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 The U.S. software company first warned that it was planning to end
support for Windows XP in 2007, but only one-third of the world's
2.2 million ATMs which use the system will have been upgraded to a
new platform, such as Windows 7 by the April deadline, according to
NCR, one of the biggest ATM makers.
To ensure the machines are protected against viruses and hackers
many banks have agreed deals with Microsoft to continue supporting
their ATMs until they are upgraded, extra costs and negotiations
that were avoidable but are now likely to be a distraction for bank
executives.
"There are certainly large enterprise customers who haven't finished
their migrations yet and are purchasing custom support," a spokesman
for Microsoft said, declining to name those customers or to quantify
the extra revenue it is earning.
"The cost will depend on both the specific needs of the customer and
what support they already have in place, so it's different for every
customer."
Britain's five biggest banks — Lloyds Banking Group, Royal Bank of
Scotland, HSBC, Barclays and Santander UK — either have, or are in
the process of negotiating, extended support contracts with
Microsoft.
The cost of extending support and upgrading to a new platform for
each of Britain's main banks would be in the region of 50 to 60
million pounds ($100 million), according to Sridhar Athreya,
London-based head of financial services advisory at technology firm
SunGard Consulting, an estimate corroborated by a source at one of
the banks.
Athreya said banks have left it late to upgrade systems after being
overwhelmed by new regulatory demands in the wake of the 2007-08
financial crisis.
"They were probably not very serious about the directive that came
in from Microsoft. There's a lot of change going on at these banks
at this moment in time and they would have seen Windows XP as one
more change," he said.
Windows XP currently supports around 95 percent of the world's ATMs.
About 440,000 — or one-fifth of the world's ATMs — are located in
the United States and many of the banks operating them will still be
running their ATMs with Windows XP for a while after the April 8
deadline, said Doug Johnson, vice president for risk management
policy at the American Bankers Association.
"One thing in our favor is that XP is battle-hardened," Johnson
said. "People will benefit from years of fine-tuning of XP...It has
been through wars."
STAND IN LINE
The queue of banks waiting to upgrade means there aren't enough
people to do the work.
"There is a little bit of a bottle-neck," said Johnson.
Some banks are using the upgrade as an opportunity to introduce new
features to their ATMs such as being able to read cards that have
microchips rather than magnetic stripes. Banks in the United States, where the old-fashioned swipe and sign
magnetic stripe credit cards are still in use, have to upgrade their
ATMs to read chip cards.
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JPMorgan, which has 19,200 ATMs, will start converting its machines
to Windows 7 in July, with a goal of finishing by the end of the
year. With the change, JPMorgan expects to improve data encryption
and ensure machines take software upgrades more efficiently and be
offline for less time.
A spokeswoman for the bank declined to say how much JPMorgan is
paying Microsoft for the extended XP coverage.
Bank of America also said it would ask Microsoft to extend support
for its machines still running on Windows XP.
Citigroup Inc, which has more than 12,000 ATMs worldwide, said it is
in the process of upgrading its machines from XP and declined to
give further details.
In Britain, RBS, which has been hit by a succession of IT problems,
has agreed a fee with Microsoft in return for it continuing to
support its 9,000 ATMs for up to three years, a source familiar with
the arrangement told Reuters.
RBS will begin upgrading its ATMs to run on Windows 7 next year and
expects to complete the process within three years, the source said.
The investment is part of the 1.4 billion pounds each year which new
Chief Executive Ross McEwan has committed in order to improve the
bank's computer systems.
McEwan admitted in December that RBS had neglected its technology
for decades.
Lloyds said it had agreed to pay Microsoft an undisclosed amount to
extend support until 2016 while it upgrades its 7,000 ATMs. The bank
will start upgrading its ATMs later this year.
HSBC, which has 3,200 ATMs, said it was two years into a three-year
programme of upgrades which it expects to complete next year. It had
also reached a deal with Microsoft.
Barclays, which has 4,300 ATMs, said it was still negotiating with
Microsoft while Santander UK, which has 2,370 ATMs, said it had
already agreed a deal.
($1 = 0.5982 British pounds)
(Additional reporting by Bill Rigby in
Seattle and Peter Rudegeair in New York; editing by Carmel Crimmins
and Elaine Hardcastle)
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