First International Bankco of Illinois is a large Chicago-based bank. As the manager of internal audit, you are called one day to a meeting with the controller. He is concerned about the operation of the bank's ATMs. Several major problems have arisen with customers' use of the ATMs. In particular, the following difficulties have occurred:

a. Currently the bank issues a plastic card to each customer containing the customer's account number (magnetically encoded) and a PIN. Unfortunately, customers have been writing their PINs on their cards. Consequently, when customers have lost their card or their card has been stolen, unauthorized withdrawals of funds have occurred. The number of unauthorized withdrawals is increasing.

b. The ATMs allow a customer three attempts to enter the current PIN. They then lock the card in the machine. Many customers seem to forget their PINs. Recently, an irate customer tried to retrieve his card using a crowbar.

c. The bank currently mails cards and PINs to new customers. Recently, mail has been stolen, and unauthorized withdrawals of funds have occurred.

Required: The controller asks you to consider the problems and to propose some solutions. Write a brief report outlining your recommendations.