Banks Paying Microsoft Millions in Support Costs For Refusing To Upgrade ATMs Running Windows XP

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Banks around the world will miss a deadline to upgrade outdated software for automated teller machines (ATMs) and face additional costs to Microsoft to keep them secure.  The Redmond software giant 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.

“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.”

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.

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.

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.  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 program 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.

Source: Reuters

 



About Author

Suril is a scientist, journalist and obsessive Microsoft observer. He holds an advanced degree in Biotechnology with minors in Biochemistry, Microbiology, and Molecular Biology. Send him tips on twitter: http://www.twitter.com/surilamin

  • Tips_y

    More money into the coffers?! But they say Microsoft is dead or dying! So what does a dead or dying Microsoft need with these additional millions/billions for ;-|

    • PoohGQ

      LOL.. I always get a chuckle whenever I hear the “Microsoft is dying” statement! Microsoft just like IBM has many income lines other than the consumer market. They would never die anytime in the next 10 years.

      • SategB

        No one intelligent has ever said MSFT is dying. What has been said that while the company will make money for along time it’s main profit centers is loosing its dominate position in the market place while the company has done a poor job transitioning to the new environment. A position the Bill Gates and the rest of MS Board agrees with by the fact of pushing Ballmer to leave the CEO position. This market change does threatens the company long term relevancy and shareholder value.

        This reality should be a concern for even a causal fan of the company.

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  • scotthumble

    This doesn’t even remotely surprise me. There has been a steady ramp up of interest in Windows 7 and Windows 8 migrations as companies realize that Microsoft was serious about the deadline. My next client is paying us to finish their Windows 7 migration in lieu of purchasing the extended support from Microsoft. We are throwing in SCCM 2012 R2 as an upgrade from 2007 while we are at it. Fortunately, we are really good at this sort of thing by now. Many companies are in something of a panic. Many don’t realize that seasoned consultants are hard to come by so when they do have a chance to lock them in, they had better do it.

  • PoohGQ

    Can we stop with this image of Microsoft money hungry! It’s a company that is for-profit in nature anyway. It costs them a lot of money to support multiple OSes and even worse for an OS that they gain little or no revenue from.
    Any big corporation still running Win XP is really not concerned about their tech and,to a lesser degree, the security of their customers info. Even those now upgrading their systems to Windows 7 are really a little daft. This OS is also starting to age and lacks some of the core touch features and other backend enhancements found in Windows 8.

  • Eman Lacuata

    the problem here is companies are too comfortable with XP that they neglected the technology is changing fast. very fast and that includes. malwares. viruses. hackers. the support cost that they are paying now could have been prevented if only they started migrating before. Microsoft have been transparent on the end of life. companies just ignored them because things still just works right? that’s what’s wrong.

  • tomakali

    May be Microsoft should create a banking/ATM framework Justlike WinCE an extensive W8 based BFSI framework to deploy any BFSI solutions also with the increase in healthcare apps and sensors its wise to invest healthcare Windows OS+ kinect services to fully prepare for the future http://www.youtube.com/watch?v=6aKNK7OTHKs