IBM banking equipment

Overview

IBM designed, manufactured and sold banking equipment such as branch teller terminals and automatic teller machines (ATMs) from the late 1960s until 1998 when they exited the banking hardware market by selling their ATM business to Diebold. The product families described here are listed in roughly chronological order.

Background

In the late 1960s banks began exploring branch automation as computers became more economical and terminal technology evolved. This adoption accelerated during the 1970s and IBM viewed this as a major business opportunity. In 1976, in the USA alone, they identified 14,000 commercial banks, 5,100 savings and loan associations and 500 mutual savings banks as targets for this technology. IBM chose to develop, manufacture and sell a wide range of solutions for this market, which this article introduces in roughly chronological order.

IBM 3940 Terminal

IBM Hursley began developing the IBM 3940 in 1964. Bank staff used these terminals to produce paper tape transaction records which were then sent to the head office by van or transmitted over modem lines. There was a model 1 and a model 2. Terminals were sold to a number of UK banks including Lloyds, Barclays and National Provincial Bank. The terminal was a desk-height cabinet with a modified typewriter on the left for data entry and a punch tape machine on the right that outputted the tapes.

IBM 3980 Bank Teleprocessing System

This terminal based banking system was used by several banks in the United Kingdom as part of initial branch computerisation. Bank branch staff could use the equipment to enter customer transactions directly into the central computer through terminals attached to a form of mini-computer called a concentrator. IBM Hursley UK developed the system and manufactured it at their Greenock plant in Scotland. Development began in 1967. The system was used by Lloyds Bank to establish the first online bank branch in the UK at Newcastle-upon-Tyne in October 1968. The success of the system encouraged Lloyds to expand the number of computerised branches, so that by November 1970 they had around 800 branches using the IBM 3980 system with the remaining branches punching transactions into paper tapes with IBM 3940s the majority of which were modem attached (with some branches still sending the tapes to a computer center by van). Lloyd's goal was to computerise all branches before England converted to decimal currency on 15 February 1971. Halifax Building Society was reported in 1976 as having connected 250 of their 3982 terminals using 24 x IBM 3981 concentrators to an IBM 370/145 mainframe. The Bank of Scotland was quoted in 1978 as saying they had 400 x IBM 3980 terminals attached to two IBM 370/158s. The 3980 system consisted of the following components:

IBM 3981 Computing Concentrator

The concentrator is used to connect remote terminals via a modem to a mainframe. It has 8 KB of magnetic core memory and a reel to reel tape drive all integrated into a tall cabinet. Earlier models could only support 10 terminals while later models could handle 14 remote and two local terminals.

IBM 3982 Keyboard Terminal

A data entry terminal, sometimes called a printing terminal that attaches to an IBM 3981. It was released in models 1 and 2. It is a teletype-like terminal integrated into a desk.

IBM 2730 Transaction Validation Terminal

IBM announced the 2730 model 1 on February 24, 1971 as part of one of the first Magnetic Credit Card Service Centres in the world. The 2730 was a terminal designed to read magnetic stripe cards at point of sale. It has a keypad with 12 keys and a selling price of $515 USD. As an example, in the early 1970s, First Federal Savings & Loan Association of Lincoln, Nebraska deployed IBM 2730 terminals in two Hinky Dinky supermarkets, allowing customers to make deposits and withdrawals or pay for purchases on the spot without visiting a bank branch which at the time was very novel. The customer needed a magnetic stripe card which the store operator would swipe through a reader along with the store's own authorisation card. They would enter a pass code and transaction code, and the terminal would transmit the request over a dial-up line to the bank's IBM System/370 Model 135, which verified the account, generated a one-time validation number, and communicated the approval back via audio response. It was described as one of the first of its type in the USA, allowing the supermarket to debit a customer account directly at time and point of sale without using cash or a cheque. In 1974 it was reported that New York's Chase Manhattan Bank installed over 100 IBM 2730 terminals into retail outlets in the "Greater Metropolitan Area".

IBM 3670 Brokerage Communication System

While not targeted at banks, the IBM 3670 product system was a finance industry specific offering aimed at brokerage firms. Announced on 21 September 1971, with first customer shipment occurring in October 1973. It consists of a number of products:

IBM 3671 Shared Terminal Control Unit. The control unit can attach up to 12 applications-oriented executive consoles and 12 data displays, expandable to 24 executive consoles and 24 ·data displays with the Display Expansion feature. A Printer-Keyboard Attachment feature allows attachment of up to 8 printer-keyboards. It holds the distinction of being the first IBM device that was announced with the new highly successful 8 inch "Igar" diskette drive that IBM had developed in its Boulder lab, internally referred to as a 33FD, although it then eventuated that the IBM 3740 was the first IBM product that actually shipped with one in May 1973. IBM 3672 Executive Console. A large keyboard with 178 keys that offer a significant number of stock trading related functions. IBM 3673 Data Display. A CRT desk-top display that can present 1200 characters, in a format 40 characters wide by 30 lines high. IBM 3674 Printer-Keyboard. A modified multi-purpose IBM Selectric typewriter that can be used as a printer, a data entry device and as a typewriter. The system is designed to allow branch offices of a brokerage firm to make inquires, enter orders, and perform record keeping through a control unit remotely attached to an IBM System/360 or IBM System/370. All products were withdrawn on 14 April 1975.

IBM 2984 Cash Issuing Terminal

The IBM 2984 Cash Issuing Terminal was designed at the request of Lloyds Bank, who branded it a "Cashpoint". It was developed by IBM Hursley in the United Kingdom using hardware initially designed by IBM in Raleigh NC. Installations began in 1972 and by 1978, Lloyds had deployed 670 terminals. They reported at the time they were using them to process over 200,000 paperless withdrawals per week totalling approximately five million pounds in cash. The terminal accepted bank issued cards and required customers to enter a personal identification number (PIN), which at the time was a relatively new authentication method for consumers. The PIN and account data encoded on the card's magnetic stripe were transmitted to the bank's host computer for validation. The term "Cashpoint" became so widely adopted that it entered common usage in England as a generic word for any ATM. The encryption system used in the 2984 was derived from a cipher algorithm created by IBM cryptographer Horst Feistel. Lloyds Bank executives were worried about the banks confidential data being read by wire-taping of the phone lines being used by the 2984, so researchers in IBM's Systems Communications Division adapted this algorithm so that each transaction's dispensing commands varied unpredictably, preventing attackers from recording and replaying instructions. According to IBM this encryption work became the basis for IBM's subsequent entry into the commercial cryptography market during the 1970s.

IBM 3600 Finance Communication System

The IBM 3600 Finance Communication System was announced on 10 August 1973 and was an early example of an integrated network of banking devices. The system combined a branch computer controller with a family of devices such as banking terminals, printers and ATMs all connected via a loop-based communications architecture. The system was developed at IBM's Systems Communications Division (SCD) in Kingston, New York with support from the IBM Advanced Systems Development Division, Los Gatos and the IBM San Jose Special Engineering operation. The 3600 was announced alongside other IBM vertical industry systems, including the IBM 3650 Retail Store System, the IBM 3660 Supermarket System, and the IBM 3790 communications system, the combination of which IBM described as a "revolution in terminal based systems". First customer shipments of the 3600 system began in November 1974. All of these systems relied on a significant number of developments across IBM:

New chips: Large Scale Integration allowed advanced Field Effect Transistor logic chips that packed far more transistors onto a new metalized one-inch square ceramic substrate Gas panels: Developed as an alternative to cathode ray tubes, the neon argon gas panel provided clear and flicker-free images. Modem communications: Synchronous Data Link Control provided lower-cost communications over telephone lines New disks: The “Gulliver” disk file that supplied a hard drive smaller than three cubic feet and also the “Igar" diskette drive Smaller printers: A disk printer system called "spica" that used a rotating disk print element with engraved print elements that are struck by a single hammer as the disk rotates Belt printers: A new system, known as “Lynx,” using a removable belt that was significantly cheaper, quieter and simpler than earlier chain printers Keyboards: New keyboard technology called “Calico” that could build a wide variety of keyboards using common manufacturing facilities Power supplies: Transistorised Switching Regulators or TsRs: compact power supplies that are one third to one-fourth the size of previous generations It was succeeded in 1981 by the IBM 4700 Finance Communication System, which offered faster processing and additional work station configurations, though the 3600's communications protocols and device interfaces remained in use long after the hardware was superseded. Early customers included:

The United Building Society in South Africa who deployed 680 IBM 3600 workstations handling 2.5 million transactions per month In Canada, all five large national banks ordered the IBM 3600 System. The Bank of Nova Scotia, with 900 branches, and the Toronto Dominion Bank with 850 branches, together ordered more than 2,500 IBM 3600 terminals Banco Comercial de Mexico (Commerex), with 48 branches oreded one hundred 3600s Takugin, one of the largest banks in Japan, ordered 1,200 IBM terminals, including 300 IBM 3600 teller terminals Hollywood Federal Savings and Loan Association located in Broward County Florida introduced a system called Bill-O-Matic that allowed customers to automate payment of 5000 bills per week. They worked with 16 local supermarkets implement point of sale terminals which allowed supermarket customers to make withdrawals and pay for groceries without checks or cash. They installed 105 IBM 3600 banking terminals encouraging customers to convert from passbooks to plastic cards, taking in 10,000 passbooks and issued 20,000 cards to old and new customers combined out of 60,000 depositors. Using new banking technology like this allowed branch staff to update, retrieve, and enter customer records on-line, with transactions processed against the central database in real time rather than batched for overnight processing. The 3601 also allowed branches to continue computer processing of transactions in an offline manner. This combination of on-line real-time processing with off-line data entry increased operational efficiency for financial institutions and helped establish networked branch banking.

Loop connection

The 3600 architecture uses a simple form of networking called a loop, that effectively creates a daisy-chain with a cable running from the 'out' port on a loop adapter in the controller, to the first device in the loop (either a terminal, a printer or an ATM) and from there to the second device and so on. The last device in the loop then connects back to the 'in' port of the loop card in the same controller. Data can only travel around the loop in a single direction. Each device on the loop uses switches to set its terminal address (from 0 to 15) and its loop speed (either 600, 1200, 2400 or 4800 bits per second), although all devices on the same loop needed to be set to the same speed. The following devices were announced as part of the 3600 system:

Communication Controllers

The Communication Controller is the programmable control unit normally located at a bank branch or other remote location where multiple devices need to be attached.