Interview with Mike Atchley, Managing Director, Qwinstar
Qwinstar Corporation, the payment equipment maintenance division of 3 Point Alliance, Inc., recently announced double-digit growth in payment processing equipment maintenance and service revenues. In that announcement, Qwinstar shared new business highlights from 2014 that included some important milestones.
On the heels of the announcement, I interviewed Mike Atchley, managing director of Qwinstar, to find out more about Qwinstar’s success.
CL: Let’s start with some background about Qwinstar. When was Qwinstar founded? And how did Qwinstar come to be part of 3 Point Alliance?
MA: “Qwinstar was founded 40 years ago in 1974. 3 Point Alliance acquired it in 2007 and I was brought in to manage the unit. I came over from BancTec, a payment equipment OEM, where I was regional service director. The majority of my experience since 1978 has been spent working in payments and industrial equipment management and logistics.”
CL: So you have seen a lot of changes in the industry. What has changed the most?
MA: “Probably the fact that OEMs have had to focus almost exclusively on manufacturing and to let other players in the industry take care of parts inventory, and technical support including training technicians as well as providing customer-centric service.”
CL: This has created an opportunity for Qwinstar then. Does it account for Qwinstar’s double-digit revenue growth?
MA: “Yes, that’s probably accurate. Since 3 Point Alliance acquired Qwinstar, we’ve experienced double-digit growth continually. And if you combine 3 Point Alliance Canada’s revenues with Qwinstar – in North America – our revenue increases are about 83%.”
CL: Can that level of growth be sustained? What does the future look like for Qwinstar and/or the payment equipment sector in general?
MA: We anticipate similar growth in 2015 and for the next few years out.
The equipment service side of the OEM sector are declining. Very few third-party service organizations are growing with the exception of 3 Point Alliance and Burroughs.
CL: Tell us about the role servicing legacy payment machines like the IBM 3890 plays in Qwinstar’s approach to the market.
MA: OEMs like IBM and NCR baked in a 15-year life expectancy for the parts needed to maintain their machines. These machines have been in the field now for 25 years. This has created a need that our customers have over time asked us to fill.
We have met this challenge by setting up a comprehensive parts inventory system that allows us to source and reclaim and keep available the parts needed to run these machines at optimal levels.”
It takes more than an extensive parts inventory to fulfil the complex equipment needs customers have…You have to deliver expert equipment diagnostics and repair that complements the ability to supply the right part. And you need a service provider with nationwide coverage so these services can be easily deployed to customers regardless of geography.
CL: Can these machines be supported indefinitely?
MA: Yes…certainly for the foreseeable future.
CL: How? What new technology or innovation is on the horizon that might positively impact you? For instance, is 3D printing a factor?
MA: We’ve experimented with 3D printing actually. We call it ‘growing parts’…
I can give you a good example…
We maintain an NCR 7766 for a customer and one of the mechanical features is something called a ‘date wheel.’ It’s a small round plastic device that’s attached to the machine that keeps track of the date – which is displayed on the wheel in a window. Well, the date wheel expired at the end of this year. It simply was not programmed to track dates past this year and it was a required functional feature of the machine.
In the past, NCR would just replace the wheel – for a fee and now they are out of stock. So we decided to make our own. We decided to look into 3D printing and found one in Minnesota. And they were able to ‘grow this part’ for us.
There is huge potential for making replacement parts using 3D printing…this technology is still in its infancy.
CL: That’s fascinating. Let’s talk about some of Qwinstar’s other highlights for the year. 3 Point Alliance is maintaining over 1,000 NCR payment processor machines in North America. That sounds like a logistical nightmare. How do you keep track of that many machines and schedules?
MA: Qwinstar maintains the largest parts inventory in the industry at a warehouse in St. Paul, Minnesota. In addition we have regional inventory locations as well as the ability to manage parts inventory at each customer’s facility. The size and scope of these inventories vary of course.
We can store, manage and deploy everything from individual components to major sub-assemblies to whole machines which can range in size from desktop size to 60 feet long by 8 feet high for large check sorting equipment.
Earlier this year Qwinstar added 3,000 square feet to its warehouse to accommodate additional inventory.”
CL: How does Qwinstar inventory system work? Is it proprietary? Can it be customized?
MA: “The Qwinstar Maintenance Director is a Web-based proprietary tool that’s flexible enough to be customized to each customer’s needs. Technicians can access the inventory tool from any Web-enabled device 24/7. The Maintenance Director tool provides visibility into warehouse inventory at our facilities as well as onsite at customer facilities.
We can generate reports in any format for any time period needed – on a daily basis, for overnight service calls, monthly, et cetera. A real-time call history is available…
CL: Do you monitor key performance indicators for your field engineers? How are your field technicians accountable for quality assurance?
MA: “Almost all of our customers have processes in place to measure KPIs so we receive internal customer surveys frequently and if there is a problem we fix it.”
CL: Your customer satisfaction rate for field engineer work must be very high. Is it?
MA: “Our customer retention rate is close to 98% — well above the industry average; we just don’t have turnover. One reason it’s high is due to our preventive diagnostics that our operators continually perform. We’re always troubleshooting to prevent fewer breakdowns and to mitigate down times.”
CL: The inventory function is fully automated and yet customizable. How do you approach machine upgrades?
MA: “Upgrades to legacy and other equipment is a core competency. We began in this business by offering upgrades to the IBM 3890 and we continue to offer upgrades on multiple platforms including NCR and others.”
CL: What’s an example?
MA: Well, we can’t and don’t get involved in any software or operating system upgrades because that is controlled by the OEM. But we can upgrade existing hardware.
We can, for instance, retrofit older model printers or scanners or cameras with the latest generation hardware which greatly extends the life of the machine.
CL: What other factors have contributed to Qwinstar’s growth? Can you expand on news surrounding new contracts?
MA: We provide maintenance coverage in 43 states and are always looking to expand. It amounts to a nationwide footprint because of how we are able to provide equipment maintenance onsite with our customers who can be located anywhere. Plus, we cover 6 Canadian provinces or about two-thirds of Canada.
Three major banks in Canada have transferred their check and remittance NCR iTrans, NCR 7780’s and 7766’s maintenance to Qwinstar’s Canadian subsidiary, 3 Point Alliance Canada.
Three major credit union processors in Canada are using 3 Point Alliance Canada for their maintenance contracts as well.
The NCR iTrans machines at some major regional banks in the U.S. are now using Qwinstar.
We are servicing about 900 credit unions in Canada now who have switched maintenance of their NCR iTrans and NCR 7780 and NCR 7766s to Qwinstar from NCR.
Three major regional banks have switched their NCR iTrans maintenance to Qwinstar.
And 3 Point Alliance can handle leasing and financing arrangement when equipment comes off lease. About 275 NCR iTrans and NCR 7780 and 7766’s came off lease this year which we are now servicing.
CL: Clearly you’ve had a busy year. Considering Qwinstar’s experience and since few other players are in this market, would Qwinstar ever invest in designing and building their own payment machines?
MA: We’d have to acquire an OEM, it’s not a core competency so it’s unlikely.
CL: Any closing thoughts?
MA: Success in the equipment maintenance sector is highly reliant on relationships with customers that have been nurtured for years – in our case – over decades. This is a barrier to entry for other companies who might be interested in servicing this market.
Our market share is growing which gives us the financial resources to obtain parts, train and retain expert field engineers, and as market conditions change we can continue offering a vertically integrated suite of equipment maintenance solutions – even in down economic periods.
Claudia Logan is a freelance writer who writes about the payments industry.
3 Point Alliance
Founded in 1990, 3 Point Alliance has been a leading provider of end-to-end remittance processing solutions that exceed industry quality standards and reduce processing costs by streamlining payment operations.