Can a Video Screen Actually Be a Branch?
Credit unions are giddy about a new NCUA rule that says advanced video terminals can be counted as full-fledged service facilities, providing a new way to compete with banks by attracting members in underserved areas.August 30
As branch traffic shrinks and the need to improve customer service grows, video-equipped ATMs are catching on.
Video ATMs allow banks to move more branch service and staff to a central location, opening up the possibility of smaller, less expensive branches that retain a large menu of services.
But is a small location with a bare-bones staff or no staff and a video connection to a central office a branch, an ATM or a contact center? The answer matters, because there are ramifications for regulation and customer expectations if a video-heavy brick-and-mortar location doesn't include almost everything that a branch includes.
"Video service has to be more than Skype conversations with a remote service rep. Video service has to provide transaction capabilities," says Brian Bailey, general manager for branch transactions at NCR, whose product line includes video ATMs. The company says these ATMs are integrated with teller platforms to perform a wide range of transactions that's similar what a teller could perform in person.
Credit unions have more specific guidance than banks at this point. Among financial regulatory bodies, the National Credit Union Administration has ruled more directly than banking regulators. The NCUA says video tellers can be used as service centers, to reach underserved locations. The requirements say ATMs and other digital kiosks have to provide real-time, face-to-face video access to live tellers at regularly scheduled weekly hours, use credit union or shared branch staff as tellers on screen, allow members to conduct all transactions that are available at a traditional facility and be located reasonably close to members.
Analysts and trade associations say banking regulators have been less direct about the amount of service video tellers have to provide in order to qualify a video-heavy location as a full-service bank branch. The Office of the Comptroller of the Currency defines a branch as any place of business established by a national bank in the U.S. or its territories at which deposits are received, checks paid or money lent. Analysts and bank trade associations said they were unaware of regulations that directly address the use of video in bank branches. "The NCUA is ahead of the other regulators in this area," says David Albertazzi, a senior analyst at Aite Group.
Gene Pranger, the chief executive of uGenius, which has deployed video tellers at a number of institutions, says his terminals enable credit unions to adhere to the provisions of the NCUA video teller ruling. "We allow for two-way transactions to occur on any level that a teller would, and most importantly, we have the ability to place these devices in underserved areas," he says. He says the company doesn't have a formal internal compliance unit, but is working with its credit union clients to ensure compliance with the NCUA ruling.
Bailey says that what specific video services constitute or do not constitute a branch is a matter "for the regulators to work their way through. At the end of day, video is good for banks. It's a new chance to offer more service at a new cost point."
Beyond compliance, there's the question of whether it's wise to digitize everything that happens at a service center.
"There is a risk to get carried away with video in branches because a lot of the functions that can currently get done in a call center can be now be done in video banking," Albertazzi says. He says video ATMs are more like call centers than like mini-branches. The distinction affects customer expectations — if a center is called a branch, consumers will expect more function than if it's considered a remote contact center or a state-of-the-art ATM.
Albertazzi says some functions should not be done remotely by video, such as transactions that involve legal documents or other paperwork the consumer wants to complete during a single session. "This is where the end user has to look at documents for a longer period of time. I don't see that happening in a video environment. So [institutions] have to be careful about what types of activities they want to put into a video channel in a branch. I think the user expectations and experience should be taken into account."
But using two-way video in branches also has many benefits, Albertazzi says. "There are specialty services such as those provided by small-business lenders, commercial loan officers and trust officers that are quite expensive to have in every single branch. The benefit of video is to centralize these functions."