Banks to be hit with Microsoft costs for running outdated ATMs

Fri Mar 14, 2014 10:57am EDT
 
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By Matt Scuffham and David Henry

LONDON/NEW YORK (Reuters) - Banks around the world, consumed with meeting more stringent capital regulations, will miss a deadline to upgrade outdated software for automated teller machines (ATMs) and face additional costs to Microsoft to keep them secure.

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.   Continued...

 
A man walks past automated teller machines (ATMs) outside a HSBC bank in London March 13, 2014. REUTERS/Suzanne Plunkett