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Summary

The recently proposed merger of American ATM provider Diebold with German vendor Wincor Nixdorf, combining the second- and third-largest players in the market, underlines the fundamental shifts now happening in the ATM and payments acquiring space. Service automation and software-driven services are increasingly taking hold in the financial services and retail sectors, fueling the growth of broader payments-as-a-service capabilities. The global reach and scale of the new Diebold Nixdorf will be a huge benefit to the new entity as it seeks to gain critical mass in a rapidly changing market. However, innovation in cloud-based software and end-to-end service delivery will be critical for long-term success.

Diebold Nixdorf will need to stay innovative to succeed

The newly formed Diebold Nixdorf will have significant global reach and the merger will, in theory, allow the new entity to lower costs by rationalizing resources and leveraging key innovation capabilities. Both companies on their own were market giants, with huge levels of impact on the industry. With combined revenues of $5.2bn, this consolidation will bolster their competitive power against market leader NCR.

Although Diebold Nixdorf will benefit from its scale, this will not be enough to ensure its long-term success. Cash use remains high and growing, but the broader ATM and self-service automation market is changing, with an increasing need for software-driven digital service delivery. This is explicitly a key driver behind the merger, with managed services, branch automation, mobile, and omnichannel solutions highlighted as a focus for the new entity.

The emphasis on software and managed services will be key to the long-term success of Diebold Nixdorf, which will require continual innovation to fend off rising competition in an increasingly software-driven market. Enterprise clients demand a growing range of functionality and flexibility to enable them to innovate and launch new services on the fly. Many start-ups and smaller players are emerging to meet these demands, but Diebold Nixdorf’s scale and reputation puts the company at a distinct advantage. This advantage, however, will be quickly lost if the sheer brawn of the company is not matched by innovative brains.

Appendix

Further reading

ICT Enterprise Insights 2015/16 – Global: Payment Issuers & Acquirers, PT0063-000011 (November 2015)

Author

Gilles Ubaghs, Senior Analyst, Financial Services Technology

gilles.ubaghs@ovum.com

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