Bank of America is beefing up its use of video to better connect customers with mortgage lenders, wealth managers, and small-business bankers who can't be in every one of its nearly 5,300 U.S. branches.

The retail banking giant announced Thursday morning it is planning to install video terminals in roughly 500 branches over the next two years, primarily in locations where foot traffic often cannot justify the cost of having specialists on site. It's believed to be the largest videoconferencing rollout ever for a U.S. bank, and it's likely to be watched closely by other banks that are looking to reduce overhead but never want to miss out on sales opportunities.

"A lot of eyes will be on B of A," says Bob Meara, senior analyst within Celent's banking group. "If the bank pulls this off, there will be a lot more [video] activity."

B of A's investment is the latest example of a financial institution deploying technology within the branch to more effectively manage costs. And video, though far from mainstream, is increasingly becoming a tool banks are using to continue offering personal service without overstaffing. Even with branch traffic declining rapidly as customers increasingly do their banking electronically, it's widely understood in the industry that the branch is where accounts are opened and sales are made.

UMB Bank, in Kansas City, Mo., for example, has set up videoconferencing rooms in three of its branches so that customers at those locations can chat with specialists who aren't located on site. Wells Fargo doesn't use videoconferencing, but it lets customers book appointments online with branch specialists to ensure that the right employee is there when they visit a branch.

Bank of America has been testing videoconferencing in a few-dozen branches over the last three years and it plans to roll it out in about 10% of its branches over the next 24 months, according to its tech partner in the venture, Cisco.

The video equipment lets Bank of America connect in-branch customers with off-site specialists, including small-business bankers, Merrill Lynch advisors and mortgage specialists, when the branch location might not merit staffing such full-time experts.

The experience is intended to look something like this: a customer would enter a branch and tell the greeter he wants a mortgage. The employee would walk him into a private room with the videoconferencing machine and push a button on it to conjure up a specialist. Then the greeter would leave the room for the two to have a Skype-like chat.

"It's very cost effective and efficient for the financial institution," says Genie Driskell, chief operating officer at Synergistics Research. "Videoconferencing terminals have been talked about since the 1980s and 1990s. [We're] really seeing it come to fruition."

B of A, meanwhile, has 10,000 videoconferencing interactions under its belt, which will help inform the way it deploys the tech at more locations.

"We have learned a lot," says Tyler Johnson, a senior vice president for Bank of America, who was part of the bank's team running the pilot.

One of the most important lessons it learned, Johnson says, is that bank agents can freeze up in front of the camera, so the company has invested in video training to help agents get more comfortable.

Once the comfort level is reached, Johnson says video allows the agents to have better conversations. Previously, the specialists might have chatted with customers over the phone when an expert wasn't available within the banking center. With video, the agents can see things like body language. "They can have a more personal conversation," Johnson says.

That's not the only benefit of video. Celent's Meara points out that the technology helps solve the inefficiency of having specialists hop from branch to branch. "You can't be at two places at the same time," says Meara. "With video, you can almost do that."

Plus, consumers who are familiar with Skype or FaceTime are more accustomed to video chats. "Even Baby Boomers are comfortable with it," says Meara. "Times are very different than even a couple of years ago."

Still, using video chats effectively within a branch will depend on the frontline staff being on board and promoting the option. The bank has faced some pushback from employees over its Teller Assist technology in which customers can interact with remote tellers via video screens at ATMs. Some bank tellers have protested that the technology is a threat to their jobs.