Hoping it was just a mechanical glitch with the ATM, the customer drove a few miles to Mid-Hudson Valley's main branch in Kingston, N.Y., where he had his first encounter with one of the credit union's new personal teller machines, which provide a high-speed, two-way video and audio link to customer service representatives working in a 24-hour call center.
Spearman recalls the customer telling him afterward, " 'Not only did a live teller fix my problem, but I got an apology at the same time.' "
Welcome to the new world of self-service branch technology, where machines are taking on more tasks that used to require tellers, and are starting to offer several services that tellers could never provide.
The goal, bankers say, is to get more customers moving through their branches faster — but without making people feel as if they are missing out on any personal service.
Mid-Hudson Valley's personal teller machines allow customers to conduct complicated banking transactions at any time of the day or night by talking to remote customer service representatives over high-speed Internet video connections.
Other banks are using touch-screen walls and tabletop devices that can display anything from animated artwork to marketing materials and information about financial products that customers can call up and print out on request.
Some banks are starting to redesign their branches to incorporate enhanced automation technology, like cash recyclers that can maximize branch floor space while improving efficiency and security. Others are installing self-service kiosks that let customers pay bills or even buy shares in initial public offerings.
And one Rhode Island bank has turned the self-service kiosk concept around, by implementing an identiCenter system that allows customers to "check in" as soon as they enter the branch — after people verify their identity, they can tell the machine what transactions they need to perform, and the identiCenter will prepare the necessary paperwork before they are directed to the most appropriate branch employee.
A New Model for Teller Machines
Coastal Federal Credit Union in Raleigh jumped onto the PTM bandwagon earlier this year and hasn't looked back. The $2.1 billion-asset outfit has installed more than 30 of the machines at nine of its 14 branches.
"It's the most promising new banking retail technology that I've seen, and I've been in retail banking for over 33 years," said Willard Ross, the credit union's chief retail officer. He cited the machines' support, customer service, convenience, efficiency and safety.
Jeff Stott, the vice president of sales and marketing at uGenius Technology LLC, which makes the PTMs, said that five U.S. financial companies are using the machines. The Sandy, Utah, company expects to have 70 units in operation across the United States by yearend, with the largest number at Coastal Federal.
"Our approach has really been to come at the market from a personal service delivery model," Stott said. "It physically looks like an ATM — but it's not. It's a personal teller."
Patti Osterhoudt, the chief operating officer at the $607 million-asset Mid-Hudson Valley, said the credit union plans to have five of its nine branches hooked up with 24-hour PTMs by the end of the year. One of its branches, in Rhinebeck, N.Y., has no live tellers — only PTMs.
She said the credit union's customers like the convenience factor. "We're in a very competitive market with both community banks and commercial banks," Osterhoudt noted. "What better way to provide great service than to allow a member to do what they want to do, whenever they want to?"
Washington Trust Co., a subsidiary of Washington Trust Bancorp. Inc. of Westerly, R.I., founded in 1800, is an old-line community bank that has embraced some new self-service technology.
Last year the $2.4 billion-asset bank moved its Providence branch into the heart of the city's downtown with the goal of adding a new layer of customer self-service, using an identiCenter system that assigns each customer a number when they check in.
"It's essentially eliminates the line," said Michael Rauh, Washington Trust's executive vice president of sales, service and delivery. The machine also tells customers roughly how long they can expect to wait, and instructs them how to efficiently prepare for their interactions with bank employees (such as by filling out deposit slips).
Instead of the standard line, customers wait in a comfortable area where they can watch television, read or use computers provided by the bank to go online.
The system assigns customers to specific branch employees according to their specialties and the tasks the customers want to handle; employees also are told what the customers need so they can prepare for the upcoming transaction and greet them by name.
The branch also uses cash recyclers, made by Diebold Inc., that can automatically count, verify and sort deposits. The Express Cash Recycler also dispenses money for withdrawals.
For customers who prefer a completely self-service model, the branch's lobby has two Diebold machines. The first is a souped-up ATM that provides check imaging and bulk cash counting, a feature that is popular with small-business owners and restaurant workers who deal in a lot of cash tips, according to Rauh.
The other machine — a high-speed cash dispenser — only allows customers to make cash withdrawals, sort of like a dedicated express-cash ATM.
The Cross-Sell Factor
One big incentive to installing self-service technology is that it frees up tellers and platform reps to cross sell, analysts say.
Nicole Sturgill, the research director for delivery channels at TowerGroup, an independent research firm owned by MasterCard Inc., said that while it sounds counterintuitive, self-service technology can draw more customers into branches and help banks break down the teller barrier.
"If banks do self-service right, then they have increased opportunity to cross-sell," Sturgill said. But she warned, if banks use self-service technology solely to decrease costs, customers can pick up on that and be left with the impression that their bank is cheap.
Last month Umpqua Bank of Portland, Ore., moved its Roseville, Calif., branch to a more centralized location in nearby Rocklin. The spot was selected for its ease of access and convenience for Umpqua's customers in the area, according to the bank, a unit of the $8.8 billion-asset Umpqua Holdings Corp.
The branch's high-tech, self-service features include a Discover Wall, a bank of 42-inch touch-sensitive display screens that people can use to view marketing materials about products (they can also print whatever they need).
The branch also contains a Computer Cafe where customers can access their accounts online or just surf the Web.
Loni Hayward, Umpqua's executive vice president of creative strategies, said the Discover Wall was originally developed in the company's Portland Innovation Lab as a 25-foot plasma-screen display, made up of individual panels. So far, the bank has installed about six of the walls (usually featuring three 42-inch panels) in branches.
"As we evolve, there is going to be more demand for self-service in branches, because so much service is being provided online right now," Hayward said.
To get customers to use the Discover Walls, the bank must provide information and some entertainment, she said. "There's got to be a hook."
The Branch of the Future
Two of the five key technologies integral to the success of the branch of the future revolve around self-service, according to a TowerGroup report published this year: interactive video, such as PTMs, and digital signage, such as Umpqua's Discover Wall and touch-sensitive tabletops.
Barclays PLC is one of the first banking companies to test the touch-sensitive Microsoft Surface table, at a new branch in London's Piccadilly Circus. The 8,000-square-foot, three-floor branch, which opened in January, makes extensive use of new technology and design, Barclays says.
The table allows customers to "grab" virtual content with their hands and navigate through information about banking services with simple hand gestures and touches. The branch was designed with completely open teller counters and employees roam the floors with hand-held computers to answer questions from customers who don't want to wait in line.
The branch's self-service area includes an ATM that dispenses foreign currency, including dollars and euros, as well as ATMs for cash, checks and coins. (It's also open seven days a week.)
"We have embraced innovative technology and design, which we expect to attract the interest of the Piccadilly community in an innovative and generous way and enable our customers to be able to interact with us in the way that suits them and in surroundings that are comfortable and accessible for all," said Mike Amato, Barclays' chief distribution and product officer.
Catching On
Cutting-edge self-serve technology is gaining traction in other parts of the world.
In Riyadh, Saudi Arabia, Banque Saudi Fransi has been rapidly expanding its branch network after trials of its first completely self-service 24-hour branches, called Fransi Connection, which were designed by NCR Corp. of Duluth, Ga.
Mostly located in shopping centers and business districts, the branches include NCR retail kiosks that can be used to browse for product information or to access online banking services. There are also telephones if customers need to speak with bank representatives.
BSF's existing branches have also been remodeled by NCR to provide customers with self-service access to a wider range of quick and simple transactions, freeing up staff to focus on customer acquisition and cross-selling. As part of the project, NCR developed unified screen layouts for both the kiosks and the bank's ATMs.
International and interaccount transfers can be made at the kiosks. About a quarter of the Middle Eastern nation's population are foreign nationals, mostly from the Asian Subcontinent, which has created demand for the service.
The ATMs and financial kiosks also offer a mix of bill payment, IPOs, statement printing, statement request and credit card cash-advance services as well as the typical cash withdrawal and check and cash deposit functions. NCR worked with retail designers Dalziel + Pow to develop the branches.
"Increased competition from both local and international financial service providers means BSF needs to continuously evolve its service," said Hashem Al Alawai, the bank's virtual banking division manager.
He said a key goal for the new branch design is to attract Saudi Arabia's young and affluent population, since about 60% of the country's 24 million people are under 20. This age group is expected to increase by about 3% annually — one of the highest growth rates for this demographic in the world.
A Belgian bank, Dexia, is one of the European pioneers in branch transformation, according to industry watchers. Last year the Brussels company awarded Diebold a two-year contract to transform its branches using 1,000 customized cash-recycling units. The pilot phase began in April 2008 and the mass rollout started in late 2008. About 800 units are scheduled to be placed among the bank's 1,000 Belgian branches, replacing Diebold ATMs.
The consultation process for this new contract started when Dexia decided to examine the profitability and security of its branches. The bank wanted to move all of its cash-related branch transactions into terminals so that none of its associates would have access to cash.
"They were looking at creating a secure environment for their associates," said Dave Wetzel, Diebold's vice president and general manager of Western Europe, who is based in Geneva. "Banks are increasingly looking for better automation for their ATMs, and Dexia is no exception."
The new Diebold machines collect and recycle commonly used banknotes, while allowing consumers to make withdrawals of any denomination note. The machines can also be configured for cash-in, cash-out, recycling or any combination of the three.
Coming Soon
And as customers become more accustomed to self-service and video banking, what will come next?
UGenius' Stott said the next frontier could be life-size holographic tellers. "The question is timing along with the convergence of software and telecommunication pipelines. But it's inevitable that it will happen."
Cisco Systems Inc. already offers holographic technology to businesses through its TelePresence product which simulates face-to-face interaction by providing a life-size video image of each remote participant, with fluid motion and ultrahigh resolution that can reveal subtle facial expressions.
Jonathan Quayle, the head of NCR's branch solutions marketing team, said there will be an increase in teleconferencing over the next decade as high-definition videoconferencing, which is becoming more common at large corporations, moves into bank branches.
Many customers cannot get to the branch during regular business hours, and might welcome an interaction with a "live" teller, even through a holographic image, Quayle said. "We are triangulating toward a point where this type of adoption is likely to accelerate."
Marian Raab, a former American Banker editor, is a freelance writer based in Maplewood, N.J.
