through social engineering, allow someone to steal the proverbial guard's coat, they're still getting inside the fortress. They're still getting out. You don't have to beat the technology. You're beating the human element, and that's still a big problem for us. Scott Harroff:                     07:28                     Yeah. Speaking of human elements and things that have been out there for a long time. With all the technology that everybody puts out there, I still get phone calls. I wouldn't say on a regular basis. But every month or so I get a phone call about some institution would have done a transaction reversal at the ATM. They'll be balancing their journal, and they'll be looking at their host logs. And, "Why am I out $300 of cash? It shouldn't have been gone." What do you see at the network as far as transaction reversal best practices? Because, John, in my mind, it's something that, between the ATM and the transaction processor, we should have been able to get rid of a long time ago. But I still get customers calling me on this. John Campbell:                 08:12                     Well, we still have ... In the industry, it's always been cardholder customer-centric. How do I protect the cardholder? Reg E is built all around that. And of course, that's what the criminals are manipulating. The TRF is a very low-tech scam. The criminal manipulates the ATM into thinking there's a fault while simultaneously breaching the dispenser shutter to grab the cash. But the way that the networks and the ATMs are set up, all it knows is there is a fault. "I don't think I've actually dispensed cash or I can, and, therefor, I need to reverse the transaction." So the debit is reversed, the bad guy walks away with the cash, and then can continue on with this fraud that they're probably getting at ATM and ATM.                                                                                 We've heard a lot about this from the European market more, especially in 2015, but it's creeping in again. Just like Ploutus and other sorts of attacks, they start other parts of the country, and the US continues to be the soft underbelly. So the current SOP for conducting this fraud is defined. Deployers who've gotten motorized ATMs, they are to set up for card before cash. And of course, the industry did this in response for EMV. I don't want the cardholder to leave their card, so I'm going to make sure the cardholder takes their card before I can give them their cash. I'll stage it behind the shutter. And then, as soon as they take it, I'll give them their cash. The bad guys know this. They test out ATMs. They can hear the dispenser cranking out. They can hear the money behind the shutter. Ant then, it doesn't take a whole lot for them to go manipulate the hardware and then obtain the cash. It's reversed again, as we were talking about before. And then, they run to the next ATM, or they just do the transaction multiple times. Scott Harroff:                     09:53                     Yeah. I look at the problem pretty much the same way you do, John. We've released XFS updates that would minimize the impact to the customer. I know First Data and a lot of other networks that are out there can turn on things inside the configuration and say, "If this occurs, then let's hold this for 24 hours, so we can verify whether the cash has been withdrawn back in. If it's been withdrawn back in, did we get all of it? Or did we just get a receipt that came back and looking like a piece of cash?"                                                                                 I know that we have a lot of technology. One of things I wonder about is, how can the industry as a whole, through events like TAG PIX, educate these customers on all the things about the deployers can do, as well as the networks. It would be interesting, I think, to get together a group of people that could really sit down and communicate this is a way that everybody understands the problem and everybody understands some solutions before something bad happens and they come back to us. I know what we can do as Diebold. What do you think processors might need to do differently to help prevent these kinds of attacks? John Campbell:                 10:57                     Well, I know that a lot of ATM deployers have actively monitored transactions reversals and card jams. They've put in some logic. But I relate it to what we're seeing. And fallbacks, as well. There's no consistent idea of what's the best way to combat the fraud. You have some FIs on fallbacks who go and decide, "I'm declining them all." Some, "If it's under 100." So you see the same thing with these transactional reversals. There's no unified idea of what's the best way to combat it.                                                                                 I think that these acquirers and issuers need to go back to what they were doing with skimming, which was regularly inspecting their shutters for damage, monitoring velocity of reversals. Issuers, education their issuers. Because the processors can help by, when they're implementing these ATMs, educate. I don't think they can just leave it up to the manufacturers. I don't they can leave it up to PCI. I think, we as processors, we as networks, need to be advocates. We can't just be rails that the transactions are running on. We need to actually be advocates for the issuers and acquirers to help them almost help themselves when it comes to these types of fraud. Scott Harroff:                     12:15                     Yep, I agree with you, John, 100%. We talked about a lot of different kinds of fraud events that are out there. Are there any other kinds of fraud attacks that you're seeing recently? Any other kind of things that the folks out there listening, Commerce Now, should really be thinking about? John Campbell:                 12:31                     A lot of what we're seeing now is the criminals trying to figure out, "How do I get around the security that's becoming more inherent at the ATM channels?" So they're going back to, "Let me attack lower security at certain financial institution's banking core. Let me go after mobile apps that were deployed years ago and haven't kept up with third-party authentication."                                                                                 There was an article a little ago that talked about cardless transactions and fraud. The way it worded, you almost thought that the transaction, the ATM interaction, was the problem. When you read in depth, that's not the case. It really was social engineering. Again, the human element. These accounts getting taken over. They're importing a new phone number, a new email address, and then, they don't have to get around the security. They've taken over the entity. They've taken over the person. The cardless transaction now is just a funnel for them. They don't have to beat the ATM. They don't have to beat the networks. They don't have to beat the processor. They beat the human. By doing so, they're bypassing all this wonderful security we've put into place in EMV and firewalls. They don't. They've gone back to, truly, stealing an identity. They've just done it in a cyber fashion. Scott Harroff:                     13:47                     Yeah. We spent a little bit of time talking about technology. We've spent a little bit of time talking about processes. You just spent some time talking about social engineering defeating the human element. There's another area that everybody likes to hear about. What is happening with regulatory compliance or new standards that you think might actually reduce fraud at an ATM or on an ATM network? John Campbell:                 14:11                     This industry is definitely closely watching the increasing move of state regulatory initiatives. Obviously, the constituents complain to their legislature about fraud hitting the local bank, the local credit union. They have taken it upon themselves to start introducing legislation. They feel, "Well, Federal Government's not doing enough." Or, "The industry's not doing enough. Fine. We'll put in some rules." Whether it's physical security, about cameras and vestibule locks.                                                                                 One of the ones that we've seen recently was a skimming sticker being put on ATMs, which, as soon as I saw it, being a former deployer, I just cringed to think, "We've spent a decade trying to get surcharge stickers off of ATMs, and now a state wants to have one on every ATM, fine people for it." Any ATM deployer knows issuers are not reading stickers. You can put, "Don't insert coin," on a deposit automation ATM, and I had someone tape four quarters to a piece of paper one time.                                                                                 So stickers aren't the issue or the solution. What you really want is, "Fine. You want to help us, states? Then help us do some education programs between the FIs themselves, the cardholders." We have PSAs out there. Let's educate them about fraud and skimming, but let's do it on things they're looking at, social media, out on TV. My gosh, we're a country that's glued to binging on Netflix. Let's put something on there and educate on the things to look for. Legislating it and punishing the acquirers is not the way to go. It's educating the public to be more diligent when they actually visit ATMs. Scott Harroff:                     15:50                     Yeah, I agree with you. I get all kinds of questions from about 1,300 customers around the United States that are small to medium-sized and handfuls of large ones that come back and say, "What have you heard about this?" And, "What have you heard about that?" Often, the regulations or the standards or a bill that somebody has generated is the subject of that.                                                                                 I remember a certain state where they decided to resurrect the old things of, "Well, if you're at an ATM and someone's about to hijack you, put your PIN in backwards, and that will summon law enforcement and save the day." John, have you ever seen any host actually responding to putting a PIN in backwards as an emergency signal? John Campbell:                 16:34                     Yeah, that's one of my favorite. Whether it's Facebook, Instagram, an email, I'll see this. I've actually saved on my phone a picture with a big, red X through it that has this warning. And it's always someone who's trying to do good. They're trying to inform their friends. And then, I have to go repost on Facebook or some other media of, "This is an urban myth. You cannot do this." I'll even explain the history of it. "There was a programmer in '90s. He wrote this." And I also explain, "We also had panic alarms at ATMs in the '80s, and all of law enforcement was changing around ghosts and came back."                                                                                 If you actually the 2010 Card Act, there's a line item. I think it's the last one where the government said, "We have to do a study on reverse PIN." It had gotten to the point where people believed it enough where it became a line item in a bill. They gave them 13 months. It came back. Like we all know, the industry, law enforcement, the processors, hardware, all went, "We can't do this. This doesn't make sense. You're going to hurt people." Most folks can't remember their PIN going forward if you asked them that. Much less, I have to remember in reverse when someone's pointing a gun at me. By the way, what do you do when the PIN is 1441? We have a problem there.                                                                                 It's one of those. It's a great idea. But when you put into the context of human beings, multiprocessors, multi-nodal networks, and by the way, the police still have to respond to it. It's just not the way to go. But, yes, whenever I see that, I start laughing, because it's one of those, "Okay, let me update this same post I've done every six months for the last 10 years." Scott Harroff:                     18:06                     Yeah. Thanks, John, for spending time with us here today. Thanks for all your valuable information, both as a customer and now as a ATM transaction processor. Thanks so much for being here today with us at TAG PIX.                                                                                 And thank you to the listeners for tuning in to this episode of Commerce Now. To learn more about reducing ATM fraud and how financial institutions can better protect themselves against these attacks, log in to DieboldNixdorf.com. Until next time, keep checking back on iTunes or your podcast listening channel for new topics on COMMERCE NOW.      

Overview: In this episode we will discuss how Financial Institutions can bridge the physical and digital worlds to create a convenient, unique experience for their customers. Resources:  Blog: COMMERCE NOW (Diebold Nixdorf Podcast)   Diebold Nixdorf Website Transcription: Amy Lombardo:                00:00                     Hello again, this is Amy Lombardo, your host for this episode of COMMERCE NOW. Our title is cleverly named Human Vs. Machine: How Can They Coexist? And I'm joined by Chris Gill, our Senior Director of Global Advisory Services. We are going to have a conversation all around the concept of the human interaction and how it finds that balance with the ATM. Hey, Chris. Chris Gill:                             00:00                     Hey, Amy. Amy Lombardo:                00:28                      Thanks for joining me. Chris Gill:                             00:29                     Glad to be here. Amy Lombardo:                00:30                     Before we start with our questions, let's just talk about the term "branch transformation," okay? It's been the buzzword in the financial industry for, what, 10 plus years? Chris Gill:                             00:41                     Mm-hmm (affirmative), mm-hmm (affirmative). Amy Lombardo:                00:43                     In 2018, what does branch transformation mean for bankers? Chris Gill:                             00:48                     Well, I think increasingly it really means the transformation between the physical as well as the digital channels. I mean, 10 years ago, if you thought about branch transformation, we didn't have the adoption of mobile banking back then and as much online banking, and the sophistication of what you can offer on a self-service device today. Branch transformation today means, I think, something different than it did 10 years ago. It's really about that connection of the human versus the physical channels in a branch environment, and how you transform not only the technology, but also the way you engage with customers and the experience that you provide is really part of what branch transformation is all about today. Amy Lombardo:                01:30                     Even though it means something different, it's still relevant, right? Chris Gill:                             01:35                     Yes. Amy Lombardo:                01:36                     You're still having the number of conversations that you would have had 10 years ago, it's still the same now, right? It's just bankers are asking for maybe different solutions, different recommendations? Chris Gill:                             01:48                     Well, the reason why it's still relevant is still that a significant percentage of institutions have not yet transformed their branches. Because there are a lot of legacy branches, older branches where it's not as easy to transform those as opposed to newer locations. If everyone had transformed their branches, we wouldn't be having this discussion today, but a lot of institutions still haven't made the difficult decisions to really change the way their branches operate today. Amy Lombardo:                02:17                     If they haven't made those decisions, is it because of the size, the number of locations that they have? Does that play into it as well? Chris Gill:                             02:27                     Well, for some institutions that maybe have a lot more branches, that could be a factor. I do think a lot of it is around the leadership of the organization and the strategy they want to pursue ... Amy Lombardo:                02:38                     Got it. Chris Gill:                             02:38                     ... and their willingness to make some hard decisions and move forward with a new program. There's a lot of inertia in the banking industry that just leads to the pace of change taking a long time. Also too, there are a lot of legacy systems that impact your ability to transform your branch, and making changes to those is very time consuming, so a number of different factors. Amy Lombardo:                03:00                     Got it. Okay, so you and I, we're sitting together, we're here in Las Vegas. We happen to be running this podcast live from our TAG picks event. I'm looking over some of the content of a presentation that you had given, and we're talking about an FI's having a comprehensive analysis to help understand their branch technology roadmap. You are talking about four steps in this technology roadmap. Can you walk- Chris Gill:                             03:29                     Sure. Amy Lombardo:                03:29                     ... our listeners through what those for are and what it means? Chris Gill:                             03:33                     A successful branch transformation plan really requires upfront analysis around your client segments. How do they transact with each day? How is it different from one branch to the next? Understanding your markets and the characteristics of consumers and businesses in those markets. Then from there, it's really understanding how your branches operate today, and what kinds of transactions are your customers doing in your branches? Because that will have an impact on What kind of technology you need to deploy and the kind of functionality that you offer as part of that, so understanding branch operations is important.                                                                                 Then from there, once you've done the in-depth analytics, you can really identify key opportunities to move forward with to transform your branch and digital channels, and understand which of those are higher priority to implement than others. Then the fourth step is then, develop really a multi-year roadmap on how to move forward in kind of what order. Then looking at the return on investment on the plan that you've come up. Amy Lombardo:                04:32                     All right, so let's talk a little bit about the analysis part that you mentioned, that first part. Can you review some options that FIs have when they're executing a transition to different types of branch technology? Chris Gill:                             04:45                     I think most institutions do not really understand that there are some customers that are more self-service oriented and there are others that are more branch oriented, and how that varies from one branch to the next. Because if you have a branch or in a market area where you have a high concentration of, or self-service oriented kinds of consumers, then your strategy in a market like that needs to be different than in a market where you have a lot of people that only come into the branch and don't use self-service. The kind of technology you deploy and the kind of people you want to have in those different branches needs to be different. You need to have that in-depth understanding of your customers and their transaction characteristics in order to come up with that strategy. Amy Lombardo:                05:29                     Okay. Chris Gill:                             05:30                     Because if you don't have that, then the risk you run is you're deploying new technology in a market where your customers are not ready for it. Then you don't get the adoption and return on that investment. Or you roll out one new technology in a market, but those customers at that market also use another branch that doesn't have that technology. It creates this customer confusion, and is an inconsistent experience from one location or one ATM to another. It's important to really understand how customers use different locations. Amy Lombardo:                06:08                     Right. How would you mitigate that risk then of, I would almost say, call it consumer confusion of what they need to do when they walk into a branch or they go up to an ATM? Chris Gill:                             06:20                     Well, I think the key is, number one, doing the in-depth analytics to know and understand your customers in a greater level of detail so that you have the right plan that addresses that cross- branch, cross-ATM usage. Then secondly, from an implementation point of view, you need to have the programs in place so that the people in one location are doing the same, demonstrating the same behaviors and the same processes that they do in another location. I mean, no different than walking into a fast food restaurant or chain and you have a different experience in one part of town than you do in another. That would not be a good experience. Certainly in banking, you want to have a similar experience across locations. Amy Lombardo:                07:03                     We've talked about it a little bit from the consumer side to say, "Okay, consumers have different ways to engage with the channels," but take a step back from the operational side. What are the benefits to the actual financial institution by going through a branch transformation strategy? Chris Gill:                             07:22                     Well, there are obviously several. Obviously, number one is better managing your costs. I mean, if you look at branches overall, for most institutions, the branch represents anywhere from 60 to 70% of their total operating costs. In a very competitive environment where growing revenue can be challenging, better managing the cost base is key. I think costs are one. Secondly, if by enhancing the customer experience, you're going to potentially differentiate yourself against the other institutions in the market, and that can lead to helping you acquire more customers or strengthening the relationship that you have with the customers that you have. Amy Lombardo:                07:59                     Right. Chris Gill:                             07:59                     It's a combination of those two things, and costs and the enhanced experience leading to more revenue. Amy Lombardo:                08:06                     Got it? Yep. It's interesting, with all the social media that we have out there, I'll occasionally see posts where someone says, "Boycott these kiosks. Boycott this," whatever piece of self-service technology. "It's cutting jobs."  Really, what you're talking about here is that it's an opportunity to move people around, give different roles. Because that person who may have been operating that teller line maybe could be more suited for someone who's more in a universal banker role, right? Chris Gill:                             08:34                     Right, exactly. Well, and that's a question that often comes up where the branch staff may perceive that the technology is a risk to their jobs. Amy Lombardo:                08:43                     Yes. Chris Gill:                             08:44                     Why would they tell a customer to go use an ATM, "Because then they're not going to come see me, and then therefore I'll be out of a job," but it's your job ... What you need to tell the teller or the banker is that, "Your job is going to change, and we want you to spend more time talking to customers, and more time understanding their needs so that we can become a trusted advisor for the customer and not just doing it from a transactional point of view." Amy Lombardo:                09:10                     Right. Chris Gill:                             09:10                     Because ultimately, loyalty to a financial institution is going to be much more around the relationship and the value that the institution provides in managing your finances, than it is going to be for doing a transaction and making a deposit. That's not a loyalty generating type of interaction. Amy Lombardo:                09:30                     Chris, why don't you tell me a little bit now about some of the specific technologies that banks can deploy that can enhance that experience, but also find that balance between the human and the terminal itself. Chris Gill:                             09:42                     Sure. I think there are really three technologies that institutions are looking at to really leverage technology, but with that kind of human touch, human interaction. Some institutions are moving more to this assisted service kind of model where they have in-lobby, self-service devices that provide more advanced functionality, and they have a person in the lobby who would greet a customer and then show them how to do their transaction on the self-service terminal. No different than at the airline, at the airport where at an airport, a gate agent is going to show you how to use the kiosk- Amy Lombardo:                10:20                     Use the kiosk, to check it. Yeah. Chris Gill:                             10:21                     ... Or in a fast food restaurant where they have a self-service ordering, where there's someone there to help you. Amy Lombardo:                10:26                     You know what? Sorry to interrupt you for a second, but I made that connection in my head that there are so many of these retailers, almost, they're like indirectly helping train- Chris Gill:                             10:39                     Exactly, exactly. Amy Lombardo:                10:39                     ... banking consumers, because that technology might not be as relevant or as often seen in branches, but any McDonald's you go into now you've got the kiosk. Chris Gill:                             10:52                     Well that's the thing. Like you go into any Home Depot, any Lowe's, any Giant Eagle or whatever supermarket, they have the self-service technology- Amy Lombardo:                11:00                     Scan and go. Chris Gill:                             11:01                     They've got four to six kiosks and they have someone there. If you're having a problem swiping your lettuce, they can come in and put in the code. I mean, so these other industries are really paving the way for banks and creating ways to do things differently. Amy Lombardo:                11:15                     Have you found that to help you then in your consultation services, that the bankers can make that connection to these other industry examples? Chris Gill:                             11:26                     Well, and again, I think there's all the bankers you talk to, they get that because they see that in their daily lives, but making the leap from that to changing your branch is a big chasm. Amy Lombardo:                11:39                     Right. Chris Gill:                             11:40                     Because a lot of people ... Well, that's going to require changing a lot of things. Because Sally, the teller, that's working in that branch today may not be the right person to be in that branch and, "We may have to make some personnel decisions, and we may need to remodel the branch, and change some of our policies," and so on and so forth, "Change the facilities ..." Amy Lombardo:                12:00                     That's a good point, yeah.  Chris Gill:                             12:01                     There's a lot of ... Branch transformation is not easy. It's funny though, because it just seems like, it just seems logical that we ought to do that then. Amy Lombardo:                12:08                     Or people just think, "I'll just swap this piece of technology, and then it'll work." Chris Gill:                             12:12                     Right.  Amy Lombardo:                12:13                     There's, yeah ... Chris Gill:                             12:13                     Yeah. Amy Lombardo:                12:14                     It's a fine line, It's a balance, right? Chris Gill:                             12:16                     Right, right. Yeah. Amy Lombardo:                12:17                     Okay, so you were giving me some examples. So ... Chris Gill:                             12:20                     Right, so ... Amy Lombardo:                12:21                     We went on the tangent about the kiosk. Chris Gill:                             12:23                     Right, so there are in-lobby, self-service devices that are in the lobby of a branch. Customers come in and they're greeted, and then the branch staff can walk a customer over there and show them how to do the transaction in a self-service fashion. One of the things that we've learned are, consumers like to learn from someone that they trust that can, who can enthusiastically show them how to do things a new way. If you just point someone to an ATM and say, "Oh, just do it over there," the rate of adoption is going to be much lower. If you have a well-educated, a knowledgeable, enthusiastic employee who can talk about the new way of doing things, that makes that level of adoption that much higher.                                                                                 One model you'll see in the lobby, self-service. Another would be upgrading ATMs to more advanced functionality, whether it be check imaging, so removing the envelope. Or personalized screens, so you can select your fast cash amount and not have to change that every time. There are a number of things you can do there. Then the third thing is adding a video dimension on an in-lobby or an ATM, so that you can talk to a video agent in a call center if you need help doing a transaction. Or in some cases, they can do the transaction for you. Amy Lombardo:                13:36                     Okay, so video is my like hot topic, because I had a conversation with a gentleman this morning and asked him his view on video. Now, you share with me the Chris Gill view on, to a video at the ATM. Is it here to stay? Is it ... What's our value prop there? Chris Gill:                             13:58                     The most successful institutions with video to date, video has been a key component and it's been well integrated into their overall delivery strategy. There's one institution that basically eliminated tellers at all of their locations and replaced them with video, and that was a key part of their strategy. What doesn't work is what I would call "lemming behavior," where just because another institution in the market has video means you need to add video. That is not a recipe for success. Again, going back to the beginning of the podcast where we talked about having a strategy and figuring out what makes the most sense for your network based upon your customers and the markets and your branches, you have to do the same thing when you're thinking about video. Amy Lombardo:                14:45                     Got it. Chris Gill:                             14:45                     Because if you have, if you operate in a market where you have a high concentration of younger consumers that are more likely to be amenable to video, as opposed to an area with a lot of older consumers that are the least likely to want to use video, then you need to know that going in, rather than just making ... Video is not a one size fits all, do it everywhere kind of solution. Amy Lombardo:                15:09                     Got it. Chris Gill:                             15:10                     Okay. Then, so there are some specific use cases that we think are more relevant. For example, video in the drive-up. Converting all the video or all the pneumatic tubes to video lanes, and you'll have a consistent video transactional experience in their drive-through can help improve efficiency and reduce the costs. Or if you are building a newer branch and you don't want to have five staff there, you could have video terminals doing the transactions, and you have two or three staff there that are there for account opening and the like. There are different use cases for it, but we would argue that there are other enhancements in self-service that would drive a better return. Things like denomination selection, in core integration and personalization. Enabling check cashing, tablet integration, that would enable other transactions like over the limit withdrawals and such. If we're looking at it from an ROI basis, we would suggest there are other options that would drive a better return than video, in most cases. Amy Lombardo:                16:17                     Got it. Had to ask you on the video. All the technologies that you've talked about here, you've worked with the institution, they've defined some of these steps and they're going into the actual implementation. Talk a little bit about the staff side of it now, and how you kind of define that ideal experience then. Chris Gill:                             16:40                     Well, when you're deploying new self-service technology, there a number of key factors that you need to be thinking about. One is really around the whole experience you want to provide in a branch that's got different self-service elements, and defining the experience, defining the customer journeys, and then creating the appropriate lobby management strategies so you're engaging customers when they walk in. There's a whole experience in process element. Secondly, is really around preparing the employees for that new environment. The third is around where you place the technology, and what kind of functionality is available on those devices.                                                                                 Just speaking about the employing readiness specifically, what we have found is that way more often than not, branch staff do not use the technologies that the financial institution actually offers, whether it be using the ATM for depositing, or making a mobile deposit, or doing person-to-person payment. Amy Lombardo:                17:35                     Really? Chris Gill:                             17:35                     It is shockingly low, the incidence of branch staff actually using those technologies. My team, we've actually done surveys, starting a project to branch staff, and we found like 80 to 90% of branch staff have never made a deposit on an ATM. Amy Lombardo:                17:52                     Wow. Chris Gill:                             17:54                     Yet, this institution is rolling out- Amy Lombardo:                17:56                     They're trying to introduce this. Chris Gill:                             17:58                     They've already rolled it out- Amy Lombardo:                17:59                     Oh, boy. Chris Gill:                             17:59                     ... and their staff still 80 to 90% don't use it. Or there's another bank that we work with that told us that only 1% of their branch staff ever made a deposit on the mobile phone, on their bank's app. Again, the branch staff are the biggest drivers of customer adoption of your new solutions. If they can't, they don't use it and can't explain it, then how are they going to talk to a customer about it? Amy Lombardo:                18:25                     It's like putting a fancy stand mixer in your home, but you've never made cookies before. Chris Gill:                             18:30                     Right. Amy Lombardo:                18:30                     Right? Chris Gill:                             18:30                     Right. Exactly, exactly. Multiple things to consider here. Number one is, how do you use, how do you do the transaction? What's the Screen flow? First you put the check in, then it's going to give you an image on the screen. You confirm, so on and so forth. You have to understand that. The other thing is you need to understand, what if there's a problem? Like what if the check were to jam or the cash jams, what happens there? Because if the branch staff are uncomfortable in how to resolve the issue, then they may not be comfortable talking about it at all. They need to be comfortable with both the functionality, the troubleshooting and then also importantly, they need to understand you can't talk about technology in the same way to a millennial that you talk about it to a 70-year-old person. Amy Lombardo:                18:30                     Yes. Chris Gill:                             19:16                     You need to have a different way of explaining the technology. A lot of these branch staff that are more millennials, they can't talk to you about the technology in the same way they would talk about it with one of their parents. Again, I think it's imperative that number one, you train the branch staff on how to engage with customers. How to leverage the technology and how to deliver it in such a way that you're not forcing them to use the technology, but you're providing a value add so that the customer feels like you're adding value to their relationship. Beyond that, it's also important, you want to make sure you have the right people in the branch with the right skillset. Right? Amy Lombardo:                19:59                     Yes. Chris Gill:                             20:01                     One of the things we advise our clients is that ... One of the key job requirements in a job description needs to be, "Must be knowledgeable in ATM, online and mobile banking." You'd be surprised at how few job descriptions we come across actually have that as a job requirement. Amy Lombardo:                20:16                     Oh, that's a good point. Chris Gill:                             20:17                     Right? Amy Lombardo:                20:17                     Right? Chris Gill:                             20:18                     Yeah. Amy Lombardo:                20:19                     Or, likes to talk to people. Chris Gill:                             20:21                     Right, right. Then just another side note, interesting. As a leader of the bank and the credit union challenge the leaders to actually ask their staff, "To what extent do you use ..." The leaders on their team, "To what extent do you use these technologies?" Because we've heard stories of the head of retail banking asking his direct reports to show their mobile bank's mobile app and most of them could not do that. Amy Lombardo:                20:47                     Oh, ouch. Chris Gill:                             20:48                     If the leadership don't use your app then- Amy Lombardo:                20:51                     Yeah, sure. Leads by example, right? Chris Gill:                             20:52                     ... It's not sending a message, an example for the rest of the organization. Amy Lombardo:                20:55                     Right. Chris Gill:                             20:56                     I also think we need to be thinking about customer journeys. It's one thing to talk about delivering a great experience, but what does a great, what does a customer journey look like? It's one thing to talk about customer experience at a high level, but it's important to really think through like, "What are some of the more important journeys that your customers engage with you on?" Coming into the branch, make a check deposit, and what does that journey look like from the time they enter, to the time they do the transaction, to the time they leave? What does that look like today versus what would you like that to look like in the future? Then, what are the people, process, design and technology requirements to deliver that journey? It's important to really map that out. Amy Lombardo:                21:35                     I think that's probably a good way to close this conversation. The people, the process, the technology .... I lost the fourth one. Chris Gill:                             21:35                     Design. Amy Lombardo:                21:42                     There we go, design. That you really need to consider all those components here when when you're looking to engage on a branch transformation project. Chris Gill:                             21:51                     Exactly. Amy Lombardo:                21:51                     Thank you, Chris, for joining me. Happy birthday to you. Chris Gill:                             21:51                     I thank you, thank you. Amy Lombardo:                21:55                     I just learned that as people are walking by. They're wishing you a happy birthday, so you're in Vegas. You can go live it up tonight. For more information on branch transformation, go to DieboldNixdorf.com, and keep checking in for next episodes of COMMERCE NOW.  

Overview:  As the tax against self service endpoints evolve to be more complex, and many financial institutions struggle to keep up, there's a growing demand for security management services in the industry. In this podcast, you will hear about this trend and what it means for financial institutions.  Resources:  Blog: A look at how ATM security has changed … and how it hasn’t ATM Security Management: Know Your Options COMMERCE NOW (Diebold Nixdorf Podcast)   Diebold Nixdorf Website Transcription: Amy Lombardo:                00:00                     Hello again, and thank you for joining us on this episode of Commerce Now. As the tax against self service endpoints evolve to be more complex, and many financial institutions struggle to keep up, there's a growing demand for security management services in the industry. Today I have the pleasure of being joined by Julie Osborne, our Global Vice President of Diebold Nixdorf's Service Portfolio, and Martin Nearhos, Principal Security Architect for the Global Services Portfolio Division as well. We're going to hear about this trend and what it means for financial institutions. So, hello Julie and Martin. Thanks for being with me here today. Julie Osborne:                   00:38                     Thanks Amy, it's a pleasure. Thanks for having me. Martin Nearhos:               00:41                     Yeah, thanks Amy. Happy to be here. Amy Lombardo:                00:44                     Okay. I'm really excited here, because I'm based here in the US, but I'm talking to two subject matter experts who are in our Singapore office. It's great to just have this global view on this security topic. So, let's dive in here. Let's start with just a high level question on why do you think financial institutions are having difficulty managing their self service security? Martin Nearhos:               01:10                     That's a good question. Maintaining the security of the customers' assets and information has always been a high priority for the industry, but threats against the self service banking channel have evolved. It's now much harder to keep up. A tax against ATMs have traditionally been isolated to geographic regions, and slow moving out of those regions, but this is no longer the case. We're now seeing increasingly complex attacks, such as various forms of jackpotting, taking place across the globe, and at the same time the threat of traditional physical attacks hasn't really gone away. It's a lot to combat. Julie Osborne:                   01:47                     If I might just add to what Martin said, financial institutions usually don't have the time or in-house expertise to keep security measures up to date. As retail banking paradigms shift, banks and credit unions are under a lot of pressure to do more with less, and even if financial institutions wanted to hire in-house security specialists, as businesses and governments fight cyber security threats, these resources tend to be really expensive and in high demand. Also, as we all know, this constant pressure to stay compliant with security regulations and industry standards, ATM security service providers can help relieve the burden of staying on top of changes and staying protected against attacks. Amy Lombardo:                02:28                     Okay. Got it. Martin, if I can ask this to you before we jump into this whole idea of doing more with less, since you're located in the Asia Pacific region, are there certain types of attacks that you're seeing on the rise today? We talked a lot about jackpotting in the Americas, but could you give us an idea of maybe what you're seeing over in your region? Martin Nearhos:               02:51                     The Asia Pacific region is quite diverse. You've got many different markets at many levels of maturity, so it varies. Locally you won't get, say Singapore, there's a certain limit to attacks, whereas in other countries very close by, you've got a much broader range of attacks. It's complex and it doesn't move. Amy Lombardo:                03:15                     Got it. Yeah. It sounds like no matter where you are, just keeping on top of that security is always going to be top of mind here. Martin Nearhos:               03:22                     Yep. Amy Lombardo:                03:23                     Okay. Let's talk about this idea of doing a little more with less. When we're looking at it from a financial institution standpoint, can we talk a little bit about why they should be looking into outsourcing their ATM service and management? Julie Osborne:                   03:37                     Oh, absolutely Amy. I might take that one. It's becoming increasingly popular for FIs to work with organizations that have intimate knowledge of the ATM channel, and offer specialized security services as part of ATM fleet management arrangements. They will want someone who can offer 24/7 secure operation centers for monitoring, and who can also take care of all necessary maintenance, hardware and software upgrades, and updates for them. Some FIs don't have the capability in house to reliably maintain secure ATM environments, and others would just simply rather have someone else handle it because it is a specialist capability, as I said. So, if FIs are looking to take the burden off themselves and effectively manage the security services of the ATM  fleet, with an ATM security service provider such as Diebold Nixdorf, they should look for a provider who can deliver the following three things.                                                                                 First, you'd want optimized security through 24/7 monitoring, proactive threat elimination, and an in depth understanding of emerging threats, to try and protect against attackers. Second, you'd want increased efficiency, freeing the FI from day to day ATM security management responsibilities, or streamlining processes. Third, you want a service that will effectively manage operational risk, to provide real time threat insights, and offer remote troubleshooting, and has a deep understanding of the industry requirements. Ultimately, I think the best approach is a multilayered security protection approach that offers real time information to ensure ATM networks are protected and available, whilst also providing the information FIs need for a [inaudible 00:05:17] ATM security audits. Amy Lombardo:                05:19                     Okay, got it. Those three points were really helpful here, especially in looking to determine your outsourcing, your Managed Security Services, but what does an engagement actually look like for an financial institution? What are some of the specific options, and what would it take to get a program like this up and running? Martin Nearhos:               05:41                     I can take that. If you're an existing customer, and you're already ready using sort of self service fleet management, which is just a suite of services designed to run multi-vendor self service devices cost effectively, the customer can sort of decide what level of protection makes sense for their organization, based on their risk profile and their operational risk. If you're a new customer, we'd look at all the fleet details that required. The ATM make, the model, physical location, that would all be analyzed. Then the customer would select the appropriate security service, and again, it's based on their business and operational risk. We suggest that whatever FIs choose is a core security service. The services offered should, at the very least, provide everything needed to comply with industry standards and requirements such as those developed by the Payment Card Industry Security Standards Council.                                                                                 It should also include the hardening of various aspects of the ATM with remote monitoring and software patch deployment. It would also include things like device monitoring, secure connectivity, managed firewall, peripheral device control, anti malware, antivirus, and of course intrusion detection and prevention. Then the FI can have the option to build upon that basic level of services for such things as protection against complex logical system attacks. Although I would recommend this sort of protection to everyone, we know that financial institutions want to prioritize their investments in advanced security, and they just can't do it all at once. With these types of services, FIs can then rely on the security service provider to proactively monitor the ATM for suspicious activity, protecting terminals more effectively in real time, responding quickly when attacks are detected, and engage with customers to resolve the incident, and take the burden of managing the self service fleet off the FI, who, as we've already said, may be stretched pretty thin on resources. Amy Lombardo:                07:42                     So Martin, if I can ask you a question here just based off of the compliance portion, the regulation portion of what you mentioned, I would think that's pretty important, almost as a value added services as well, that your security partner could provide you almost with the consultation, the education, on what all these requirements might mean for your institution. Am I thinking about that the right way? Martin Nearhos:               08:11                     You are. There's some industry standards that, across everywhere, but what happens is you get into regional areas. Some have slightly different requirements, so as a global offering, it's quite difficult, but we have specialists in all the major regions that could offer that service. Amy Lombardo:                08:29                     Okay. Thank you. Okay, so to close out this topic, have you heard how customers are responding to these types of Managed Security Services in the industry today? Are they able to focus more on their customers without the burden of managing their own ATM security services then internally? Julie, how about you take that one? Julie Osborne:                   08:51                     Thanks Amy. Actually we have. We've seen some very positive results from the financial industry. Threats against the self service channel aren't going away anytime soon, but with Managed Security Services, financial institutions can spend less time trying to prevent attacks, and spend more time with their customers growing their businesses, and ultimately that's where we want them to be. Martin Nearhos:               09:11                     And, just as the FI is focusing on on their customer, the security service provider, but it's got to focus on continuing to evolve and develop, because the expectations will continue to rise, and FIs will expect to be offered more value in the future as well. Amy Lombardo:                09:29                     Well great. This sounds like a no-brainer to me. I would want to stay protected and just not have that burden internally. Thanks Julia and Martin for being with me here today, and to our listeners for tuning into this episode of Commerce Now to learn more about Managed Security Services, and how FIs can better protect themselves. Log Onto DieboldNixdorf.com. Until next time, keep checking back on iTunes or your favorite podcast listening channel for new topics on Commerce Now.    

Overview: Self-service checkout technology is transforming the way Americans think about customer service. Not long ago, good customer service meant properly training sales associates to assist shoppers in need. Now, more and more companies are shifting to tech-based customer service. As of Q2 2018, 95 percent of American consumers had encountered at least one form of self-service retail and 49 percent used them on a weekly basis at the supermarket. In this episode, PYMNTS in collaboration with Diebold Nixdorf, examine survey data collected from 2,170 American shoppers on their experiences with and impressions of self-service retail checkout options.   Resources:   Link to Self-Service Report   Blogs:  From Self-Checkout to Self-Service: The Retail Evolution:  https://blog.dieboldnixdorf.com/from-self-checkout-to-self-service- the-retail-evolution/#.W4Vn5DYY7IU Q&A with Frank Natoli, Executive Vice President, Self-Service Technology: https://blog.dieboldnixdorf.com/qa-with-frank-natoli-evp-self-service-technology/#.W4Vod-hKiUk   DN website: www.dieboldnixdorf.com COMMERCE NOW website: www.commercenow.libsyn.com Transcription:  PYMNTS Representative:                             00:00                     The early days of self-service were a bit bumpy in terms of functionality and obvious usefulness. Diebold Nixdorf's VP of Retail Strategy, Arvin Jawa, told Karen Webster. "That," he noted, "is getting better. The technology is becoming cheaper and easier to operate and consumers are getting more enthused for it by the moment." But he says, "In order to get all the way there, retailers need to think less about self-service as a new series of consumer touchpoints, and more about how to use it to reset the customer retail journey entirely." Amy Lombardo:                00:32                     This is "COMMERCE NOW."                                                                                 Hi, it's Karen Webster and our topic today is self-service retail checkout. With me to have the conversation is Arvin Jawa, VP Retail Strategy at Diebold Nixdorf. Arvin, thanks for joining me today. Arvin Jawa:                         00:59                     Hey, happy to be here Karen. Thanks again. Karen Webster:                01:02                     This is to take a little bit of a deep dive to go under the hood with the data from the survey that we collaborated on, to get to know what consumers think about self-service checkout, how they use it, and what they'd like to see more of. So shall we dig in? Arvin Jawa:                         01:23                     Sounds great. Looking forward to it. Karen Webster:                01:24                     All right. So here we go. Interesting, perhaps not surprising, 82% of consumers have used self-service checkout at least once in the last year. And people like it. In fact, 80% of people said they'd frequent a merchant if they could use self-service checkout. Why do you think that is? Arvin Jawa:                         01:48                     Oh yeah. We see this as a really great trend. Of course, we have a favorable view of self-service technologies of course and we agree that generally, consumers also have a favorable view of self-service technology. Clearly, there's a movement towards more adoption of these solutions in the recent years, attributable to some really big implementations.                                                                                 You've probably heard of Amazon Go. I'm sure everyone has heard of Amazon Go. Everybody knows Macy's in the US and Macy's has announced a recent deployment of self-service mobile application where they're allowing their consumers to scan-and-go within the store. And of course, everyone's favorite place to go and grab burgers and fries, McDonald's. A company we're very fond of. They've got a great deployment coming out here with self-order kiosks within their stores. So there's really a great buzz in the US around new self-service technology. Karen Webster:                02:48                     Is that because of the convenience that consumers get in order to basically be self-serving themselves in terms of getting in and out of the store quickly without having to wait for someone to check them out personally? Arvin Jawa:                         03:05                     You know, it's a great question and it was something that I found really compelling within the research. You see that there are lots of reasons for why consumers like self-service technologies. But ultimately, it comes down to creating value for the consumer. Consumers really enjoy either saving time, saving money, or really, really enriching their shopping experience. Retailers who have determined how to create that kind of value for consumers through self-service technologies have figured out how to actually have really good deployments.                                                                                 McDonald's is a perfect example of that, right? As I mentioned, they're implementing self-service kiosks and in order to figure out where they could create value for their consumers, they started looking at the journey, they started looking at where are the ways that consumers can actually order with us? For a long time, there were only two ways to do that: you either had to go to the counter and speak to somebody and place an order, or you had to drive and go to the drive-thru and speak to a machine with a person on the other side of it.                                                                                 They really reevaluated their journeys and how to reshape those beyond those two traditional ways of ordering. Where they were able to then give their consumers more choice in the ordering options, a way to actually create some sort of customization mechanism for the order they're making. Do I want lettuce on this Big Mac or not? The kiosks allow for a self-guided customization, but also self-enablement on the payment choice as well. Now the consumer has various options on how they want to pay: cash, credit, debit, or new fangled mobile technology payments.                                                                                 But then beyond that, they could take it another step further and say, "Hey, we're going to actually allow you to go seat yourself. Just go over to a table, take a tent card, and we're going to bring your food out to you." So they really reshaped the journey in a way that made it faster, more compelling, and more enriching for the consumer.                                                                                 When you look at those value elements, that's the type of thing that helps consumers really start to adopt usage of self-service technology. Karen Webster:                05:22                     And I think the technology has also improved the reliability and accuracy of the experience too. We'll talk in a little bit about self-service at supermarkets and drugstores, but it's now more efficient and faster to use these self-service checkout devices than, perhaps, they've been in the past. Arvin Jawa:                         05:43                     Absolutely. You know, I think there were a lot of earlier generation type of self-service implementations.                                                                                 The early self-checkout systems within grocery stores or do-it-yourself retailers, they were really clunky and not very user-friendly. In fact, they were probably the antithesis of self-checkout because you would always find a need to intervene a transaction because, well, you couldn't get past the age verification on an alcohol purchase. "I want to buy my wine, but I still needed someone to validate my driver's license," or, "I couldn't scan this item properly and so I needed some assistance," or, "The weight scale didn't necessarily integrate well with my purchase." So the reality is they were far from convenient. They had lots of issues in the user interaction.                                                                                 Same thing happened with kiosks and also a number of mobile apps that were early renditions of today's mobile and self-checkout solutions. Probably because the technology was sort of leading. It was almost the hammer looking for the nail, as opposed to, "Let's see what the journey is that we can improve and figure out how we can then deploy technology to eliminate the friction or reduce the time in the process." Karen Webster:                07:09                     It was interesting that those who don't use self-service options don't use them because they're not available at the places they shop. What is it that retailers need to do in order to implement a self-service technology? You talked about McDonald's, and the journey, and the flow. Is that what's getting in the way of retailers embracing this trend? Arvin Jawa:                         07:36                     There are a couple things and I mentioned a few issues around consumer adoption, which I think is one-half of the equation in the obstacles, in the barriers. Early generation technology wasn't necessarily great. But the second-half is probably even more of the reason for why there hasn't been wide scale adoption. On the retailer side of things, frankly, things are complicated. If you think about retailers having investments and legacy software platforms, they have to maintain these, and they have to integrate these. Point of sales software is a perfect example, right? Now, all of a sudden you want to implement a self-service checkout system or a kiosk system nearby the storefront. What happens is we have to then, retailers have to find a new way to integrate these new touchpoints because they would typically run on their own software, or they had their own software stack. This all costs money. It's expensive. It requires new integration and new certifications.                                                                                 The other thing is that retailers didn't have a lot of options. The vendors who were the first generation of solution providers for self-checkout technologies, they were very costly and they weren't the best solution providers. Now, I think there's greater choice and they have more options.                                                                                 But the other thing is, as I said before, retailers weren't necessarily looking at self-service as anything more than another touchpoint in the store. What we've found in our retail implementations of self-service technologies is that when retailers shift their mindset to thinking about self-service as a business transformation through the implementation of self-service technologies, then they really start to realize real benefit. The benefits case for deploying these solutions are amazing. They start to say and realize, "Hm, we can actually improve throughput and reduce the checkout area size within the store." In other words, "We can optimize the real estate."                                                                                 Second, "We actually improve overall customer satisfaction or net promoter scores because we're more judicious in where and how we allocate our store associates' time." In other words, "It's disproportionately geared towards helping customers who need help, as opposed to spreading ourselves in a peanut butter-like fashion across every customer. We can focus our customer service on those who need it most and that optimizes our payroll investment. So now, when we improve throughput in a smaller checkout space and optimize the real estate footprint, and we do that with better customer support, we can actually start to see that we're increasing sales because we're allocating or reallocating our staff time towards upselling and cross-selling."                                                                                 That's why we see success with self-service technologies without customers. We start with designing and enabling the journeys that our retailers want for their consumers. We don't start with the technology, but we instead start with addressing the pain points and the friction inside those journeys that the consumers experience, and then we design the optimal journeys that our retail clients want for their consumers. We call this Storevolution is the term we use. It's where we put the consumer at the center of the journey and we make the physical store a digitally enriched or enhanced experience that's always on and always secure. Karen Webster:                11:11                     It's interesting. I'll not share the name, but a QSR where I go every morning to get my coffee and breakfast sandwich implemented kiosks, but they were so cumbersome to use that the only people who use them now are the people behind the counter, which of course, defeats the whole purpose of having a self-service kiosk in the store. I thought that was kind of the craziest thing I'd ever seen. Arvin Jawa:                         11:40                     Yeah, yeah. No, I totally understand. And quick service is a really great place or a great space for self-service technologies to be utilized in. You know, I will name names. I love to go to Chipotle. I love to go to Starbucks. I love to go to Chick-fil-A. These are my favorites, partly because of kids, but also because I have a caffeine addiction. These are retailers who implemented self-service technologies. Some did it really well, some didn't do it so well, and some have learned along the way.                                                                                 I love eating at Chipotle, but I was really, really ... I wasn't happy with their initial outlay of their mobile self-ordering app because I could never find the way to maximize or optimize my time. I could never time up when I would place my order to when I would get it in the store and pick it up at the counter. There was always a synchronization of that process. They figured it out. They allowed me to then select the time that I want to come and pick up my order, which makes it a lot easier.                                                                                 Chick-fil-A did something really interesting. They don't want you to walk away with food that's cold or not fresh. And so you can place your order, but they won't actually start to make your order until you "check-in," which is basically geo located to some fence around the store location. So when you're within 100 feet of that location, you can then check in and say, "I'm here" and they'll start your order. The proximity to the store is an added feature to their mobile self-ordering application.                                                                                 But I still say the gold standard is Starbucks. They did a full-on business model change, right? This wasn't just about self-service technology; they started off as a digital gift card, really, is what they're mobile app was, and then they found a way to allow me to top up my store value amount on a regular basis. When it dropped below a certain level, I would always get topped up. But then, they took that to another level and said, "Hey, we're going to let you order from this app, therefore you can skip the line." So not only did I have my payment vehicle already in my hand and on my phone, but now I had an ordering capability.                                                                                 Then they integrated the loyalty points program, the stars, the rewards. And better yet, they encouraged me by changing my behavior or suggesting that, "Hey, you're going to gain more points if you actually use the mobile ordering app." That's when true adoption occurred. I don't have statistics at hand, but I think everybody that's in the industry understands that Starbucks has done a bang up job on deploying their self-ordering or mobile ordering ahead technology. Karen Webster:                14:41                     Oh, for sure. Arvin Jawa:                         14:42                     Their program is fantastic. They can use the data now to determine how to readdress or reassess their store footprint. How much are they going to serve by mobile ordering? How much are they going to serve by in-store ordering? How much are they going to do through drive-thru ordering? They can then re-staff or redeploy their staff accordingly. So fantastic business model change. Karen Webster:                15:04                     So they report earnings later in the week, so we'll be able to know exactly, quarter-by-quarter, what their progress has been. I agree with you. Arvin Jawa:                         15:04                     Exactly. Karen Webster:                15:12                     And it sounds like to do it well, what retailers need to understand is how to engage the consumer by addressing the pain points for which they want to use mobile order ahead to begin with. When I've used it in places where it's relatively new, there's always been that friction of cold food or there's been a mismatch in when I want to pick it up and when it's actually ready. So I know that it takes a little bit of trial and error, but it's like the kiosk experience; you have to be prepared to onboard the consumer at the same time the retailer's trying to onboard the technology, and those two things have to sync pretty quickly and pretty well. Arvin Jawa:                         15:58                     Yes, completely agree. I think retailers really need to convince themselves that they think it's good for their business, and once they've done that, they have to convince the consumer that it's a matter of demonstrating a value. What value is going to be provided to the consumer? Is that going to come in the time savings or is it going to come in the enrichment of the shopping process? If they can do that, they can create a value on both sides, for them and for the consumer. Karen Webster:                16:26                     So supermarket was probably one of, at least as I remember, one of the early adopters of self-service checkout. I found it to be useful for small numbers of items. For a full grocery order, boy, that was pretty tedious. And of course, with Amazon Go, they've taken that concept even further. Consumers like that. They like the option of being able to go in and go out. And almost more than a quarter, approaching 30% of consumers, say they'd visit those merchants more if they gave them self-service options to check out.                                                                                 Again, it goes back to, in this case, it seems like a pretty straightforward implementation. Why aren't more grocery stores looking at that as an option? Arvin Jawa:                         17:19                     Yeah. It's a great question. I ask myself that when I go to my favorite local grocery store. They're fantastic. It's the best produce around. They're the nicest people around. Maybe that's why they won't do it because they love the interaction that they are able to give with their consumers from their store staff, but there are time where it's just not convenient for me to stand in line. You have a couple, you have a small basket, or the lines are long because it's a very popular grocery store. I'm not the only one around that likes the local grocer.                                                                                 But again, it comes back to retailers determining the journeys for consumers. If they continue to just try to improve only those journeys that they have that are based upon a manned checkout station, then they lose the opportunity to create value for the consumer in different ways. If I can save or at least perceive that I save an extra few minutes in this particular shopping event because I could go and check myself out either through a self-checkout station, or through a scanning app on my phone, or through a personal self-scanning device that they may hand to me when I walk in the door, if any of these solutions can save me that extra few minutes, I'm more likely to come back to that store. Right? Karen Webster:                17:19                     Mm-hmm (affirmative). Arvin Jawa:                         18:52                     And so they have to recognize that the value proposition that's created through time savings or the value proposition that's created through perhaps an app that suggests to me that when I buy this kind of rice, I should buy these beans, these are the types of added value that consumers prefer and these are the things that create loyalty amongst consumers and the retailers or brands that they shop. Karen Webster:                19:22                     Well, I would think that in certain segments, and not to stick with grocery, but let's, the opportunity to bring people into the store is now, perhaps, more important than it's ever been. And creating those efficiencies in the physical footprint called the store would be things that, if I were running a supermarket, I'd certainly want to investigate pretty heavily. Arvin Jawa:                         19:47                     Yes, definitely. If you think about the space a retailer uses for a grocery store, it's massive. The real estate investment is incredible. So the staff has to be appropriately allocated to the things that are the highest value added activities. Frankly. Being stuck behind a cash register isn't always the most highest value activity at any given point in time. Sure, during peak periods, it's always necessary to have the right amount of staff. No doubt. But there are also times where that staff can be redeployed into helping stock shelves, helping serve consumers, helping in different ways within the store.                                                                                 And so retailers have to think about how to leverage that physical asset. We think physical is a very, very important part of the retailing future. It's definitely not dead, as a lot of people tend to say, but instead, their physical space is evolving to be a more purposeful and useful arrow in the retailer's quiver, especially an multichannel or an omnichannel retailer. And digital isn't just a channel; it's as much an enabler or a fabric that binds the consumer journey, whether they're at home, or at work, or at the café, or the restaurant, or in the grocery store, or on their phone shopping.                                                                                 What we see is that a consumer-centric design of digitally integrated or digitally enabled consumer journeys within the physical environment that are free of friction is what retailers really, really need to think about. And so if self-service is a component of that journey, we really think that retailers are going to win. Karen Webster:                21:37                     I also think that what you've said all along is that it's not a one size fits all, so it is about that customer journey, and then adapting the self-service technologies accordingly. So I don't know, do you think that retailers have this mental picture of what it means to have self-service, and in their environments, they think that either won't work because of store format or the type of store, and they're not opening their minds to think about things like scan-and-go in department stores or the Amazon Go experience in smaller formats? Arvin Jawa:                         22:15                     Yeah, that's a great, great question and a great observation Karen. I think it's frankly, it was at the heart of what we ourselves were looking to understand about the US market. What is it that's holding back consumers in adopting or more importantly, retailers, in deploying self-service technologies in the US at clearly what's a lower rate than the rest of the world? We're a global organization. We see what's happening in Europe, we see what's happening in Asia, and those parts of the world are definitely much more advanced in their adoption of self-service technologies.                                                                                 Some of the stats you've mentioned and some of the stats that are within the study are about consumers not being compelled to increase their frequency within a given retailer, even if self-service technology is available because they just don't see the value. I think you might be right in that retailers probably have a preconceived notion that, "Self-checkout is this and it must be this."                                                                                 When we look at it from the perspective of the journey, then the technology falls to the background and it becomes only the enabler of the journey that we want to create. And so I think your point is great. What we see in Europe, for example, we have some data from our own implementations that European customers, 53% of consumers prefer to use self-checkout in stores and 21% of retailers plan to actually increase the density of their self-checkout deployments. In other words, they already see the value. It's more than just self-checkout in a grocery store kind of solution. These are personal self-scanning, they're scan-and-go with the mobile device, they're kiosk solutions.                                                                                 So I think if you open up or reframe the mind to say, "I really want the consumer to have the best experience possible and that experience can be this or that," that's when you start to see retailers looking at this as a really positive way for their consumers to shop. Karen Webster:                24:34                     I would agree. And in some of the other studies that we've done, particularly in retail environments, apparel and accessories stores, consumers want the ability to scan-and-go because stores don't have has many people wandering around for help, and consumers are always time pressured. What they want is to be able to buy what they want when they see it. Certainly retailers, particularly now, should be thinking about how to enable that efficiently so that consumers walk out with something in a bag rather than walking out without having purchased anything at all. Arvin Jawa:                         25:12                     Absolutely, absolutely. I've spent a lot of time in the apparel and accessories field and actually, I think there's a really fascinating use case around self-service technology with a company, I'm sure you've heard of it, Rent the Runway. Internet pure play, right? Karen Webster:                25:12                     Yup. Arvin Jawa:                         25:27                     A subscription retailer who's really banking on the sharing economy. Fantastic business and interesting model. They've opened up, I think, about five stores in the US and recently deployed a scan-and-go solution in their stores. Karen Webster:                25:44                     Interesting. Arvin Jawa:                         25:44                     You'd say, "Five stores? Can't be that big. Do we really need self-service technology?" Well, the fascinating thing is that they looked at the journeys that the women who were shopping their stores or who were part of their club, they found that women were actually coming in before work, perhaps on the way from the gym or the way to the gym, and using that time period to trade out the clothes that they had gotten the week before and that they wanted to actually trade out today, so that they could wear something new to the office on that very day. Karen Webster:                25:44                     Oh really? Interesting. Arvin Jawa:                         26:25                     And so as a result, they were time pressed in their journey into the store location.                                                                                 They found that by creating some very, very simple self-service kiosks that had a scan-and-go type technology that was integrated to the mobile app, it allowed these consumers to very quickly help themselves, be able to return the items that they were bringing back, and take the number of items they were going to take on that day, and get on right away without ever interfacing with any of the store associates. So really, really fantastic utilization.                                                                                 Perhaps it's the mindset of having been a digital player before a physical player, but it really speaks to the idea of looking at what it is your consumer is trying to do in their daily life and specifically, in their journey with you as a retailer or as a brand, and trying to improve that in a way that gives them some perceived value. In this case, time saving. Karen Webster:                27:30                     That's great. Before we wrap, what was the one thing or one observation from this study that surprised you? Was there something that you sat back in your chair and said, "Huh, I didn't expect to see that"? Arvin Jawa:                         27:49                     Yeah, you know, I would say that this is both something I didn't expect and something that I did expect. There was a portion of the study which was related to the payment method, the various payment method would drive user satisfaction or frequency were most utilized by the members of the surveyed audience. I was not surprised by the utilization of debit, credit, and cash, especially in the US economy. You expect that. We tend to be a more credit and cash-driven society in retail.                                                                                 But I was really surprised by the very, very low utilization of tools like Google Pay or Apple Pay. That was something that was really, really fascinating to me. I would have expected, especially for consumers who were using more, what I would like to say more advanced technologies like self-service, either mobile ordering or scan-and-go or self-scanning or a self-checkout, that they would have a higher propensity to utilize newer digital payment mechanisms. But in fact, we see the opposite.                                                                                 I couldn't really explain it, but it was definitely an ah-ha. But I guess it mimics a lot of what we see in the rest of the world. We definitely see that in Asia, where digital payment is more highly utilize than in markets like, say, Germany or in the US which tend to be more cash or credit- driven, we see that the self-service technologies in Asia are also dominated by the utilization of WeChat or Alipay as the preferred mechanism. So perhaps this is more aligned towards the cultural norms than it is to the technology deployment. Karen Webster:                29:50                     Yeah, I think it also has a lot to do with acceptance, right? Consumers, if they're not sure and they're time pressed, are going to use a payment method that is reliable, maybe even on file in their app, and that isn't necessarily one of the alterative players, at least today. Arvin Jawa:                         30:09                     Agreed, agreed. Karen Webster:                30:12                     Interesting. Well Arvin, thanks so much for your time. Great conversation, great insights on an area where there's certainly a lot of familiarity from both consumers and retailers on the value, but perhaps an opportunity to rethink in the context of the customer journey and what new technologies exist at the intersection of self-service and mobile to make that journey more favorable and enriching for both parties.                                                                                 I really enjoyed it, the conversation. Thanks again. Arvin Jawa:                         30:43                     I did as well. Thank you Karen. Great to speak with you. Karen Webster:                30:46                     Thank you. Buh-bye now. Amy Lombardo:                30:47                     Find other episodes of "COMMERCE NOW" on iTunes or your favorite listening channel. Until next time.        

Podcast Summary: No other crime is more romanticized by pop culture than the bank robbery, and no type of criminal more than the thief. Think Bonnie and Clyde, John Dillinger, the Sundance Kid and Butch Cassidy. What comes to mind? Tunneling under the bank, cracking safes, elaborate escapes, and adrenaline-filled action. However you feel about them, one thing is certain; those type of heists, no matter how notorious and exciting, are slipping in to antiquity. We’ll probably never have another fated criminal couple like Bonnie and Clyde, or another escape artist and thief like John Dillinger, for the simple fact that their methods are outdated. Today’s criminal is more apt to attack from their home computer than at the teller window. They crack codes, not safes, and the only mining they’re doing involves data. In this episode, Scott Harroff and Dave Phister talk about cyber security, cyber criminals, and how industries can protect their data, their software, and overall – their cash. Resources: Blog: https://blog.dieboldnixdorf.com/our-commitment-to-you-as-your-security-partner/.  DN website: www.dieboldnixdorf.com COMMERCE NOW website: www.commercenow.libsyn.com Transcription:  Amy Lombardo:                00:00                     No other crime is more romanticized by pop culture than the bank robbery, and no type of criminal, more than the thief. Think Bonnie and Clyde, John Dillinger, the Sundance Kid, and Butch Cassidy. What comes to mind? Tunneling under the bank, cracking safes, elaborate escapes, and adrenaline filled action. However you feel about them, one thing is certain: those types of heists, no matter how notorious and exciting, are slipping into antiquity. We'll probably never have another fated criminal couple like Bonnie and Clyde, or another escape artist and thief like John Dillinger, for the simple fact that their methods are outdated. Today's criminal is more apt to attack from their home computer than at the teller window. They crack codes, not safes, and the only mining they're doing involves data.                                                                                 In this episode Scott Harroff and Dave Phister talk about cyber security, cyber criminals, and how industries can protect their data, their software, and overall, their cash. I'm Amy Lombardo, and this is COMMERCE NOW. Scott Harroff:                     01:19                     Hello again. This is Scott Harroff, your host for this episode of Commerce Now. The last time I was on this podcast I spoke with Bernd Redecker on what jackpotting could teach us. You'll find that episode on www.commercenow.libsyn.com iTunes or however else you listen to your podcasts. Today, I'm joined by Dave Phister, Director and product manager responsible for security at Diebold Nixdorf. Today we're going to talk about cyber security and touch on exactly what cyber security is from our perspective and how criminals are turning to digital means to acquire things like money and data.                                                                                 Hello, Dave, and welcome. Thanks for joining today. Dave Phister:                     01:56                     It's a pleasure, Scott. Thanks for having me. I've been honored here since you're becoming a bit of a podcast regular, for you. Scott Harroff:                     02:04                     Well, thank you very much. I never knew being a podcast star was in my history, but I'm happy to roll with it. As I said, today our focus is on cyber security, and when you and I hear this term, we have a pretty good understanding of what it means between you and I, but a lot of times people think that it's all about foreign hackers stealing secrets. Can you give a little bit of color around our definition of cyber security. Dave Phister:                     02:29                     Yeah, I sure can. It's a great question, Scott, and a great point. I think simply stated, cyber is anything related to computers or computer networks. That could of course, include the internet, so then cyber security would be the measures taken to protect the computer or computer system against unauthorized access or attack. In our industry, that's typically been referred to as logical attacks, but they're really just attacks on the digital components of the ATM. As you know, the ATM contains a computer, a hard drive, uses a Windows operating system, has USB ports. It's a, amongst other things, a computer client hanging off of a network, much like a desktop computer at work. It just happens to be controlling a safe full of cash.                                                                                 Strictly from a computing standpoint, the security controls required to defend the computing aspect are really no different than any other network, whether it's a national security system protecting those secrets, or essential server in a fortune 500 retail data center. The tools, tactics, techniques, and procedures to compromise, or hack, the components, are the same everywhere we look. So additional to a firewall, it needs other cyber security like encrypted hard drives, digital signatures, access controls, proper patch management.                                                                                 I think this is where the industry has let down their defenses a bit. OEMs and financial institutions haven't taken enough care to maintain current technology and protect the software and computing assets of the ATM. In addition to protecting the cash, as you mentioned, data must be equally protected, specifically the computing components that process that data, else compromise is a matter of when, not if. I think one perception is that cyber security defends against a hack originating from cyber space, which would mean something remote. Though ATM networks are not connected to the internet, they still connect to a bank network somewhere, and I would remind our listeners that as recently as 2016, we witnessed an ATM attack. It was launched solely from a remote network, in this case the voice recording network was breached in Europe, the hackers navigated their way to the ATM segment, pushed malware down to the ATMs, and the mules were waiting for cash to dispense. Anything is possible as commerce, payments, and channels connect, Scott. More and more every day. Scott Harroff:                     04:40                     Great. Now that our listeners understand what cyber security is when we use that word, what sort of cyber security threats do our customers face, and what do you think the biggest risks are? Dave Phister:                     04:50                     As you discussed, Scott, with our colleague Bernd Redecker in the previous podcast, the jackpotting attacks we've seen recently in the Americas, they can all be categorized as cyber attacks. The January jackpot attack where they removed the hard disk, loaded malware, and replaced it was possible because the customer didn't employ hard disk encryption. It's a fundamental cyber control. Earlier attack took advantage of a weakness in a very old USB security protocol and would have not have been possible had the customer deployed the latest AAES USB security encryption.                                                                                 Then as I mentioned, 2016 attack in the AP regions clearly executed remotely. There was no behavioral monitoring software installed, like a McAfee or Symantec or Bit 9, Binamic, so finally, one point here, Scott, financial institutions are continuing to see cyber attacks in the internet and the mobile arena as well. The mobile device is now a connected component to the ATM and now we're seeing financial institutions have cyber attacks against the mobile wallets in the internet banking services. Though the fraud redemption's occurring at the ATM, there's nothing the ATM can do to prevent it. It looks like a valid mobile EMV NFC connection, but the transaction is actually fraudulent.                                                                                 What are the risks? Systems mostly in unattended operating environments. Systems that don't improve their top hat security with better locks, intrusion sensors. Anything with outdated hardware and software, old unpatched operating systems are the biggest risks. The example I like to give is there are so many ATMs out there running Windows XP. That's a very old, outdated operating system. Systems with no sign or encrypted software, or hard disk encryption, or just encryption in general. Anything that lacks access control and authentication enabled to protect the internal computing system. Lastly, as Bernd mentioned in the previous conversation you had with him, Scott, behavioral monitoring software. If it's not on systems today, systems certainly can be at risk. I think, Scott, you'd agree that a branch lobby system that's mostly attended may not need the same protections as a lesser attended system at convenience store, but on average we're simply not making it hard enough on the criminals, regardless. Scott Harroff:                     06:59                     Yeah, I completely agree with you on the thought of a lobby ATM being different than an ATM on a remote location, and since financial institutions don't have unlimited funds, the idea of I have to do all my security the same everywhere on every ATM is probably not the right approach. There's probably ways to do a better job of allocating resources. You've talked a lot about ATMs and ATM security, but at the same time, I look at it more of an ecosystem where the ATM is interacting with other things, especially as we move into the world of ATMs connecting into not only the ATM transaction processing system, but now they're connecting into cores and they're connecting into web servers and interacting with databases on a customer's network, and just as recently as last week I saw an alert coming out from the FBI where they're talking about now there's cyber attacks against financial institutions where the hackers are not really attacking the ATM in any way, shape or form. They're going in, they're attacking the core system, they're changing account balances, they're changing daily withdraw limits, and they're just using the ATM as a mechanism to get the cash out.                                                                                 That's a cyber attack against something completely different that impacts the ATM, so I'm kind of wondering about your thoughts on how do you protect the end to end channel? Dave Phister:                     08:18                     Yeah. It's a great question. Certainly, as you indicated, there are many end points, or there are many attack points in the chain of the transaction sequence. You really have to identify the critical components, categorize those assets, and identify the risks, and then deploy the appropriate controls. Ideally, end to end security would protect the connection from the host all the way down to the ATM, as you know Scott, end to end security is certainly complex in itself. Requires additional support and resources from not only the ATM but from the host itself in the way of key management. I think ideally, in that world, we'll get to one day, but right now I think we have to focus on setting controls on the operating system, setting controls on the system software, setting application security software, setting the firewalls, and doing all the fundamental components at the ATM to protect the endpoint as we then focus on how the network now begins to converge into this world of connected commerce introducing mobile devices and other components in the ecosystem. Scott Harroff:                     09:32                     Completely agree with you, Dave. I think one of the other things that a lot of customers should look at, is not only their protective controls, and not only their detective controls, but what do I do when something does happen? What's my instant response plan. I've talked to a lot of customers in the last couple weeks where they're relying on something to protect them, but when they notice something bad going on, and I say, "Well, what's your instant response plan? How are you going to turn that account off? Who's going to do it at two in the morning? How quickly can you turn it off?"                                                                                 All of a sudden I'm getting customers that are saying, "Wow, I really haven't thought about how we're going to handle everything after the event starts." I think having an instant response plan is also a really important part of this. Now that we now what the threats are facing our customers, let's touch on how FIs can combat those risks over all. Can you expand a little bit on this and talk about how FIs should be protecting them against physical, cyber, and fraud threats this year and next? Dave Phister:                     10:29                     Yeah, absolutely. I think certainly the comments you just offered with regard to having an incident response plan in place is certainly critical, by every stretch of the imagination. FIs certainly need to be focusing on that in the ATM space. At it's highest level, I think it starts in the boardroom, Scott. Security is a foundational part of the customer's user experience, and the trust in the brand, so an investment strategy must include security [inaudible 00:10:59] component. On average, that hasn't necessarily been the strategy. Don't get me wrong. We have plenty of customers, as you know, that do have progressive security investment strategies, but they're the minority by far, so it has to become a recurring percentage of revenue operation.                                                                                 Second, technology refresh, it must become a normal recurring commitment. It changes to rapidly. We have to do a better job of deploying the latest software and hardware, because it's this software and hardware that enables the latest security features with the latest technology that the hackers, as you know, are definitely taking advantage of the latest technology, so we have to put ourselves in a position to defend against that pace. I think we need to recognize that from a funding and a budget perspective, criminals do have access to the funds, so we can no longer make that argument. We have to provide the funds and we have to maintain configurations in a current fashion.                                                                                 Third, customers need to embrace a zero trust model and deploy layers of security. Prevent physical access to the top hat with proper intrusion prevention. That's layer one. Then deploy access controls to reduce privileges and force authentication. Layer two. Then encrypt communications and data that's flowing within the system. Then finally, as Bernd suggested, start deploying behavioral based security software that could detect abnormal behavior and respond appropriately in the event that one of those three earlier layers was circumvented and malware may be running on the machine.                                                                                 I think in the end, these three components are how we can get the customers to improve their protections in the future, Scott. Scott Harroff:                     12:50                     Yeah. I agree completely. That's a lot of great information on how the financial institutions can protect themselves from attack. To wrap up our conversation Dave, let's talk about what's next. What developments have you excited on the security front? Dave Phister:                     13:05                     I believe there is an emphasis now on analytics in the industry. I think it's a long time coming. I think financial institutions can harness this ATM data sensing and respond to not only operational aspects of the ATM, but security risks as well. I think this working in accommodation with an ATM behavioral monitoring capability as an example, could certainly transform security at the ATM.                                                                                 There's a movement on the mobile security front. We talk a lot about mobile interaction with the ATM. This is the next big user interface and the component to the ATM, certainly PCI has posted guidance, and deployments using mobile devices are happening today. We're seeing a lot of that usage increase, so we certainly need to focus on security around mobile devices. Then, the standards bodies are doing work as well, which I think is important. PCI is pressing for stronger cryptography to be used, like TLS instead of SSL, AES instead of Triple DES. I think maintaining current cryptography certainly will help defend the systems of the future, certainly when we consider that the attackers have access to the technology that could be used against it.                                                                                 Biometrics is slowly making it's way to the conversation. I think we expect more in that space in the future, especially as it pertains to data privacy controls, so again, a lot of areas where I'm excited with regard to the industry, and then areas where security is a vital component in the industry as well. Scott Harroff:                     14:47                     Yeah, I agree, and I look forward to a time when the security controls and mechanisms are widely supported across all the platforms. Some of the networks that we work with are outstanding at security, and they have TLS implemented, and they have great fraud systems, and some of the others aren't quite there yet. I look forward to having a nice common platform where everybody's really on the same playing field and everybody's working together against fraud versus maybe institutions one, two, and three are doing their own thing, institutions four, five and six are doing something different. That's one of the things I look forward to seeing.                                                                                 Is there anything else that our listeners should take away with today, regarding our conversation? Dave Phister:                     15:28                     Yeah, a couple final thoughts, Scott. First and foremost is communicate and share. We're in a global fight against crime, whether it's communication with PCI, East, ATMIA, secret service or the FBI, certainly we can talk about the latest FBI alert that we've seen in the news here in the last week or so. I think that's just another indication of sharing from the government side to the private side. This information, if shared, can be used in the global fight against fraud.                                                                                 Then, secondly, I'm a big fan of the National Institutes of Standards and Technology. Many believe work like the NIST risk management framework applies only to federal systems, but that's not true. This work translates into the critical infrastructure in the banking industry, and their cyber security framework is the policy framework of computer security guidance for how private sector can asses and improve their abilities to prevent, detect and respond to cyber attacks.                                                                                 Again, there's a lot of great work being done that can be embraced in the private industry by financial institutions. Then, I also encourage our listeners to visit the East security page and take a look at the cyber attack mitigation link. Very insightful information and guidance on cyber security beyond just the firewalls. Scott Harroff:                     16:51                     Again, thank you Dave for being here today, and to our listeners for tuning in to this episode of COMMERCE NOW. To learn more about cyber security and how financial institutions can protect themselves against these types of attacks on digital systems, log into DieboldNixdorf.com.                                                                                 Until next time, keep checking back on iTunes or your podcast listening channel, for new topics on COMMERCE NOW.  

Podcast Summary:  Procrastination. It’s a mysterious, sometimes crippling force that allows us to avoid undertaking and completing important tasks. And we’re all guilty of it on some level. Sometimes it’s due to anxiety. We’re anxious about the workload, or we’re unsure how we, or others, will feel about the finished product. It can also be due to perfectionism. We expect so much of ourselves that we delay a task as long as possible because we’re scared that, once it’s completed, it won’t be to our standards. Or it can simply come down to our emotions. We just aren’t in the mood to take on the task today, so we put it off. Normally, procrastination is harmless. The work gets done, eventually, right? But when it comes to financial institutions and their software, the art of procrastination has some serious drawbacks. From security issues to a lackluster customer experience, neglecting to update their operating systems until the last minute can cause a bigger headache than they bargained for. On today’s podcast, we’ll be talking about the upcoming Windows 10 software migration, and how financial institutions can look at this event not as an obstacle, but rather as an opportunity, and how banks, credit unions, and other FI’s can leverage the migration to their advantage. Resources:  Blog: Windows 10 - An opportunity not an obsacle -  https://blog.dieboldnixdorf.com/windows-10-an-opportunity-not-an-obstacle/ Windows 10: Your Migration FAQ - https://blog.dieboldnixdorf.com/windows-10-migration-faq/#.W2SlqChKjIU How to Win with Windows 10 - https://blog.dieboldnixdorf.com/win-windows-10/#.W2Sl_ihKjIU  White Paper: https://www.atmmarketplace.com/whitepapers/windows-10-an-opportunity-not-an-obstacle/ Webinar: https://www.atmmarketplace.com/whitepapers/webinar-windows-10-a-financial-institutions-roadmap-to-2020/ DN website: www.dieboldnixdorf.com COMMERCE NOW website: www.commercenow.libsyn.com Transcription:

Podcast Summary: Black box attacks. Cyber attacks. Malware. Manipulation of the hard drive. There are so many factors and variations when it comes to jackpotting attacks that it can make your head spin. These attacks are constantly evolving in their sophistication, but that doesn’t mean you should give up the security ghost. Every attack teaches us something new – from the preferred ATM target to the preferred type of malware. Studying these attacks and closely scrutinizing every aspect of a jackpotting attempt allows us to get ahead of the attacks and become proactive instead of reactive. In this episode, our security gurus Scott Harroff and Bernd Redecker will discuss the lessons and takeaways banks can learn from jackpotting and security, and how they can get ahead of the problem BEFORE it costs them. Resources: Blog:  https://blog.dieboldnixdorf.com/what-recent-jackpotting-attacks-can-teach-us/ Sign-up for Security Alerts: http://pages.e.dieboldnixdorf.com/ATM-Alert-Subscription?_ga=2.241321483.882907520.1533304320-1846737074.1524590636 DN website: www.dieboldnixdorf.com COMMERCE NOW website: www.commercenow.libsyn.com Transcription: Amy Lombardo:                00:01                     Black box attacks, cyber-attacks, malware, manipulation of the hard drive, there are so many factors and variations when it comes to jackpotting attacks that can make your head spin. These attacks are constantly evolving in their sophistication. But that doesn't mean you should give up the security ghost. Every attack teaches us something new, from the preferred ATM target to the preferred type of malware. Studying these attacks and closely scrutinizing every aspect of a jackpotting attempt allows us to get ahead of the attacks and become proactive instead of being reactive. In this episode, you'll hear from two security gurus, Scott Harroff and Bernd Redecker. They'll discuss the lessons and takeaways banks can learn from jackpotting and how they can get ahead of the problem. I am Amy Lombardo and this is COMMERCE NOW. Scott Harroff:                     01:05                     Hello again, and I'm Scott Harroff, your host for this episode of COMMERCE NOW. If you recall, Amy Lombardo and I had a great conversation on jackpotting a few weeks ago. And today I'm joined by Bernd Redecker, Diebold Nixdorf's Director of Corporate Product and Solution Security, and we will take a deeper dive into what recent jackpotting attacks can teach all of us and the best ways to protect against them. Thanks for joining me today Bernd. Bernd Redecker:              01:29                     Scott, it's a pleasure to be here. And thanks for the opportunity. Scott Harroff:                     01:32                     Okay, so let's recap a little from the last jackpotting podcast. First, we've seen an expansion of jackpotting attacks in 2018, especially in the Americas. Secondly, while these attacks don't feature brut force, they combine aspects of physical and logical manipulation of ATMs. And then looking back at four ATM security alerts from this year, it's clear that protecting yourself requires a holistic security approach. So, diving right in Bernd, can you remind our audience that although there is no one type of jackpotting attack, what are some of the major types of jackpotting that can occur. Bernd Redecker:              02:07                     Scott, thank you very much. The term jackpotting, first of all, basically refers to getting money out of an ATM. And jackpotting is coming from the gambling machines, basically you win the jackpot. Jackpotting as such, the term has been defined or it has been created already some years ago. There is a general distinction between different verines. One is called a black box jackpotting and black box simply means that the attacker brings his own electronics. As you already said, jackpotting is always a combination of a physical and a logical breach. When this is done on-sight, like with a black box, the attacker has to open the machine, he brings his own processor, his own CPU, connects the cash hunting device of the ATM with his box and then has the machine paying out money. Of course it's not as easy as it sounds at the moment. They will have to circle then security measurements. They will have to break security measures which are there, which are in place or which should better be in place. But I guess we'll talk about that a little bit later.                                                                                 There's another attack vector. And that comes with all the equipment which is already present at the machine. So the second one would be attacking the hard disk drive of the existing CPU in the ATM. We see several cases where they rip off the disk of the ATM, take it back to their car, infect it with malicious software, put it back in again and then jackpot the machine. And that, again, has different verines. Some of them have malware, some of them have even modified legal applications. And we can go through that as we touch the different alerts. And especially this year we have seen a [inaudible 00:04:04] of that. I guess we are going to touch now, right? Scott Harroff:                     04:08                     Yeah. And these attacks are really only across the four alerts that we just talked about. And I know there's other types of jackpotting. And as we've seen recently, these attacks continue to evolve very quickly. So it really is crucial to stay up to date and know what's going on. Can you talk about the January 25 alert and give us some specific takeaways? Bernd Redecker:              04:29                     Yeah, the January 25 alert ... And by the way, if you would like to, please register for our security alerts, can find them on our home page. Alert from January 25th refers to, again, a combination of both attacks. It was HD a replacement attack. However, it was also using physical manipulation in the ATM, which means they did a combination of both to be able to get to the cash. And the challenge here is looking at outdated stuff, looking at outdated protections may open potential attack factor which the attackers then exploit, which means we definitely have to take care that protection is checked and verified over the time, machines are updated in a timely manner, and policies which are on the machine get updated. Scott Harroff:                     05:22                     Yeah. And I'll tell you, as I keep looking at what goes on, our original alerts on the Diebold side having XFS 4139 and then 4141, then 4146 and 4148, it just seems like these guys ... You close one door and turn the lock so they can't open it, and they turn right around and they start looking for the next door as soon as you finish turning the lock on the first door. So help us understand a little bit about how the May alert is different than the January alert. Bernd Redecker:              05:53                     In that case, the attackers brought their own laptop. So the difference there is January it was disk infected, in May they brought their own computer in case it was infected. It was a small notebook. They disconnected the original PC, which means all of a sudden all logical countermeasures are completely obsolete, they can't help any longer. They connected directly to the dispenser and then they have been using physical measurements to trick the whole machine into communicating with a second notebook. That's the bad thing about it, we are seeing these combinations of physical and logical attacks more and more, taking advantage of processes.                                                                                 The bad thing is it doesn't help any longer to build another fence, to build another protection mechanism, which they are then starting to re-engineer. We have to change completely the way we protect the machines. And what has shown good progress is going to a model where we have more behavioral situation. And basically that's what we did in the May topic. However, please keep in mind, of course you will have to update the machines. We have machines out there, we just have been involved in an investigation with a customer with the average age of the machine, was 17 years unpatched, never updated. These machines are liable for attacks or can fall into attacks just because they are that old and that outdated. If we update them regularly, if we maintain them regularly, on a regular base, we can protect them. But of course the attackers, as soon as we close a door, are going to try and find another one. Scott Harroff:                     07:45                     Yeah, and there's something I really want to drill in on there a little bit, Bernd, because I'm in front of a lot of customers here in the US and I get this perception, especially from some of our larger financial institutions, that they've got the opinion that I'm running, I won't mention product names, but I'm running Vendor X antivirus product or I'm running Vendor Y whitelisting product or I'm running Vendor Z super security product on my hard drive, and because I've got all these products protecting me from a security standpoint, from the yellow vendor and the red vendor and the blue vendor and everybody else, because I've got all this security on my hard drive I don't need to do software updates. And what I think I just heard you clearly say is that's not the case. If you've got the greatest security running on your hard drive but you're missing this firmware update, you're vulnerable, right? Bernd Redecker:              08:42                     It depends. Of course it depends. You are right, there is no silver bullet. There is no bulletproof solution. What we have to take into consideration is protection on let's call it three layers, interconnected layers or interconnected levels. One is against what we would refer to as IT or cyber attacks, like malware trying to reach the ATM PC or we have to provide protection against malicious users and we have to think about protection when the machine is being switched off. That is very often forgotten. That would cover attacks directly against the devices. There is no difference, from a logical point of view there is no difference, whether I switch off the machine, the PC, or whether I directly connect to the dispenser. But if we do not offer protection or if we do not consider protection on all of these layers, then there is room for attacks. If there is a gap somewhere, there is room for attacks. If we don't encompass, and that's what I see as upcoming attacks, processes, there is room for attacks.                                                                                 What is also a little bit misleading, and again, like you Scott, I don't want to talk about product X, Y or Zed, the ATM in most cases is running a little bit specialized but more or less standard PC, which means we are looking at a standard operating system which you know from your office environment. So why the heck don't we deploy office protection tools? The biggest difference is, think about your computer, when you switch it on, well maybe not in your home environment but definitely in your office environment, the first thing you will have to do is you will have to enter a password, even before the operating system starts. Well, here, with ATMs or with POS systems, we are looking at machines, and especially with ATMs, we are looking at machines which are out in the wild 24/7, there is no dedicated user on it who would be able to put in a password when you boot it, which means you will need dedicated security measurements for exactly these environments.                                                                                 If you start deploying standard office environments to these areas, you can think about that, in reality from my experience it has never been a very good solution because there has to be a trade off. When you look at standard antivirus, for instance, your machines or your pattern on your home PC gets updated, well at least hourly. You can't do that with an ATM. It will spoil the bandwidth, it will spoil potentially availability of the machine. So you have to think about other measurements dedicated for self-service machines, dedicated for 24/7, machines running unattended. So we have to take a different perspective on this to be able to offer protection. Scott Harroff:                     11:46                     Yeah, I agree. I think that when you look at an ATM environment there's a lot of different aspects that you need to look at relative to jackpotting. If you've got an ATM that's sitting in the middle of your lobby, maybe you haven't updated the software for 17 years. With it sitting in the middle of your lobby and the doors are only open from eight in the morning until five at night and people are paying attention to what's happening at the ATM, you've got a lot of vulnerabilities on that ATM possibly but what's the likelihood, if you will, of somebody walking into that branch and opening up the ATM and standing there for the next hour taking notes out of the front of the machine and putting it into a great big bag they have on the floor? It's just not likely to happen. It could. But it's just not really likely. And then you move from there and do a drive-up lane, and depending on how it's configured you got a little bit more risk. It's out there 27 by 7 and maybe the lighting's not as great as it could be. And then you go to the other extreme, maybe I've got an ATM at a gas station or an off-site government building or in a college campus and now you've got an ATM that from a physical standpoint's very exposed. Your likelihood goes up.                                                                                 So I think the other thing, in addition to the tools running on the ATM itself, I think customers really need to look at the physical environment and the risk factors around each ATM and use that as a way to help model what their total exposure is and figure out what to do there and not overlook physical security. I can't tell you the number of customers I've talked to where all their remote ATMs have exactly the same key that they were shipped with from the factory and they have no alarms on the top hat and no one's monitoring to see if the ATMs up or down. So I really agree with you, it's a comprehensive solution that really you've got to look at everything together all at once. Bernd Redecker:              13:33                     Like you said, having something like the same key in all machines is never a good solution. Normally security does not come from obscurity, it comes from secrets you have and you possess and you can use in the field, but not from having just something which you think the other one doesn't have. That's impossible. Just one comment on the environment. You're absolutely right, especially when we look at not only the logical attacks, when we look at attacks in total, there are different areas, there are different regions where attacks, some kind of attacks, are more likely than others. Unfortunately, this also applies vice versa. And just because your ATM is in a lobby may help if you think about a bank environment, may help when you're, for instance, in Europe or in North America. We have also seen attacks especially in Latin America where it's not especially a lobby but it's supermarket scenarios where there are ATMs and they have been jackpotted while the store was open.                                                                                 So the crooks have developed patterns where they really don't care who's looking at them, again, depending on the region, depending on the environment, where they simply don't care whether they are being seen, where they try to disguise. We have seen full operations where they even come with their own protection, not armored but in terms of distracting anybody who goes out there and tries to talk with the one who's currently jackpotting the machine. And of course it never looks like what you would expect jackpotting. It's not cloak and daggers, it's not people with raincoats and black hats. It's always people looking absolutely, in these scenarios, it's always people looking absolutely normal, pretending to do normal transactions. And you can tell from the lock files of the ATM and you can tell from the videos that in fact they were cashing out money instead of really doing a normal withdrawal. Scott Harroff:                     15:29                     Yeah, and we've seen the same thing here in the US. We've had big box retailers with ATMs very close to the main entrances and you've got all those people walking in and out of the big box retailer and your point of sale line is right over there. And of course you've got all those surveillance cameras. And right there in the middle of it for an hour they're jackpotting. Hey, let's talk a little bit about the difference between the May alert and the July alert. So they're both black box attacks. Why don't you give our audience a little bit of information around the differences between the July and May alert just to clarify that. Bernd Redecker:              16:06                     Well, the main reason we published another alert on jackpotting and black boxing in July was, first of all it was a wave over here in Germany and with also seeing something similar happening in Latin, but what was really astonishing and what was new at that point and time was a way of organization. So we know that the majority of the jackpotting cases, we do have organized crime, we do have organizations in place who do the jackpotting. In that case the biggest difference was that the guys who were in front of the machines, the guys who did the transport, had absolutely no idea what they were doing. They have been hired completely, well, underground style. So they had no clue why they were transporting a notebook from one country to another one.                                                                                 They didn't have a clue what to do with that in front of the machine other than the description, "Okay, open the machine or break the machine here, there and there. Connect this and then here you go". So that was basically the biggest difference we saw in that. And that it hit in two regions in parallel led us to issue this warning. Again, if the machines are properly updated this should have not been possible. And we have also seen attacks which were unsuccessful due to full protection, at least against known attack vectors. So this proves to help. In this case, the machines were not upgraded. But the main reason for this was the organization grate behind that. Scott Harroff:                     17:48                     When we look at these attacks, sometimes when we do our forensics it's a very complicated multi-step process that requires ... You have this version of this and this version of that and you're missing this countermeasure and you're missing that countermeasure. And it's really perfect storm of all these things coming together in conjunction with a technical person at the ATM that's really, really smart. What I think I just heard you say is we can go all the way to the other extreme of you have a not sophisticated person that sort of, kind of just pulls out a hard drive and you're missing a patch and they use that as a way to impact the hard drive and put it back in. That's kind of what happened in the July alert, right? Could you elaborate on that a little bit? Bernd Redecker:              18:36                     Basically, the guys who are in front of the machine, in that case, are not really aware of that there is a missing patch. What they have is they have typically a device or an instruction or a USB stick or whatever it is for this given attack plus a description. Again, breaks machine here, unlocks a hook there, plugs this in there, and then press a button. And that's all they know and all they need to do. They have no clue that a Microsoft patch was missing or the firmware wasn't on the latest release whatsoever. And that's the world we are moving into where the money mules have absolutely no idea on why they are doing what they are doing. They just know it works.                                                                                 You can also tell that from the controls which are getting embedded into the malware, which is used either in the disk replacement scenarios or in notebooks if we get into re-engineering of them, most of them if we talk about notebooks, most of them have remote connection. If we talk about software and substitution, there is a control embedded where these guys are remotely controlled in terms of the brain who gave them the notebook knows exactly, knows later on exactly how much money is in the machine and how much the mule would have to deliver. But the person on-site does not know that there is a, again, a patch missing. He's not the brains. And they simply hire them and they have reached a level now where they hire them completely anonymously. Scott Harroff:                     20:13                     Well, I think the good news here and the bad news here are all wrapped up in the same sentence. We build ATMs to last. They are not something that you put out there and in a year or two or three you replace with a brand new ATM. There's ATMs that have been out there for 10, 20 plus years. And, at the same time, that's a good thing because the customer has a piece of hardware that is very reliable and it's out there running. But on the other side of the coin, a lot of these older ATMs are in an environment where the customer really hasn't done the things that you talked about, Bernd, to keep it up to date. They haven't kept the operating system up to date, they don't have signatures up to date, they don't have whitelisting in place, they don't have encryption in place. They might not have the physical security around the ATM. So you've got a combination of older units with not enough security being one of the main drivers of why organized crime has focused in on that.                                                                                 These attacks, also they're evolving really, really quickly. So you can't just take the defenses that you've got today and make the assumption that those same exact defenses are going to be perfect for protecting you tomorrow. You've got to keep up on top of this stuff, you've got to keep up with updates and upgrades. And if you don't, then the criminals will find a vulnerability somewhere in a platform and try to target it.                                                                                 Bernd, is there anything else you want our listeners to take away with today regarding our conversation? Bernd Redecker:              21:34                     Yeah, just perfect statement, Scott, just to emphasize on that. Even if the customers don't get attacked, leaving the machine on the old state makes it even more difficult to upgrade them if something happens. So maintenance is nothing you should do only when something happens, you should do it on a regular base. And you can even do that for the old machines. Of course there is an end of life at some time, but until then ... Typical lifespan, when we look at life cycles of machines of software, that is clearly above seven years to some extent. So that shouldn't be a problem to patch and update them over the lifetime.                                                                                 The other thing I would like to point out or I would like to hint to is we've been talking a little bit about physical protection, we've been talking a lot about logical protection. As we mentioned one or two times, the attacks we are seeing at the moment are also a combination of logical and physical. And what we are seeing, and again on a global scale, it simply doesn't matter where you're looking, to which geography you're looking to. Some are more advanced in the negative way than other regions. But, nevertheless, what we are seeing is that the crooks are also starting to take advantage of banks processes. There is an attack called transaction reversal. There are other attacks where the crooks know exactly that the bank will, in one or the other case for instance, refund cash. And while this is not literally jackpotting but the result is the same, they trick the whole process in a way where it refunds any withdrawals immediately meaning they can withdraw until the machine is empty. And the result of that is very near to a jackpotting again. So if we think about protecting the machines, it is the physical protection, it's the logical protection, protection when the machine is switched off, we have to consider processes. And of course, if we do all these things, we also have to properly monitor the machines. Because it doesn't help at all if the machine sits out there, and again 24/7, lobby, drive-ups, remote locations, whatever we have, it doesn't make any sense if the machine sits out there, it's protected to some effect, knows that it's currently being attacked, cries for help and nobody's listening. Scott Harroff:                     24:06                     Yeah, that's a great example Bernd. We're talking about jackpotting and so many times you think about it, and to your point of the outcome is all the cash is gone and the method had nothing to do with a black box or malware, it was just that reversal attack that just kept right on going. So I think one of the things that a lot of our financial institutions should do is really sit down with an expert on security and really walk through all the different things that you and I talked about today and really put a plan together for where are we today, ideally where do we want to be, and what are all the steps that we need to put in place to go from where we are to where we need to be, and then how do we keep up to date once we get to where we want to be?                                                                                 So Bernd, thanks so much for being here today. It's always great to have someone of your level of expertise and knowledge available to talk to the financial institutions about what's going on in the channel. I want to thank the listeners today for tuning into this episode of Commerce Now. To learn more about jackpotting and how you can better defend your ATM fleet against these evolving attacks, please log on to dieboldnixdorf.com. And, until next time, keep checking back on iTunes or your podcast listening channel for new topics on COMMERCE NOW. And thank you very much again for everybody's attendance today.

Podcast Summary: In January of this year, Amazon shook up the retail space by introducing their own brick-and-mortar retail space, but they added a twist. The entire store is checkout-free. Customers walk in, grab their products, and go. With the use of an app, a combination of sensors and cameras, the store tracks a consumer’s purchases and charges their Amazon card when they walk out. It’s the epitome of quick and convenient, and it’s got a lot of traditional retailers on edge. But with every new innovation, there are other companies who are quick to redesign the reinvented wheel. Now, Microsoft is designing a rebuttal to Amazon Go. While Microsoft has no interest in creating its own ecommerce platform or running a retail store, the tech giant is investing in creating cashier-less shopping technology and expanding its commercial cloud services to more retailers and businesses. Microsoft isn’t the only company that’s hopping on the Amazon bandwagon. Retailers across the globe are trying to implement Amazon-like qualities into their digital and physical marketplaces. But should they? In today’s episode, I’ll once again be joined by Dave Kuchenski and we’ll discuss how the Amazon Effect has feverishly gripped retailers, and whether or not that’s a good thing. Resources: Blog: https://blog.dieboldnixdorf.com/personalization-store-one-future-retail/#.W1s8WtJKiUk https://blog.dieboldnixdorf.com/e-commerce-represents-major-gap-for-u-s-grocers/#.W1s8etJKiUk DN website: www.dieboldnixdorf.com COMMERCE NOW website: www.commercenow.libsyn.com Transcription: Amy Lombardo:                00:01                     In January of this year, Amazon shook up the retail space by introducing their own brick and mortar retail space, but did you know they added a twist? The entire store is check-out free. Consumers walk in, grab their products and go.                                                                                 With the use of an app, a combination of sensors and cameras, the store tracks the consumer's purchasers and charges their Amazon card when they walk out. It's the epitome of quick-and-convenient, and it's got a lot of retailers on edge.                                                                                 But, with every new innovation, there are other companies who are quick to reinvent the wheel. Now, Microsoft is designing a rebuttal to Amazon Go. While Microsoft has no interest in creating its own eCommerce platform or running a retail store, the tech giant is investing in creating cashier-less shopping technology and expanding its commercial cloud services to more retailers and businesses.                                                                                 Microsoft isn't the only company that's hopping on the Amazon bandwagon. Retailers across the globe are trying to implement Amazon-like qualities into their digital and physical marketplaces, but should they?                                                                                 In today's episode, I'll once again be joined by Dave Kuchenski, Diebold Nixdorf's Director of Retail Strategy and we'll discuss how the Amazon effect has feverishly gripped retailers and whether or not that's a good thing. I'm Amy Lombardo and this is COMMERCE NOW. Amy Lombardo:                01:54                     So, hello to our listeners. I am joined once again by Dave Kuchenski, the Director of Retail Strategy here at Diebold Nixdorf. He has also shared with me that he is a self-proclaimed Sonic the Hedgehog video game expert. Hi, Dave. Welcome back. Dave Kuchenski:               01:53                     Hi Amy. I'm glad to be back. I don't know if I'd call myself a video expert. My four-year-old kind of beats me every single time we play, but thanks for sharing that with everybody. Amy Lombardo:                02:04                     Yeah, no problem. That's what you can depend on me for. All right. In our last conversation, we talked a lot about the in-store shopping experience and the idea of having this connected consumer. I want to follow up with that discussion today and give some more specific examples, but to refresh the listeners' memory, we left off talking about this idea of the blind spot.                                                                                 I think of the blind spot as that spot you can't see in your rear view mirror or even a movie that was popular a couple of years ago, but when it comes to the retail world, can you talk to me about what the blind spot is? Dave Kuchenski:               02:47                     Yeah. There's this blind spot that physical retailers have that online retailers do not. If you think about online retailers and how they market to their consumers, they have visibility to me, as a consumer, a lot of times, we have profiles that are set up. They know how many times I've come back to a site looking at a specific item.                                                                                 There's personalized ads offers loyalty and they know who I am basically while I'm shopping on their site. They know my shopping history, what I've bought before, things that I like. There's this advantage that online shoppers have that physical retailers don't.                                                                                 When I step into a physical retail store, the customer's activity is unknown. The shopping history is not visible until after I check out. I've bought some item and I'm out the door. There's a little bit of an opportunity there to capture me by the mobile app, based on the purchased history at point-of-sale, but it's a vast difference between what online shoppers are actually able to do.                                                                                 The idea is what if we could change that blind spot and help recognize customers when they're coming into the store, help provide a more immersive experience that's personalized and make that interaction inside the physical store more valuable to the consumer. Amy Lombardo:                04:07                     Yeah, that's a good point, Dave, because think about your weekly grocery store ad that you get or like your home repair store. The same things are on sale to every single consumer, no matter age, demographics, whatever that might be, and that's a good point, if there could be a little more personalized.                                                                                 On that thought, talk to me a little bit more about how the physical retail world itself is changing and how retailers can look at ways to overcome this idea of the blind spot. Dave Kuchenski:               04:38                     We see retailers innovating in several different ways around their customer's journeys. We've kind of outlined this framework of five areas that our customers, retailers are innovating. The first being, experiential. Improved in-store experiences. They generate more satisfaction in the shopping journey. It's purely about customer enjoying their time in the store. Expertise, customer store alliance, subject matter experts to provide guidance on products. We see some innovation there happening with retailers enabling their in-store associates with technology. Showrooming. We see different store formats happening.                                                                                 Groceries are a great example. If they're not just necessarily doing these giant grocery stores anymore with thousands of products in them. They're doing these smaller format-type showrooms with more frequently purchased items, so that's one example. Then, we have store intelligence. Consumers generate data within the store, things that they look at, things that they buy. Retailers are constantly trying to find ways to collect different data points, become more intelligent about the activity that's happening in their store, and then utilize that to create better experiences, offer better products for the consumers.                                                                                 Then, the last one is supply chain and fulfillment. We see all these new fulfillment models. It started with Amazon and Amazon created all these warehouses. They were able to create two-day delivery. Now, we're starting to see these physical retailers come up with creative fulfillment models to be able to deliver more products, more efficiently to customers. Amy Lombardo:                06:15                     Dave, that last example about supply chain and fulfillment, are you saying that some retailers, if they can't meet that shipping quota, they're using some of their hub-to-warehouses to actually ship product out of versus standard warehouses? Dave Kuchenski:               06:29                     Yeah, they're actually viewing their physical stores as this network of warehouses, mini-warehouses. Things like ship-from-store. They'll get drivers to come pick up items that have been bought online, in the store, and then deliver them to locations.                                                                                 They're also thinking of things like buy online and pick up in store. Buy in store and ship to home. There's a lot of different ways that they can think about how products actually get delivered to-and-from the different retail locations. Amy Lombardo:                06:59                     Well, I guess that could be a good example, if you're buying something that's very heavy or very large and it wouldn't make sense to maybe put it on a truck or what that may be. Talk to me about some of the advantages of having ship to a store or pick up in a store, because to me, it almost would seem that it would be less convenient then. Like, what's the advantage to the consumer? Dave Kuchenski:               07:24                     Yeah, there are various reasons why consumers may want to pick something up at the store. Maybe I'd buy something online and indicate that I'm going to pay with cash in the store, so consumers come in and pay with cash, so that's kind of like the last mild problem that Amazon deals with. Amazon today, if I want to buy something with cash, I have to go purchase an Amazon gift card or fund it at different locations with the cash.                                                                                 Retailers have that ability. They have the cash ecosystem already in place, so that's kind of one advantage they have there, but there's various reasons why customers may want to come into the store. Maybe I need something that day, so I buy it online and I need to pick it up immediately. There's a lot of reasons why, I think consumers may want to utilize different fulfillment models. Amy Lombardo:                08:10                     But Dave, you had talked about the Amazon model and you're not able to pay with cash. Does that speak to the whole unbanked and underbanked story line? Is there research that shows that Amazon is losing out and needs to figure out something else different for their delivery model? Dave Kuchenski:               08:29                     Well, I don't know that it's Amazon losing out. I think Amazon is trying to capture those customers, that's maybe it's had difficulties in the past with. For instance, Latin America. Latin America's a very cash-based society. Amazon has traditionally had difficulty capturing those customers in that market.                                                                                 Utilizing different fulfillment models, collect on delivery. I have, say a UPS guy show up at a house and that UPS guy is then collecting the cash for the retailer. Amy Lombardo:                09:06                     Oh, okay. That's a good example. Yeah. That makes sense. Dave Kuchenski:               09:11                     Yeah, it's well-documented that Amazon has had difficulty capturing those unbanked consumers. I really think that's one area that physical retailers kind of have an advantage, especially ones with large footprints for consumers that are cash-based to come in and pay for their goods, using cash. Amy Lombardo:                09:30                     Right, right. Let's talk a little bit about loyalty. With nowadays, just all the options available on how you want to shop and when and where, is loyalty increasing for a retailer or could it possibly be decreasing based on that experience? Dave Kuchenski:               09:48                     Yeah. Loyalty's a difficult thing for retailers to achieve today. Many times, we see consumers being more loyal to brands than to the retailers themselves. Probably has a lot to do with Amazon offering such a massive breadth of product offerings.                                                                                 If I find a brand I like and their shirts fit me well, I'm going to continue to buy that brand for simplicity's sake, because I know it's going to fit and I know I'm probably going to get a great price from Amazon. Additionally, Amazon's able to offer me a significant selection of a given item and potentially brands that I've never heard of before.                                                                                 But, they're well-rated by other buyers, so I know they're going to be quality items. The curation of products is something that is changing and retailers are going to have to excel at and find the best products at the best prices to keep up with the Amazons of the world.                                                                                 So, we've all had that experience where trying to find some off-the-wall item that I have nowhere to buy that's around me, so I go on Amazon and you find 20 different types of that given item. That's a difficult thing for physical retailers to keep up with.                                                                                 I think providing product data to consumers, it's unbiased is a great place to start. If you think about the ways that retailers have approached their eCommerce in the past, a lot of time you get these review ecosystems and you kind of question whether or not they're completely unbiased and whether they're providing me data that is actually relevant.                                                                                 You kind of get that sense with Amazon. That the reviews are pretty much unbiased. You'll get occasions where the retailer, whoever's selling on Amazon may try to skew those reviews, but Amazon sorts through those pretty quickly. As a consumer, you kind of feel like the data that you get off Amazon, the product reviews, are pretty unbiased and reliable. Amy Lombardo:                11:37                     Okay. If I'm reading between the lines, I'm thinking you're going on Amazon and trying to find your son that cool Sonic the Hedgehog action figure because he wants to play the game with you. Dave Kuchenski:               11:50                     You're right, and they do. For whatever reason, they've kind of restarted the whole Sonic the Hedgehog TV series. But, they haven't put out the toys, so the only toys left for me to buy him are the $40 pack of collectible of Sonic the Hedgehogs that are extremely fragile and he just breaks on a monthly basis and I'm left with buying another $40 pack. Amy Lombardo:                12:16                     Find a game that is a little more like the characters a little more universally known. Dave Kuchenski:               12:22                     That's right. Amy Lombardo:                12:24                     All right. In your role, you spend time looking to leaders in the retail space and what they're doing and how they're innovating and how these answers can lead us to our own business model, here at Diebold Nixdorf. Let's talk about some examples of these companies that are doing it right. Dave Kuchenski:               12:43                     The first example's I'll give is Kroger. They're really do a lot of innovative things. They're the largest, I believe the largest grocer, if not one of the top three in the United States.                                                                                 They've done a couple of things. We talked about store formats and showrooms. They've created their Fresh Eats market. It's small, convenience store. Smaller than their normal format. They offer a wide assortment of goods. Made-to-order food.                                                                                 They have comprehensive produce area, bakery in bulk section. These smaller formats. They offer a wider assortment of traditional, convenient store goods. That's one thing they've done.                                                                                 The other thing that Kroger's doing is we talked about product fulfillment. They've partnered with a company called ... I believe I have the name right. Ocado. Ocado's a fulfillment technology. They utilize technology to basically provide better store inventories to be able to enable Kroger to do their order online, deliver to my house, type of fulfillment models.                                                                                 Kroger's moving towards a model where you can order your stuff online and get it delivered to your house the same day. I think Kroger's doing an excellent job of innovating for traditional grocer. Amy Lombardo:                14:02                     Those smaller convenience stores that you were talking about, are those in lieu of or is it closing down the larger locations or are these new locations that are popping up to help with drive time or just traffic patterns? Dave Kuchenski:               14:18                     Yeah, it's a trend we've seen where supermarkets are downsizing their fleet of larger stores for these smaller footprints that are potentially a little bit easier to manage, more popular, and create that competitive advantage to be able to deliver the most common goods the same day, so doing same day delivery.                                                                                 I think it's something that is definitely going to be a trend with other grocers to help keep up. McDonald's is an interesting one. They've rolled out some new food kiosks. It's a really interesting change to a quick service restaurant model that has been around forever. It hasn't changed in my lifetime.                                                                                 You walk up to the countertop. You order your food. You stand there and wait until they bring it out and you go sit down at your table or you take it home, but they've adopted these kiosks.                                                                                 Now, you can walk in and order your food by that kiosk. You don't necessarily have to feel like your lack of decision-making is causing frustration on the person behind you because they have four to six kiosks in every location, so you don't feel rushed as a consumer.                                                                                 Chances are, you may end up buying more because you don't feel rushed and you can kind of browse the menu at your own pace. Once you make your payment at the kiosk, you pick up a table card and then go sit down and then, somebody brings you your food. There's Bluetooth built into those table cards so they know where you're saying.                                                                                 It's just a really interesting take on the traditional quick service model. I think it's something that really enhances that consumer journey for McDonald's customers. Amy Lombardo:                15:56                     Yeah, like upselling. The other day when I was using the kiosk and my daughter saw the slushy instead of the healthy juice box, I ended up having to get a slushy because it wasn't worth the complaining. Dave Kuchenski:               16:09                     Yeah, that's right. There's probably reasons that those kind of products are down at the bottom of the kiosk where kids can see. Amy Lombardo:                16:17                     I know, I know. That's smart marketing, smart marketing. How about an example about expertise? Is there one that lies in that portion? Dave Kuchenski:               16:25                     Yes. Several of the beauty retailers are doing an excellent job with this. Companies like Ulta, Sephora. They have these beauty technicians. They're enabling them with technology about me as a consumer, what I like, what I need. They're enabling their associates with things to be able to allow the consumer to virtually try on different products and see how it looks.                                                                                 I think Sephora and Ulta are great examples of enabling those subject matter experts in the stores to be able to better help serve their consumers. Amy Lombardo:                17:01                     Okay. Dave Kuchenski:               17:03                     I think Domino's is an interesting one. Domino's came out with great market earnings. Business models don't always have to be difficult. Things can be simple to make money. I don't know if you guys have ordered with Domino's lately, but they're basically an eCommerce company that delivers pizza or makes pizza.                                                                                 They know ... They capture me on my mobile device. They capture me online. The ordering process is really simple. When I place an order, you, as a consumer, get a time that your order goes in. You get a time that your order is finished cooking. You can see when your driver has left the store, when they're on route to your house, when exactly they're going to be there.                                                                                 I think that Domino's is an excellent example of a pretty simple business model. They make pizzas and they deliver them to their consumers, but they really transform themselves into an eCommerce company that utilizes things like data analytics and mobile to really drive a better experience for their consumer. Amy Lombardo:                18:06                     That seems interesting to go through all of that for a pizza, or salad, whatever it might be, for something that's a low dollar amount type item, but if earnings are well, then obviously, it's working, right? Dave Kuchenski:               18:22                     Yeah, yeah. Absolutely. I think they've done an excellent job of surpassing their competitors. Little pizza shops, they have difficulty keeping up with that because they can't invest in that technology to kind of really, I'll call it Uberize the pizza business. Amy Lombardo:                18:40                     Right. I want to keep going on this for a minute because you brought up something interesting, these mom-and-pop pizza shops. Within the small-to-medium business size market, are there maybe less costly or less time invasive-type things that those SMB market can look at reinvent themselves, based on what we've talked about here today? Dave Kuchenski:               19:06                     Well, I think what the small-to-medium businesses can do is, they can identify their pain points, because there's nothing that gets a consumer to stop interacting with your business like some significant pain point. Maybe it's a payment, maybe it's your menu and how you interact with your consumer by that menu. Are products difficult to find on your menu? Is your ordering difficult?                                                                                 I think that focusing on those little pain points and identifying them first off and then coming up with some creative way to solve that pain point is something that the small-to-medium businesses can do to really just create a positive interaction because that's going to keep customers coming back. That's going to create this word-of-mouth that is going to help your customer base grow.                                                                                 I think that the biggest piece of advice is just focus on those pain points and get rid of them. Utilize the things that are available to you. Your past customer shopping history is a good one that every retailer has small or large. I think that's good advice for SMBs. Amy Lombardo:                20:13                     Okay. That makes sense. How about store intelligence? Is there an example of store intelligence being used? Dave Kuchenski:               20:19                     Coop Italia is a great example. They created the store of the future. I think they launched it several years back. You can go actually and use it and people use it every single day. It's blending the digital and physical into one experience in stores. The products that are on their shelves, they use this technology to see what consumers are reaching for.                                                                                 Say, I pick up an apple or I pick up a banana. The digital signage within the store is changing based on what I touch and what I put in my cart. I may pick up a banana. I look at the digital signage. It tells me where that banana is from. It tells me the price, the nutritional information. They're really trying to blend the digital and physical space into one experience that is creating this more immersive-type of grocery experience. They can potentially utilize that data of what I've touched and felt. We talked about that blind spot and not being able to recognize consumers and what they're looking at, or what they're touching and feeling in stores.                                                                                 Coop Italia's doing a great example of collecting all those data points that consumers are generating and then utilizing that data to then potentially upsell or just create a better experience in general. Amy Lombardo:                21:36                     How else is store intelligence used? Is there other examples of that or is it just the idea of you're picking up a product? Like, are cameras being used to see what the consumer shopping or maybe the pattern of which they walk throughout the store? Dave Kuchenski:               21:53                     Yeah, there's several ways. Consumer tracking via cameras is one way to see where there's hot spots throughout the store. Consumers stand in this area more often than over here in this area. There could be various reasons why. It could be which signage is up, which products. It could be that people don't linger very long in the frozen section.                                                                                 There's various ways to capture that. There's actually some technology out there too that's utilizing lighting to be able to interact with the cameras on our phones. If I've got my phone out, they can actually track where consumers are moving to.                                                                                 It's evolving technology, but again, I think it all comes down to identifying a consumer, anonymously or not, watching them walk through the store, seeing what they're collecting, seeing what they're picking up, utilizing the different data points that are available to the retailer, and then that enables you to help remove that blind spot and potentially increase your conversion rate in store, raise your basket size, and then just increase your revenue in general. Amy Lombardo:                23:02                     Let's close out the conversation with just some best practices. Is there a sweet spot? Is there a secret sauce here that retailers need to be taking away from this conversation? Dave Kuchenski:               23:15                     I think the first thing is, retailers have an imperative to adopt to changing consumer expectations. Don't sit back and hope your loyal customers are going to continue to visit your stores. Delight them with new experiences and information they don't expect.                                                                                 You may wake up tomorrow and find that some other retailer has provided a unique enough experience to lure them away. It's really competitive out there. Physical retailers need to take a design thinking approach to solve consumers' needs.                                                                                 Consider your customer journeys. Evaluate their pain points they experience every day. What are the best products available to me? Am I getting the best price? Where do I find these items in store? How can we get customers in-and-out as quickly as possible? How can I utilize data about my customers to curate products and provide a better experience?                                                                                 I think there's a lot of different ways if you just think about the consumer and their needs, you can achieve a lot. Repurposing the physical space to kind of create a greater value to the consumer is just good business. Times are changing. Consumers' expectations are getting bigger, so it's important to evaluate what is valuable to your consumer and deliver on those expectations.                                                                                 It's going to be different for each retail vertical and each retailer in those spaces. So, begin with your customers' journeys and I think that's going to get you started down the right path. Amy Lombardo:                24:29                     Okay. Thanks, Dave, for being with me here today and to our listeners for tuning into this episode of COMMERCE NOW. To find out more on this topic, go to dieboldnixdorf.com and click on the link in the podcast show notes. Until next time, keep checking back on iTunes or however you listen to your podcasts for new topics from COMMERCE NOW.

Podcast Summary: Jackpotting, a sophisticated cyber-attack combined with the physical manipulation of an ATM machine, has been sweeping across Europe, Asia, and Central America for the past decade. It recently made its way onto US soil in early 2018. In fact, these hackers swept up 1 million before anyone caught on, and they’ve continued targeting banks and credit unions in small towns with lax security and outdated software. In January, two men were arrested for a jackpotting attacks in Rhode Island and Connecticut. Other attempts and attacks have been reported in the Pacific Northwest, New England, and along the Gulf. While it’s unclear just how much money has been taken in total, these attacks are still occurring, and they won’t stop any time soon. In this episode, we’ll be talking the “what, where, when, and how” of jackpotting, as well as how financial institutions can protect their ATM fleet - and their brand image - from damage. Resources: Blog: https://blog.dieboldnixdorf.com/dont-be-the-jackpot-protect-your-atms-against-evolving-attacks/ DN website: www.dieboldnixdorf.com COMMERCE NOW website: www.commercenow.libsyn.com Transcription: Amy Lombardo:                00:01                     It's early evening and a standalone ATM sits in the middle of a mostly deserted strip mall. A man in a technician's uniform approaches the machine. He pops the top hat without hesitation and fiddles with the hard drive, swapping it out for a new one. When his job is done, he replaces the components and walks away. A few minutes later, someone else walks up to the ATM. He mimes the usual actions of an ATM customer, punching in numbers on the keypad, inserting a card and then he waits. Within the next few seconds the ATM begins to spin. The machine spits out wads of cash, up to 40 bills every 23 seconds. Anyone bothering to pay attention might think it's this guy's lucky day. Others might think he's withdrawing his life savings. But anyone with security expertise will recognize this as exactly what it is, a jackpotting attack.                                                                                 Jackpotting, a sophisticated cyber attack, combined with the physical manipulation of an ATM machine has been sweeping across Europe, Asia, and Central America for the past decade. It made its way onto U.S. soil in early 2018. In fact, these hackers swept up one million before anyone caught on and they've continued targeting banks and credit unions in small towns with lax security and outdated software. In January only two men were arrested for a jackpotting attack in Rhode Island and Connecticut. Other attacks and attempts have been reported in the Pacific Northwest, New England, and along the Gulf. While it's unclear just how much money has been taken in total, these attacks are still occurring. And they won't stop any time soon.                                                                                 In this episode, we'll talk about what, when, where, and how of jackpotting as well as how financial institutions can protect their ATM fleet and maybe even important, their brand image. I'm Amy Lombardo and this is Commerce Now. Hello and welcome to Commerce Now, your source for fin tech conversations along with emerging trends in the banking and retail industries. Today I'm joined by Scott Harroff, Chief Information Security Architect with Diebold Nixdorf. So, hey Scott. Thanks for joining me today. Scott Harroff:                     02:26                     Good morning, thanks for inviting me. Amy Lombardo:                02:28                     It's always great to talk to you. So, today we're going to talk a lot about jackpotting and I want to start the conversation with just where did the term jackpotting come from. The only meaning I know of the word is something good, usually when someone wins the lottery. So what does jackpotting mean here in terms of security references? Scott Harroff:                     02:51                     Jackpotting came about back in the 2010 timeline from a conference that's called DefCon. Once a year hackers and white hats and gray hats all get together and they present to each other for several days over a week in Las Vegas and one of the presentations was delivered by a speaker by the name of Barnaby Jack. And what Barnaby essentially did is he took an ATM and he brought it up on stage and after doing a whole bunch of research before the conference he found several vulnerabilities inside the ATM software stack. And by exploiting those vulnerabilities, he was able to make the ATM essentially jackpot itself and dispense all of its cash on the stage in front of the audience members. So, it really is kind of a term for ATMs dispensing all of their cash that came about as a result of Barnaby Jack's jackpotting speech during the DefCon Conference. Amy Lombardo:                03:46                     Ah, so there you go folks. If you're ever watching Jeopardy or some other trivia show and you're asked who originated the term jackpotting, now you'll know, courtesy of Scott Harroff himself. So, when a jackpotting attack occurs, is it something that happens immediately? You're giving this example of Barnaby up on stage and he did it real time but do these attackers carry out their mission immediately or is it something that maybe happens hours, days later? Scott Harroff:                     04:24                     What we're seeing in the United States is the attacks are occurring very soon after the software or the tool is deployed at the ATM. Although they could visit the ATM and they could set the ATM up hours or days or weeks in advance, in the U.S. what we're seeing is they set the machine up and then very quickly after that they go through the process of making the ATM dispense all of its cash and then they leave. Amy Lombardo:                04:53                     Got it, and it's usually with another individual, right? It's not a one person attack because someone's probably monitoring some software in some remote location and then there's said attacker who's walking up and taking out the cash, right? Scott Harroff:                     05:13                     Well, it theoretically could be just one person if the one individual had the right tool and they understood how to use the tool and they were working all by themselves, a lone wolf, if you will. Then, yeah, absolutely one person could do it but what we're typically seeing is this is an organized crime ring activity. These are individuals that come in from Venezuela and Mexico and they work in groups. So, we typically have two or three individuals working together in any one attack. We have what we call the cash mule and that's the person that shows up at the ATM and their job is simply to be at the ATM and to take the cash out of the ATM, put it in a bag and then leave.                                                                               We have another individual called the tech and the tech is the technical person who arrives at the ATM prior to the cash mule. And what their job is, is to analyze the ATM to determine how the ATM's configured and then determine what the appropriate tool or technique is to use to jackpot that particular ATM. We also have what we call the operator. The operator is the person that, in some of the attacks, needs to authorize the software prior to it being able to be used at the ATM. They're typically remote and typically they're called on a cell phone to give the access codes to activate the software. And then what we've been seeing recently is we have what we call a surveillance team.                                                                                 In much the same way that you would think about spies and counterspies working with or against each other, these are individuals that show up and while the people are physically at the ATM doing whatever they're doing, they're a little bit away from the actual scene and they're watching what's going on at the scene. They're watching what's happening around it. So if a consumer were to drive up to the ATM or if a police car were to pull in the parking lot, it's this person's responsibility to tell the other people that are at the ATM, hey, there's a police car coming, hey there's a customer coming, you need to leave and then they're watching the scene once they're gone. They say okay, the coast is clear, come on back, you can continue your job. Amy Lombardo:                07:33                     Wow, that sounds quite complicated just to get notes out of an ATM here. Is a jackpot attack, is it a one and done or could you go and, based on the amount of notes that the ATM can dispense at a time, or is that the way it's hacked, so it just that threshold is completely removed, and it'll just empty the ATM at once? Scott Harroff:                     08:03                     Again, there's a variety of different techniques that we've seen used. One of the techniques would require the person to use what we call a black box and if they were using a black box they'd physically gain access to the inside of the ATM to disconnect the dispenser from the CPU in the ATM then connect it up to the black box and the black box would send some commands to the dispenser and if the dispenser wasn't configured correctly, that would start the dispenser into a cycle of continuously dispensing notes. So, you have the ATM physically opened, out of service, with a black box connected and it's pretty much go as quickly as you can, get as much as you can and if somebody's interrupting you, you just take your black box and cash and you leave. The ATM is left in an out of service situation so that would be one approach in one extreme, if you will.                                                                                 The other side of it would be where software is used to actually put the ATM into a mode where it can be switched into and out of service. So, the software would be able to be controlled remotely. You'd use something like a wireless USB dongle that would provide keyboard and mouse functionality and then the tech would be somewhere in the parking lot or in near proximity of the ATM and they'd be sending commands ... okay, dispense your cash and that would start. The cash mule would start taking all the cash out of the ATM and then the technician would see somebody pulling up behind the cash mule and then send commands to the ATM ... go back in service and now the in service screen would appear, the consumer would use the ATM, it'd look completely normal, it would provide them exactly the transactions that the consumer wanted and then the consumer drives away. The cash mule comes back and then the technician remotely says, okay, I want you to start dispensing cash again. And again it starts dispensing.                                                                                 And we've actually had video from customers where the person that's at the ATM doing the cash removal had been interrupted three or four times and as consumers came up and used it, it looked normal. Cash mule came back, did their thing, another consumer came up, the cash mule left and again, the consumer comes back. We've actually seen it go through cycles where they'll spend over an hour being interrupted and getting the cash out of the ATM while other people are there using the ATM. Amy Lombardo:                10:24                     Wow. So these criminals are pretty daring in those types of examples that they're going back and forth there. Scott Harroff:                     10:32                     Actually they're really, really daring. We've got one example out in California where the folks jackpotting the ATM were actually in a big box retailer. So, imagine that, you're right at the ATM, right in front of the entrance, and right over your shoulder to the right hand side is all those cash registers, all those customers checking out, all the store people operating the cash registers and you know, somewhere there's all these cameras that are watching for shoplifters and things and in the middle of all that, we had a group of individuals literally jackpot the ATM while the store was open and all that was going on. So, yeah, really bold and daring. Amy Lombardo:                11:15                     All right, I don't know if I can say this on this podcast but that's a little [inaudible 00:11:20] there. I mean, my goodness. Scott Harroff:                     11:24                     Yeah. And you know they're not wearing masks, they're not wearing disguises. It's like you and I just walk up to an ATM and pretend we're technicians servicing the ATM and take all the cash right there in front of all these people and all those video surveillance things going on so, yeah, it's pretty aggressive sometimes. Amy Lombardo:                11:44                     All right, so listeners, just for the record, don't look up Scott and I and look what we look like on LinkedIn, and think we're going to be jackpotting ATMs. All right, let me get back to my questions here. I've got a lot here for you. You mentioned some examples here in the U.S., but are we finding these attacks all over the world because I could have sworn a colleague mentioned to me once that maybe jackpotting even started in Russia or am I just thinking of something totally not related? Scott Harroff:                     12:18                     No, you're actually correct. No, you're spot on. It's a global thing. It's been going on for many, many years. It's relatively new to the U.S. We actually have a security alert from one of our competitors that they published in the 2016 timeframe warning their customers that their ATMs were vulnerable to these attacks. Our first record is competitors ATMs being attacked in 2016. We actually didn't see anything happening on our equipment until the 2017 timeframe and then they were in the U.S. hitting large ISO, an ISO is a deployer of ATMs for a third party. So, if you didn't want to own and operate your own ATM, but you wanted to have your logos on the ATM so your consumers could use them, that's what an ISO is. They deploy ATMs on behalf of somebody else. They focused in on this ISO pretty heavily from the spring to the fall of 2017 and then once that ISO did a good job of counteracting the vulnerabilities on their fleet, the bad guys were forced to expand out and go after other folks' ATMs. So, that's when we started seeing it move off that ISO on to other customer's ATMs and at that point we started sending out security alerts, doing customer awareness training and letting them know, hey, if you haven't done A, B, C, D, F, G to protect your ATMs, it's a really good idea to start working on that right now. Amy Lombardo:                13:45                     Got it. Are there certain types of ATMs or maybe even locations that they're at that seem to be more vulnerable than others? Scott Harroff:                     13:56                     You know, that's a really good question. The commonality here is ATMs need to have up to date firmware, up to date software, up to date configuration settings and good physical security. So, theoretically any ATM running what's called XFS, XFS is the middle ware layer that sits at the operating system level and it kind of acts as the intermediary between whatever your terminal software stack is like Agilis or Vista or pick your software stack and the operating system. It kind of translates what the terminal software stack wants to do and the commands for the devices. And that's an open standard, it's published on the internet. So, if you could use this uncommon tool called Google and you did a search for XFS specifications ... Amy Lombardo:                14:51                     What's that? Scott Harroff:                     14:52                     Never been there. You could actually Google for the XFS specifications for the dispenser and you could find out what you need to do in order to tell XFS how to operate the dispenser. Or, if you're a little bit more lazy and a little bit less creative, you could actually Google for applications that do test dispenses on the internet and then that would actually give you the actual software itself to interact with XFS and to make the machine dispense cash. Any ATM running a common software layer called XFS is theoretically vulnerable to this. Now, if you've got XFS up to date, firmware up to date, and configuration setting up to date, again, you add layers of defense to protect you and slow the attacker down. But, really almost any ATM running that layer is vulnerable.                                                                                 Then again, you move on to ATMs that might not run XFS, some really low end cash dispensers that you might see in gas stations or maybe convenience stores, they don't run XFS but, again, the attackers have stolen ATMs and have analyzed how they work and then found attacks that work against non-XFS ATMs as well. I would pretty much say any ATM is vulnerable but then we gotta talk about the likelihood of attacking an ATM successfully is. So, if you've got an ATM that's sitting in the middle of a branch and you've got all these branch people around the ATM, the doors are locked from 5:00 at night to 8:00 in the morning, the chance of somebody walking into that branch while all those employees are there and spending an hour jackpotting the ATM and removing handfuls of cash, time and time and time again, really low probability. Could it happen? Yeah. Is it likely? Not so much. So, we'd put those into what we call a low risk category.                                                                                 An ATM that's in a drive up configuration where the key to the ATM's computer is exposed to general public, we'd put that into a medium risk category. An ATM that is on premise, maybe in a vestibule, maybe in a corner of a branch parking lot, again, without good security would be a medium risk. And then a high risk ATM would be an ATM that's off site. So let's say it's in a university, let's say it's in a public building somewhere, maybe it's in a college campus, maybe it's in a gas station or a convenience store. Those are high risk and, again, the highest risk would be an ATM that would, believe it or not, be in a shopping mall. We had a lot of attacks occur where an ATM was literally on site in a shopping mall with all those people moving around the ATM, the jackpotters right there jackpotting the ATM. So, from lowest risk to highest risk, that's kind of what we've seen here in the U.S. Amy Lombardo:                17:44                     Huh. Okay. Yeah, you would think it would be the other way around with the shopping mall example but in reality you're not, as a consumer, looking for that. You're going on with your day to day activities. Are ATMs the only system or device that can get jackpotted? Could a kiosk that dispenses money be vulnerable to this? And I'm thinking back to the grocery store example that you gave me earlier on. Scott Harroff:                     18:17                     Absolutely. Any device that has a reward whether that reward is I get cash or whether that reward is I get credit card data that I can then sell on the dark web or I can use myself to clone cards and go redeem by using a stolen pin and a stolen card number somewhere else, any device that has value to organized crime or an attacker would be subject to these attacks. Amy Lombardo:                18:44                     So, jackpotting is not just getting some sort of notes out of an ATM, it ... to your point here, it could be data as well. Am I understanding that right? Or did I just take you down a rabbit hole? Scott Harroff:                     19:01                     No, so jackpotting, in the way we're talking about it, typically occurs at ATMs. That's the way that the media has been presenting this. This is the way all of the experts have been talking about it. When they say jackpotting these days, what they typically mean is somebody at an ATM stealing cash from an ATM but you could take the concept and extend it. You'd have to be pretty brazen but what if I were to somehow put malware onto a casino's gaming machine. What if, as opposed to getting cash out, what I do is I get a jackpot on my casino machine and it just gives me all the coins that are in there. What if somehow I manipulate that into sending the signal back to the main system that says person at this machine just hit the jackpot and they won the $5 million dollar grand prize. You could extend this concept into a lot of other areas but typically it's around ATMs. Amy Lombardo:                20:01                     And in that instance, consumers, anyone who's listening Scott Harroff will be visiting Las Vegas in two weeks. Just kidding, just kidding. All right, let's shift the conversation into talking a little bit about preventative measures and what a financial institution can do to be the most prepared for these types of vulnerabilities. Can you just walk us through steps a bank should take and really that process, how complicated it could be or maybe not? Scott Harroff:                     20:41                     Sure, absolutely. The first thing I want to bring about is that there's a lot of different scenarios that can lead up to a jackpot, a lot of different techniques, a lot of different tools. One of the biggest misconceptions is some institutions that haven't had an in depth discussion, they kind of think a jackpot is a jackpot. It really, really isn't. There's many different vectors that could lead up to a jackpot scenario. You could remotely get into an unprotected ATM across the network and jackpot it, for example. But most of the time it involves being physically close to the ATM. Again, we have some attacks called man in the middle attacks and what that means is somebody gets between the ATM and the host and they, on the network, change the traffic, so the ATM thinks that the host is telling it to do things that the host really didn't tell it to do. So, that's a remote attack as well.                                                                                 It could happen at the host, it could happen between the host and the ATM or it could actually happen on the network cable that goes right into the ATM itself so, that's an attack that has a proximity kind of affect to it. But the most common attack is an attack that involves getting into the computer area of the ATM. If you have an ATM that is, again, in a branch lobby chances are no one's going to go in there and try to jackpot that machine. They're going to look for something's that's maybe a little easier, maybe a little less risk. An ATM that has a lock that's exposed to the general public, if you will, is really the first main indicator of an ATM you should be concerned about and especially if that lock hasn't been changed from the factory configuration.                                                                                 So, if your ATM has exactly the same lock as your bank, or your credit union down the street who's a competitor, you know, you're probably vulnerable because, well, if the key that opens your ATM opens 20 or 50 or 100 or 1,000 other ATMs from competitors around you in the state, that's really the first major weakness that they look for. Today if they show up and they put the key in and the key doesn't turn, you know maybe they could pick it, maybe they could force it open but what they're really looking for most of the time in the U.S. attacks we've seen so far is an ATM where the lock is just in the factory configuration. You put a key in you can buy off of eBay, for example, you turn it and it opens. That's the first step. The second step is really, what if when I open that door an alarm goes off. What if I now think that for whatever reason, I've just tripped something, am I going to stay there when an alarm's going off and try to perform this jackpot? Probably not. Maybe I'm really, really aggressive and I do but chances are, if the top hat were to open and an alarm were to go off, the bad guy's probably going to leave quickly.                                                                                 Having that alarm there, if you open the door and if you don't put in, for example, a four digit disarm code to turn off the alarm and the alarm starts going off, that's another layer of protection that would prevent the bad guy from probably staying there and jackpotting it. And then the next step is making sure that the ATM software stack is up to date. Making sure that the communications between the CPU and the dispenser are appropriately configured. Making sure that all of the different details around the software security and the configuration of the ATM are up to date, those things all added together can either significantly slow down the attacker to the point where they're probably not going to get any cash or only a little bit before somebody shows up to intercept them or maybe prevents them all together. Those are the kind of things you really want to do is adding these layers of physical security and information security controls to the ATM to make sure that you've really slowed somebody down or you've stopped them all together. That would be what I would be looking at doing. Amy Lombardo:                24:48                     Got it. And is there a way that a financial institution can actually tell when this might be happening? Is it just as simply as what you were talking about, an alarm going off? Or is there some sort of software that they can actually tell? Scott Harroff:                     25:07                     Actually the physical security of the top hat area and the chest, having sensors that noticed that somebody's doing something they shouldn't be doing is a really good first layer of defense but as you pointed out there's also software on the ATM that could notice that something's occurring that's not normal. For example, my dispenser was unplugged from my CPU. Well, how many times does a dispenser disconnect itself from a CPU in a normal ATM? It really doesn't so if you have software that watches for that, that could be a detection mechanism that says hey, I want to now respond to this or another good example might be how often does your hard drive physically unplug itself from an ATM while it's up and running normally? Well, the answer is it doesn't ever disconnect itself while the ATM is up and running normally. So, again, having software that watches for something like that would aid you in detecting that something unusual is occurring and you probably want to have your physical security people log into their cameras or DVR's, look to see what's going on or maybe even send an alert to a security monitoring system so that a third party could actually respond on behalf of the bank and send somebody out to check out the ATM. Amy Lombardo:                26:23                     Got it. As we close out the topic for today, what did I miss, Scott? Is there other recommendations that you would give here or, really, I didn't miss anything. It's really you. Anything else that you would just add to this conversation of just kind of in closing here? Scott Harroff:                     26:42                     Absolutely, I think one of the things that most financial institutions in the United States haven't really done a thorough job of yet is assessing their fleet and really looking at them from the perspective of which of my ATMs are at the highest risk. Which of my ATMs are not at risk at all? And then looking at those ATMs and saying okay, this is a high risk ATM, which vectors would work at my ATM and basically doing an internal analysis of how could my highest risk ATMs be attacked. What do I need to do with my ATM vendor to try to now counter these different attack vectors and make my highest risk ATMs as secure as they can be from these attacks? I really think that we've got some financial institutions that have done a very good job of assessing their fleets. They've done a good job of remediating their open vulnerabilities but I think there's far, far too many customers out there that haven't gone through and done that work and they're actually still vulnerable to these attacks when the bad guys come back next time. Amy Lombardo:                27:52                     Okay, okay. So, obviously that would be our plug there to talk to someone like yourself or an account rep at Diebold Nixdorf to get more information. Scott Harroff:                     28:04                     Yeah and again, this isn't really a Diebold Nixdorf problem although our ATMs, if they're not properly set up and configured and protected, they are vulnerable. NCRs are vulnerable, your Tritons, your Tranaxs, those other ATMs are vulnerable as well. Again, I just want to make sure we close with this, this isn't really a Diebold Nixdorf problem although this is a Diebold Nixdorf doing the podcast. It's really an industry challenge and everybody needs to be diligent. As long as you own a machine, that's loaded with cash, you need to be concerned about this risk. Amy Lombardo:                28:37                     Yeah, that's a great point and a great way to close this. So thanks, Scott, for being with me here today and to our listening for tuning into this episode of Commerce Now. To learn more about jackpotting or how you can better defend your ATM fleet against evolving attacks, log onto DieboldNixdorf.com. Until next time, keep checking back on iTunes or your favorite podcast listening channel for new topics on Commerce Now.