FOR the world's leading creator of the software which powers ATMs (cash machines), with 15 offices worldwide and a customer roll-call of some the world's biggest banks, KAL has a surprisingly modest headquarters in a back street off Edinburgh's Easter Road.

Founder Dr Aravinda Korala admits: “We don’t like banks coming here, they see our building and think we are Cinderella-like.” He adds with a smile: “They don’t really come here anyway – they expect you to be there.”

While the likes of Citigroup and UniCredit might not beat a path to a former industrial shed in Leith, they have chosen KAL’s unrivalled software for their huge networks of ATMs across the globe.

Mr Korala, a Sri Lankan son of an engineer and nephew of a medical professor, came to Edinburgh to take an engineering doctorate in 1979.

He founded KAL a decade later and last month picked up a Queen’s Award for the business’s international growth. It employs 100 staff from 20 nations with software certified in 30 languages, from centres in Cincinatti, Mumbai and Sydney, not to mention 11 satellite offices.

KAL may only be supplying the Nationwide and Norwich & Peterborough building societies in the UK, but its biggest coup was when it secured the contract to become sole supplier of ATM software to the world’s third largest bank two years ago.

Mr Korala says: “The biggest most exciting thing was when we won Citibank, for 28 countries. The marketing you must do is make sure banks know you are there, talk to them. We started doing that about three years before we actually won the contract… you have to make sure you are invited to the party when they are ready for the bid.”

Unlike most banks, Citi had built its own ATM software, so at the critical presentation in Los Angeles they understood the issues better than most, Mr Korala says.

“They were quite surprised to discover that our KAL software had a similar architecture and ethos to theirs – relatively speaking they were like us, that helped a little bit. Then it turned out that their requirement was very complicated and sophisticated and that meant that quite a lot of the competition weren’t able to do that. It was down to us and one other company – and they couldn’t do it in the timescale.”

Mr Korala recalls: “There was a huge rush of excitement … though the project start was a year later than we thought it would be – it felt like ages.”

So far the software is running live across the US and in some other countries. “Each country has regulatory requirements, you have to be compliant with all of that stuff, there are language requirements, transaction requirements, there is a lot of fine detail.”

KAL had already won a contract for a bank with an even bigger network than Citi’s – the 34,000 ATMs of the China Construction Bank. “We are number one in China in terms of the installed base,” Mr Korala says.

After his studies, he worked for PA Consulting but moved on because “the whole management consulting thing is not as exciting as making something work … software was what I wanted to do”.

Mr Korala, now married, started KAL from the front room of his New Town flat, with “a few pounds in a bank account”, and a list of 10 or 15 ideas for potential products that might create an income.

“I remember sitting with an Excel spreadsheet, watching the graph of our money going down”.

The first break came when he landed NCR in Dundee, the UK’s only ATM maker, as a customer.

“It was one-off survival stuff at that time, it was a three-month contract, then they gave me another one and another one – that was quite good because it meant I could fund my family – my son was born in 1990.”

The next milestone was when KAL created some ATM software for NCR, based on “open standards” rather than a manufacturer’s proprietary standard, for use by NatWest. “We noticed that NCR didn’t seem that interested, but NatWest was very interested.”

The English bank realised that software which could be used in any kind of ATM was the way forward – and for KAL the product holy grail had arrived. “Globally there are about two million ATMs, compared with PCs it is a tiny number. On the other hand, ATMs are very expensive to run. It will cost a bank between €20,000 and €30,000 a year to run an ATM.”

But even 15 years on, the “multi-vendor” software that can cut the banks’ operating costs is not an easy sell, Mr Korala says, because it represents “potentially disruptive technology” in the industry.

“Banks want a single software solution – but manufacturers have more control over the marketplace if they can sell software only for their ATMs. Initially we didn’t have a complete solution, only pieces of it, so we started marketing the pieces to other ATM companies.

“Smaller manufacturers were interested in multi-vendor, the bigger guys were saying ‘nobody will want that’ – but that was more to do with their business model.”

By 2000, the business was employing 40, and in 2003 the Edinburgh team began to build its complete software solution, using partner companies which KAL is careful not to compete against, and to fuel its rapid growth. Overseas sales have doubled to £10 million since 2008.

“We have always been a very international mix of engineers,” he says. “We have people here from Germany, Spain, Italy, France, China, Japan, and we speak a lot of languages natively. We always thought that was a critical part of being able to work with customers internationally – we don’t want to do the speak English louder thing.”

KAL’s wizardry means banks can now offer customers “cash recycling”, where money can be paid in as well as withMrawn.

As millions will testify, ATMs need to work at all times. But in countries without chip and pin they are an easy target for fraudsters.

“The amount of fraud is very significant,” Mr Korala concludes. “Much higher than the cost of converting a network to chip and pin … it’s really crazy.”

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