Cloud ATMs: Are They Worth It?

Andrew Froehlich, Network Engineer & IT Consultant | 1/24/2012 | 40 comments

Andrew Froehlich
Did you know that many automatic teller machines (ATMs) throughout the world still run Windows XP, Windows 2000, and even (gasp!) IBM OS/2? Yes, it's safe to say that in many cases, ATM machines have been brushed aside for years as it relates to operating system upgrades and patch maintenance.

But something as critical as an ATM -- a publicly shared device that has direct access to our bank accounts "should" be of utmost importance in terms of IT security. But for one reason or another, the technology seems to have been stuck in the past decade or two.

This has led to major security holes found in out-of-date OS software. Banks and ATM manufacturers claim that the lack of proper OS and security updates is due to the fact that each ATM is its own independent PC. Since the operating systems are so outdated, the only way to perform upgrades is to have technicians physically visit each ATM and manually update software.

To solve this problem, Diebold -- a major ATM manufacturer -- is developing cloud-based ATMs with VMware that move ATM software and operating systems into the back-end network. Diebold claims that this solves not only the system update predicament but also makes the local ATM machine more secure, due to the fact that absolutely no information is ever stored on the ATM itself -- rather, it's stored securely in the cloud. If an ATM was to be stolen, there is absolutely no customer data on the hardware to tamper with.

The logic behind virtualized ATMs seems sound, but I see several major drawbacks that could make ATMs less reliable. For one, a constant high-speed Internet connection is necessary in order to work. Many ATMs still use dial-up connections or low-speed DSL/leased lines. The telecommunications network would have to go through a significant upgrade for the virtualized ATM model to work.

Also, some ATMs can continue to perform cash-distribution functions while they have no connection to the back-end banking system. The transactions get cached locally and are recorded later when the network connection is restored. The new virtualized ATMs would require 100 percent connectivity; otherwise it stops working altogether. Since a virtualized ATM cannot store any information locally, no network connection means no cash. This could be a major problem in parts of the world that still don't have reliable broadband or sub-par telecommunications cabling.

Lastly, the risk of customer data being stolen while being temporarily stored locally on an ATM is very low, in my opinion. While it is true that a handful of countries have a problem with thieves physically stealing ATMs, this type of brute-force action is done only to steal the cash inside and has nothing to do with any data that is stored on the machine itself. Plus, I would sincerely hope that any important customer data is encrypted, and therefore useless to anyone that tries to retrieve the data outside the ATM network.

So what do you think? Are the benefits of virtualized ATMs all they're cracked up to be, or is Diebold simply ratcheting up the hype in an effort to sell some new hardware using the "cloud" as a marketing tool?

View Comments: Newest First | Oldest First | Threaded View
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Mutani   Cloud ATMs: Are They Worth It?   1/28/2013 5:39:17 AM
Re: Updating
It doesn't matter really, i thought the focus should be moved to securing the link btn ATMs and anywhere it gets user information, and not allowing it to store user information. this is devastatingly dangerous. Any technology regardless of OS can do.
The_Phil   Cloud ATMs: Are They Worth It?   2/12/2012 9:15:06 AM
Re: Best option?
And to add to that point, we all know that any time 'regulations' are put into place, it just adds extra layers of complicataion and LESS transparency (ironic huh).
Joe Stanganelli   Cloud ATMs: Are They Worth It?   2/1/2012 2:51:13 PM
Re: Best option?
Additionally, because that data would be accessible by more people and organizations, banking regulations/laws would be implicated.

At the very least, it's potentially a regulatory headache that I don't imagine being worth it.
The_Phil   Cloud ATMs: Are They Worth It?   1/31/2012 11:52:00 PM
Re: Best option?
Well yes I agree. I was just playing devil's advocate and trying to look at it from the viewpoint of an excited semi-techie thinking it would be a good idea. I also worry about who exactly would be the vendor that supports the cloud platform?? That's alot of responsibility with the amount of ATM transactions that are processed each day.
impactnow   Cloud ATMs: Are They Worth It?   1/30/2012 10:12:19 AM
Cloud questions

Are there cost benefits to the cloud ATM? What a are the security issues? Can it increase ATM functionality?

LuFu   Cloud ATMs: Are They Worth It?   1/29/2012 8:07:38 PM
Balance in the ATM Cloud
Perhaps I should view ATM fees as something outside of my petty temporal existence. Let's take a Yin-Yang approach to the role of ATMs in the monetary universe. When the machine spits out money upon demand that would be the Yin of the ATM's duality. As a complementary opposite in its inherent nature, the ATM would then need to suck up money. This Yang would be ATM fees. Make sense? Doesn't matter, logic and ATM fees were thrown out the window a while ago.
Joe Stanganelli   Cloud ATMs: Are They Worth It?   1/29/2012 7:38:21 PM
Re: ATM Beef
Tell me about it, David.  Indeed, some companies find a way to charge customers no matter what.

My phone company charges me two "mandatory" fees for the same service.  I'd feel less insulted and alienated if they didn't break it down and called it a price hike.
Joe Stanganelli   Cloud ATMs: Are They Worth It?   1/29/2012 7:36:24 PM
Re: Best option?
Indeed, Phil -- though, FWIW, I don't understand how cloud ATMs could possibly provide better security.  If anything, it would be worse -- a lot worse -- to have ATMs online.
Joe Stanganelli   Cloud ATMs: Are They Worth It?   1/29/2012 7:34:17 PM
I'm not sure what the big deal is when it comes to running updated ATM software.  Does it really matter that ATMs are still running on OS/2?  As long as they accurately accept deposits and spit the money out, does it particularly matter?

I will say this, though.  I hate being near those Windows-based ATMs that relentlessly, loudly sound that Windows "ding" repeatedly when a customer makes a transaction.  Very irritating.
Joe Stanganelli   Cloud ATMs: Are They Worth It?   1/29/2012 7:32:08 PM
Re: ATM Beef
Indeed, LuFu.  While ATMs are generally cheaper for banks than teller service, I wonder if there will be some maintenance fee passback to ATM customers who use banks updating their ATMs to cloud-based technology.
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