‘The US has been building and installing ATMs for thirty years. I think India will do it in half the time.’ – Lars Nyberg, Chairman and CEO, NCR Corp

Chairman and

talk-2.JPG (9935 bytes)In the
latter part of 19th century, a company called National Cash Register was founded in the US
to manufacture, well, cash registers. A century later it was acquired by AT&T but
later spun off as NCR Corporation. Today, the $6-billion megacorp dominates the customer
transaction segment of the financial industry, with leadership status in automated teller
machines, value paper scanners and industry-related datawarehouses. Lars Nyberg, Chairman
and CEO, in an exclusive interview with DATAQUEST during his first visit to the country,
reveals searing visionary statements about underlying technologies and his riveting
perspectives on the yet-to-unfold Indian market.

How would you describe your global
strategy for competitiveness?
Our strategy is clearly to sell to businesses. We want to provide them with total
solutions, which include hardware, software and services. The solutions are in the area of
what we call consumer interactive devices for the financial retail business particularly.
All those devices create transactions and all of them are connected to datawarehouses,
which turn those transactions into relationships. By using the data, feed it back to treat
you as an individual through your specific needs-that’s the overall strategy of the

Can you portray the core competency
of your company?
All the solutions that we offer need to have core technologies included either in
the hardware or in the software. That is the difference between a solution provider and a
systems integrator and we are clearly the solution provider. The core technologies that we
own and are very good at makes a difference to the competition. [The first of] these are
dispense mechanisms-to dispense off value paper like notes and airline tickets. The second
is scanning technologies, which is an important technology for automating solutions. And
the third is datawarehousing, which includes the massively parallel architecture both for
software and hardware. Those are three examples of core technologies that are absolutely
crucial for our organization.

What is your future vision for the
Exactly what I said in the beginning. Our vision is going to hold for at least
five years. Guaranteed! We will add a bit to it and we will adjust as technology becomes
available. To serve the consumer as an individual consumer is going to be the key strategy
for any of those industries for many, many years.

What are the enabling technologies
for deployment of NCR solutions?
Well, you know, we have a board of directors like anybody else in the US. One of
our directors is CK Prahlad. I worked with CK on the strategy and vision of our company.
CK wrote a very interesting paper-The End of Corporate Imperialism-about two months ago.
It says that corporate executives in the Western world should got to emerging markets, not
to tell them how to do business, but to see how those people are doing business and learn
from it. And go back and implement that in the Western world. And I think he is right. Let
me tell you he has a point. If you look at the financial industry in India, it is really
opening up. They [the industry] don’t have the legacy of the Western world. I think they
are going to deploy self-service ATM equipment in another way than the Western world. And
if they do, maybe that is a lesson for the Western world. That is also the reason why I am
here: To understand how do you serve a billion people with cash-[and] how do you implement

What are the solution areas that
NCR competes in?
It is self-service in banking or branch automation-we call it channel delivery
systems in the financial industry; switching; imaging payment systems-check handling and
clearing; datawarehousing for the financial industry as a specific solution; store
automation and retail; datawarehousing for the IT industry; datawarehousing for national
accounts in terms of yield management for the communication industry. And then we have a
solution called ‘network high availability.’ Every solution has core technologies
included, except the last one. This is really based on partnerships with Cisco and other
companies. The reason why we do that is because, maybe not so much in India, but in many
other countries, we have a huge infrastructure service. This includes maintenance people,
installation people…and they need those kinds of companies. This is a vast opportunity.

How do you perceive the Indian
The reason why I am here is the billion population of this country. This is a big
portion of the world market. There is a very clear middle class here. So I think the
opportunity is huge. The question is, when will it happen, how long will it take? I wanted
to come here to meet my own people, to meet customers, to meet politicians, to get a feel
of how quickly India will take to really start growing. For me, there is no
discussion…this [the market] will explode. No mistake! Two years, five years, 10 years
or 20 years-I don’t know the answer [when]. We are working here in India not for a short
term or short profit. You stay for decades. But I also got to make some money in that
process. I want to see this guy [Rajen Kaul, Managing Director, NCR India] and I want to
talk to him about how much money can be put into India and still make money. Because India
is one of the five countries that we have identified as emerging…

Which are the other four?
China, Indonesia, Brazil and Russia-and you can laugh about Indonesia! But I
haven’t changed my mind about it. Yes, it would take longer because of the problems, but
Indonesia is the fourth largest country in the world.

Are slow reforms in the financial
industry and consumer mindsets going to limit the penetration of NCR products?

I don’t know. I don’t see a big difference in India compared to other countries. Yes, I
know it’s only about 508 ATMs installed. But I am absolutely convinced that Indians are
going to ask for ATMs. Yes, there is a learning curve and we had a learning curve in the
Western world, 25 years ago. I am not too sure about the `x’ number of years. The question
is, what is the `x?’ Is it three years, five years or seven years? But `x’ number of years
down the road there are going to be literally thousands and tens of thousands of machines
installed in this country. And a big portion of the population of India are going to use
ATMs as naturally as anybody else. I am just not totally sure how those machines will be
specified. I think it will be a bit different from some of the machines of the Western
world. I think the situation will be that a huge amount of machines will be installed in a
real short period. That is different from the US. The US has been building and installing
ATMs for 30 years. I think India will do it in half the time.

Are you saying that NCR products
will have a different form in India?
I think it’s very important to keep the cost of the machine low-to allow rapid
deployment by the banks. I think you will have both ends. I think you will have really
simple machines. I also think some of the banks are going to have fewer, very advanced
machines. So I think you will have a spectrum. And the mix of the spectrum will be
different in India than, say, for Europe.

What is the strategy for India?
The strategy for India is not going to be different from the rest of the
countries. I do think that in India we will start with more emphasis on the consumer
interactive devices-the ATMs first. And the datawarehouses come second. And that’s exactly
what happened in the Western world as well. We didn’t have datawarehouses five years ago,
but we certainly had ATMs.

How do personal ATMs, public ATMs
and smart cards fit into your technology vision?

The technology is there. You can load electronic cash onto the smart card. Actually, our
ATMs are doing that in some countries. Then, of course, if you want to use that, you will
have terminals at every point where you can possibly pay with cash. I think electronic
cash will increase. Will it replace normal cash? No way! For the past 25 years, I have
heard that checks will disappear. Check volume in the world is still growing by 3%. Cash
has a couple of very interesting advantages. I think the fact that it is totally anonymous
is one of them. Alan Greenspan made a speech about six months ago, arguing that cash will
never ever disappear. I don’t think cash ever will disappear. I don’t come across to say
that electronic cash won’t make it. I think electronic cash will be another form of
payment. It’s strange. We seem to be adding things all the time. I will give you an

About ten years ago in Europe and the US,
there was a big debate about the [bank] branches disappearing, because they would all be
self-service. No branches! Then about 3-4 years ago, people said no, no, no, self-service
will disappear. Now, it will all be electronic commerce, PC-home banking, internet
banking. The truth is that you now have multiple channels to do banking. You can go to the
local physical branch, you can go to the ATMs-there are more ATMs in the Western world
than ever before. You can do internet banking today, which you couldn’t do a couple of
years ago. You can do telephone banking, which you couldn’t do a couple of years ago. It’s
all about convenience. You as a private customer want convenience. You are the king! You
want to do the business, when you want to do it, where you want to do it, the way you want
to do it. And if the bank is not giving you that flexibility, then you have to change to a
bank which does. So my argument is that cash will be around big time and electronic cash
will also be around. Big time? I don’t know. We will see. Maybe.

How does your datawarehousing
technology integrate with other NCR products?

Every consumer interactive device, whatever it is, whether it is an ATM or a telephone,
[makes a transaction and] we want that transaction to be recorded into the datawarehouse.
An ATM generates a transaction; the terminal in the branch generates a transaction; the
telephone when you call in to the bank generates a transaction-they all feed into the
datawarehouse. We have a specific datawarehouse solution for the financial industry. My
bank now has data-where do I withdraw money, which ATM, from which bank. If I continuously
withdraw money from another bank’s ATM, that’s a clear sign that I might be leaving the
previous bank. Many banks in the US recruit 20% new customers every year. They also lose
18%. Can you imagine the cost to recruit 20% new customers every year and lose 18% and
make only a 2% increase? If you can reduce that 18 to 10, you would have five times more
customer growth than you had earlier.

In India we are trying to get the
ATMs onto a common network. Is it the same model in developed countries?

Not always a single network but couple of networks…

…Is that the way things are
supposed to progress here also? As you deploy ATMs you also network them.

Well, that’s a decision for the bank to take. I think it is likely that you will have
networked ATMs with fees for non-banking customers. What is important is that the primary
bank gets the information about you as a customer. If you bank with me and you have to go
to a competitor’s ATM, that information about what you are doing is mine. I say nobody
else should have it. That information I don’t want to share with my competitors. Yes, I
think they will be networked but I think the information will be proprietary to your bank.

NCR was very early in endorsing
Windows NT for high-end applications like datawarehousing. What was the idea of such an
early move?

NCR was very early in adopting open systems. You might not remember this-I didn’t work for
the company then-but there was a hardware box [from NCR], called Tower. It was one of the
first mid-range computers which utilized Unix. So we were very early adopting Unix, we
were very early adopting Intel, and it was very natural that we would be early in adopting
NT. The underlying argument is if you look at hardware operating systems, these have
become commodities. We have no ambition trying to create an operating system, a unique
operating system. That battle is over. So what we do is look around and see what is the
best in the marketplace. That’s why we went to NT. We see only two operating environments
for the foreseeable future. One is a flavor of Unix, which we think-and we have made our
point very clear-is Solaris, and the other will be NT. Those are the two operating systems
we think people will have for the next five or six or seven years. So we have said, Okay,
we will use those two and build our value on top of it.

Does NCR compete in the airlines
market segment, which is also a high value product industry?

I think three of the five major airlines in the US use NCR for datawarehouses. My argument
is that airlines is a very important segment for datawarehousing. Loyalty programs, which
is another application for datawarehousing, is exactly what the airlines do and has the
same, absolutely the same, kind of functionality that the frequent flyer kind of program
has. So we are competing in airlines in datawarehousing. We have no ambition to sell other
things to them, unless we find the possibility to sell them ATMs, the dispense systems. We
are very good at dispensing paper. We can dispense notes and airlines tickets.

What is your plan for investments
in India?

I quite often get this question. And I say: Will you specify what you mean by
‘investments?’ And, everytime, they say ‘build a factory.’ The factory I think is not the
key issue. We are a solutions company. We will invest in training, we will invest in more
people. We are actually outsourcing a lot of software development, nothing to do with NCR
India, into India. I just met a person here who has 64 full-time employees that do nothing
else but help our retail business develop software. And for our datawarehouse technology,
which is a leading-edge technology, some of the porting development to NT is being done
here in India-not under the banner of NCR. That’s the kind of investment you will see us

Are you planning more of software
development outsourcing or are you planning to set up a development center?

That was one of the questions I came to India with. I got to go back now and talk to the
business units. Should we outsource or should we actually do it under our own name? I
don’t know what the answer is. I know for sure we are very happy with the performance of
people in India. Do we need to own the company? Maybe. We have some very good partnerships
in India. I don’t want those people to believe they are going to lose their business. I
want to be a little careful.

Who are your existing development
partners in India?
We have five partners for software development for global deployment: Infosys,
HCL Technologies, Satyam, Futuresoft and Wipro.

What are the similarities and
dissimilarities between India and China from NCR’s perspective?

Both are great opportunities. The pace is different. China moves more as one group of
people. They go to the right-they all go to the right and they go pretty fast. They also
go back pretty fast. India goes at a slower pace, [is] less volatile. That’s my

How has this translated into
business in China?
China was very quick in pushing us to invest in self-service machines. We are the
#1 in China. We have thousands of machines installed in comparison to the five hundred in
India. We have a joint venture and a manufacturing facility and that’s a difference. Do I
think India could have even more ATMs installed at a certain point in time than China?
Yes, I think so. In how many years? I don’t know!

Easwaradas SatyaN
and Arun Shankar,
in Mumbai

Leave a Reply

Your email address will not be published. Required fields are marked *