Many British banks still have thousands of ATMs to upgrade to a newer operating system

ATMs still on old software despite end-of-support deadline

With thousands of ATM’s in the UK still running on the outdated Windows XP software, British banks are now queuing up at Microsoft to negotiate deals for the company to extend support.

Aware of the risk viruses and hackers would pose to unprotected machines, the banks have agreed to pay extra fees for Microsoft to keep their assets secure.

RBS, operating about 9,000 ATMs in the UK, all of which are still equipped with the obsolete software, has agreed on a three year service contract with Microsoft. The bank will only start upgrading to Windows 7 next year and expects to complete the process within 3 years. The investment is part of the annual £1.4bn spending, which the company’s new Chief Executive Ross McEwan has allocated towards improving the bank's troubled computer systems.

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 programme 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.

Microsoft announced its plans to end support to Windows XP-powered machines in 2007. However, only one third of the world's 2.2 million ATMs using the system have already been upgraded.

According to analysts, banks have been neglecting the problem as they were dealing with new regulatory demands in the wake of the financial crisis.

"There are certainly large enterprise customers who haven't finished their migrations yet and are purchasing custom support," a spokesman for Microsoft said. "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."

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 60m, according to analyst Sridhar Athreya, principle at London-based financial technology consultancy SunGard Consulting Services.

"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.

As the majority of all banks around the world has not completed, or even commenced, the work yet, there is currently a critical shortage of workers with the required skills to carry out the upgrade.

Especially in the USA, which is still largely using the outdated magnetic stripe technology, the 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.

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