A number of banks have become enamored of video conferencing systems that replace face-to-face meetings, but it's still not clear whether consumers will fall for them, too.

Video conferencing technology, which allows two-way conversations - complete with digitized moving pictures of the parties speaking - is changing how bankers interact with each other, especially at institutions with far-flung offices.

A number of banks, including Society Corp., Cleveland. and KeyCorp, Albany, N.Y., are using video conferencing as a tool for conducting meetings without incurring the lost time and expense of flying people around the country.

Far-Flung Offices

The technology is particulary useful to these institutions because of the way their offices are arranged. Society has offices in several noncontiguous states, including Ohio, Texas, and Florida. KeyCorp offices are in even more widely separated locales, such as Alaska and New York.

"A video hookup is only about 30% more expensive than a phone call for us," said Daniel Doty a senior vice president in Society Bank's information services group. "I cannot see [video conferencing] ever replacing personal contact altogether, but it certainly allows us to be more choosy a6out the reason for a trip."

Though video conferencing has caught on at these institutions as a way to cut costs, the technology has been slow to take hold as a self-service retail banking enhancement.

This use of the technology has generated much interest among forward-thinking bankers who are looking for alternatives to expensively staffed branches for dispensing financial expertise.

Option Discussed

A number of institutions, including Huntington Bancshares Inc. and BayBanks Inc., have discussed installing self-service terminals that would allow customers to summon bank representatives to a screen to answer questions.

But so tar, only PNC Financial Corp. in Pittsburgh has installed the devices, and some industry data suggest that consumer demand is unlikely to lead to any quicker adoption of the technology by bankers.

According to a recent report from Synergistics Research Corp. in Atlanta, only about 30% of consumers expressed interest in video banking, and most of these were only "somewhat interested."

Handful Plan Implementation

As such, few bankers have plans to employ the technology in the next few years. None of the banks participating in the American Bankers Association's 1992 National Retail Operations and Automation Survey have installed video conferencing for consumer use, and less than 5% of banks said they intend to install self-service video terminals in the next two years.

But despite these numbers, proponents of video banking believe that consumer demand for the product will increase as the public becomes more familiar with the technology.

"The consumer can only demand what [he or she] knows, and right now the consumer doesn't know anything about video banking," said William Randle, head of corporate marketing at Huntington Bancshares, based in Columbus, Ohio.

Huntington is testing a self-service video conferencing terminal developed by NCR Corp. and its parent American Telephone and Telegraph Co.

Ball Is in Bankers' Court

Customers "are willing to let banks define convenience, and bankers have to act on that," Mr. Randle said.

Huntington plans to begin testing the NCR video self-service machines sometime this spring.

The machines - which will initially be deployed near automated teller machines with large transaction volume - can handle basic transactions such as deposit taking and statement printing and also more complex tasks like opening new accounts and initial processing for loan applications. it will not dispense cash.

Advances in the Technology

Industry observers said advances in digital technology have made video banking much easier to implement than it was just a few years ago.

Video signals that once could be transmitted only over expensive coaxial communications cables can now be compressed and sent through standard telephone lines.

In addition, experts said the quality of video images used at the terminal continues to improve even as the cost of installing the systems drops.

Cost to Be Halved

According to Personal Financial Assistant Inc., the Charlotte, N.C.-based company supplying PNC Financial with its video banking software, the cost of installing television-quality video will be halved by the middle of next year.

Experts said that this price improvement could give many more bankers the incentive to use video conferencing in areas outside the back office.

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