Banks set December deadline for full ATM polymer-readiness

The Jamaica Bankers Association, JBA, has not put a cost on the ongoing job of deploying new machines and technology for handling the polymer notes released by the Bank of Jamaica, but says the banks are feeling the sting.

It’s said to cost up to 80 per cent more to procure smart banking machines with the capability to process the new bills, plus the banks have had to hire outside experts to do the reconfiguration and deployment of machines after their efforts to do the work in-house fell short.

The network upgrades under way are said to have two layers: reconfigurations or upgrades to some machines in the network; and replacement of some with iABMs, or intelligent automated banking machines.

“iABMs are new technology and expensive,” said a JBA representative. “The cost is US$125,000, while older machines are in the US$70,000 range,” the person said.

In all, the network of ATMs and ABMs in operation nationally is just shy of 890, and while the banks have given themselves timelines ranging to December to get all of the reconfigurations done, it’s mainly to the degree where the ATMs can facilitate withdrawals.

Already, the majority of the ATMs in existence across the banking sector are capable of dispensing the new notes, but less than half of the targeted machines are ready to accept cash deposits.

Information for this story facilitated through the Jamaica Bankers Association puts the network’s state of readiness for withdrawals at 80 per cent on average, but only 44 per cent for deposits of the new polymer banknotes. The information dates to September 11 and covers seven commercial banks and one mortgage bank or building society.

Put another way, up to September 11, a fifth of the ATMs across Jamaica still couldn’t facilitate withdrawals of cash, while more than half of a subset of the machines are incapable of accepting deposits of the notes.

It’s been 10 months since the Bank of Jamaica launched the revamped series of banknotes that were developed on polymer substrate. That material was said by the central bank to be more durable and likely to save on the cost of replacing bills in the future, due to the expectation of less wear and tear on the current stock of notes.

Printed by De La Rue, the banknotes are in denominations of $50, $100, $500, $1,000, $2,000 and $5,000.

However, the new polymer notes weren’t technically compatible with the network of ATMs across the banking system, forcing the banks to invest in upgrades to facilitate transactions involving withdrawals or deposits of the new money.

President of the Jamaica Bankers Association Septimus ‘Bob’ Blake says the banks are advanced in their preparation for the new polymer notes, but that the costs involved have been wide-ranging and steep.

They’ve had to invest in new fraud-detection technology and new machines, and training of staff and service providers on how to handle the polymer notes and maintain the upgraded ATMs, while juggling other challenges related to budgeting for the upgrades, supply chain delays and limited availability of technical services, he said.

“Polymer notes have advanced security features that require specialised equipment for authentication and counterfeit detection. Our banks will have had to invest in additional security measures to align with the new protections against fraud and counterfeiting,” says Blake, who is also CEO of National Commercial Bank Jamaica, the country’s largest bank.

“Security is being addressed in collaboration with the central bank,” he told the Financial Gleaner.

The time taken to upgrade ATMs has varied from bank to bank, depending on the complexity of the job, and the availability of resources.

The banks with smaller ATM networks and fewer complexities were able to complete the upgrade process as of July 21, the JBA president said.

“The larger banks with more extensive networks are projected to complete the process by December 2023,” Blake added.

Completing the process doesn’t mean that all 886 machines across Jamaica will be able to facilitate all types of transactions using the polymer notes. Rather, it’s about ensuring that the ATMs can at least dispense the new notes when persons make cash withdrawals.

To date, 705 machines, or 80 per cent of the network, can dispense the new notes. But the banks only intend to facilitate deposits at 401 of them and so far, 177, or 44 per cent, of those machines are deposit-ready.

By December, the expectation is that all 886 machines will be able to facilitate withdrawals and the targeted 401 ATMs earmarked for deposits will be onboarded.

The Bank of Nova Scotia, which trades as Scotiabank Jamaica, operates 292 machines, of which 227 can dispense the new polymer notes. None are able to accept deposits of the new bills, however, but the bank is looking towards an October deadline to complete the upgrade of its network. At that point, it expects to be at full capacity for withdrawals and have 114 machines ready to accept cash deposits.

“BNS explained that for intelligent ABMs, the notes have to be fed one by one into the machines and are individually read, which affects the speed of testing, configuration and validation,” said a JBA representative.

NCB, with 300 machines, is at 99 per cent readiness for cash dispensing. Some 296 of its machines facilitate withdrawals, but only 106 machines are able to accept deposits of the polymer notes currently. However, the bank intends to have as many as 134 machines configured for deposits and all 300 for withdrawals by December.

Blake said neither the existing ATM hardware and software configurations are compatible with the new polymer notes, while indicating that the network required deep adjustments, and the work often disrupted service at the ATMs.

“Some banks had to modify or replace various components within their ATMs, including bill validators, currency cassettes and software systems,” he told the Financial Gleaner.

“Technical glitches or incompatibilities were particularly impactful at one of the two major banks during attempts to ‘remote update’ their ABM fleet,” the JBA president said.

To speed the up the transformations, different banks have turned to tech vendors to handle the upgrades. Three of those companies were said by JBA to be Beryllium, Diebold and a PBS-led consortium.

“Some of our members tried to remote deploy. It didn’t work for all banks. Some pivoted and used manual [processes], asking Beryllium to locate and work on them,” said the JBA representative.

NCB and Scotiabank are Jamaica’s largest, accounting for 62 per cent of the banking market. Between them, they also operate two-thirds of the ATMs installed throughout the country. The other one-third is controlled by CIBC First Caribbean International Bank Jamaica, JN Bank, JMMB Bank, Sagicor Bank, First Global Bank and VM Building Society.

FirstCaribbean’s ATM network is at 48 per cent readiness, with 19 out of 40 machines having the ability to dispense the polymer notes, while 17 can accept deposits. The bank has said it is at 100 per cent for deposits since it only plans to utilise 17 machines for that purpose.

JN Bank operates 143 machines, of which 43 per cent, or 62 of the ATMs, can now dispense the polymer notes, but none are able to accept deposits. However, the bank has indicated that only 81 of the ATMs have been slated for deposits, and those are also expected to be configured by December.

JMMB Bank has 15 machines, including 14 smart ATMs.

“Twelve of the bank’s 14 smart ATMs have been configured to both dispense and accept the new polymer notes. The two ATMs which currently do not dispense or collect the new notes required additional upgrades, the scope of which fell outside of the bank’s intended launch date at this time,” JMMB Group’s General Manager for Digital Services, Gifford Rankine, told the Financial Gleaner, when asked to clarify the deliverables. Eventually, the bank will bring all the machines up to speed.

One of JMMB Bank’s machines is configured only for dispensing cash, and won’t facilitate deposits. It’s among the machines that currently facilitate withdrawals, but Rankine said the ATM only dispenses three of the polymer banknotes: the $2,000, $1,000 and $500 bills.

Sagicor Bank has reported 100 per cent project completion with 43 ATMs ready to dispense cash. None can facilitate deposits at this time, however, but it will be tackling that element of the upgrades later. It will be rolling out iABMs on a timeline to be determined, at which point the network will be able to facilitate deposits of the new banknotes.

Jamaica’s second-smallest bank, First Global, has configured 17 of its 21 machines for withdrawals and 13 for deposits, saying it’s at 100 per cent readiness for deposits and 62 per cent readiness for withdrawals.

As for the sole independent mortgage bank, VM Building Society, it has 32 machines but only 87.5 per cent can currently dispense the polymer notes. That equates to 28 machines.

VM will also only be allowing deposits at 28 machines, all of which have already been configured, putting that element of its upgrade at full completion.

“The allocation of resources for software development, testing, and deployment to ensure smooth integration within our local ATM networks was a significant outlay in terms of cost,” said Blake.

The outlays covered testing and certification “to ensure that we had consistency in compliance with our established security and operational standards,” he added. “This is time-consuming and involves additional costs.”

The investment in the retrofitting of the network covered “transportation, installation and logistics for each ATM” at “significant cost”, as well as the procurement of specialised equipment for authentication and counterfeit detection, which is ongoing, the JBA president said.

But as to what those outlays look like in dollar terms, no estimate was forthcoming.

“We are required to adhere to regulatory requirements regarding the acceptance and processing of new currency designs. Compliance efforts like these involve some legal and administrative costs,” said Blake.

“We will be better able to assess the cost-effectiveness of our upgrades when we have completed our roll-out and factored in some items, such as the expected lifespan of the new notes, potential efficiency gains, and so on,” he said.

The upgrades have been disruptive to the network, with machines sometimes being taken offline to facilitate the reconfigurations.

Blake added that the execution of the projects have also been impacted by rampant criminality, as well as lack of access to some of the ATMs; for example, those located in areas that are under construction or renovation, such as major hotels and tourism hubs.

There has been a spate of robberies at ATMs in recent times, forcing the banks to take some machines out of commission and reassess their cash management systems to reduce their exposure.

“The impact of criminal elements on the availability of some machines for use by the public cannot be discounted as a hindrance to our ability to maintain the maximum fleet of usable machines,” Blake said.

As for what will happen beyond December, the JBA says if any machines miss the deadline, remediation work would continue.

Otherwise, the sector wants to move towards full iABM coverage in the long run, but the bankers association says it will take some time to get there.

“ABMs have a long lead time between placement of the order and shipment. They are sometimes ordered years in advance and then configured for local needs... . The ultimate goal is that all will be intelligent ABMs but it may not be possible on a quick timeline. The good news is that there are sufficient machines covering the island.”

avia.collinder@gleanerjm.com