TD Bank became the first of Canada's big banks to say it will replace its aging fleet of 2,400 bank machines. TD execs and some industry analysts say that they expect all the banks to upgrade their ATM network within the next few years. Banks want their ATMs to do more than just take deposits and dispense cash. They also have to comply with some regulations. For example, payment groups like Mastercard and the Canadian Payments Association are insisting that ATMs communicate financial data using triple-DES encryption. Right now, the ATM network protects data with single-DES encryption.
From a story I have in today's Globe about this:

Toronto-Dominon Bank said yesterday Hewlett-Packard (Canada) Ltd. will take over responsibility for the bank's automated teller machine network, the latest example of a Canadian bank trying to cut costs by hiring specialized technology partners.
Industry players and analysts said ATM operations, in particular, are ripe for back-end consolidation and aggregation, as banks try to manage cash, maintain an aging fleet of ATMs, and comply with new financial regulations in the face of increasing competition from white-label ATM operators.
The TD deal is also being seen as an example of the way Canada's banks will continue to invest in capital equipment while avoiding technology choices that create additional costs for a future merger or other business combination, such as the acquisition of a full-service insurance company. . . . [Read the full story]