Customers may soon be talking to a screen at the branch — instead of a person.

Though video technology has been available for several years, banks have been wary about using the two-way communication systems to interact with customers, focusing on training, meetings and other internal applications.

But improved technology and growing interest in cost cutting have prompted some financial companies to install videoconferencing systems to serve people in the branch, replacing tellers in some cases or providing immediate access to specialists who might be working at another location.

BBVA Compass Bank is testing a video workstation that offers mortgage origination and investment services at six Houston-area branches that lack such specialists. The system features a split-screen that shows the banker's face and lets customers watch as their application is created.

"You really feel like you are face to face with the person, even better than face to face," said Alejandro E. Carriles, a senior vice president at Compass and the director of research and development who spearheaded the project.

The Birmingham, Ala., unit of Banco Bilbao Vizcaya Argentaria SA of Madrid has been evaluating the Virtual Banker system for about two months. Shelaghmichael Brown, a senior executive vice president at Compass and its head of retail banking, said it plans to install the system at another 60 to 70 branches in 2010.

"Our customers who have used it, love it," Brown said. "We have closed a number of transactions using just that channel."

Brown said the system helps the bank provide financial services to more customers without requiring additional employees. "We have a widely dispersed network. We have a need to make some of our specialist services more widely," she said. The $59.4 billion-asset BBVA Compass has 741 branches in seven states.

While BBVA Compass is focusing on services that are not available in local branches, Coastal Federal Credit Union in Raleigh is using video to replace tellers.

Willard Ross, the credit union's chief retail officer, said the $2.2 billion-asset Coastal Federal has installed video teller systems at 13 of its 19 branches, enabling employees to work on sales rather than processing transactions.

"Our branch managers can focus exclusively on their platform staff, the people who make loans and open new accounts," Ross said.

The Express Teller system, developed by uGenius IP Holdings LLC in Sandy, Utah, uses employees at a central call center in Raleigh. The devices function much like a conventional automated teller machine, with a video screen that enables members to communicate with the teller. uGenius says its machines can handle 95% of typical teller transactions, including cash and check deposits; check cashing; account payments and transfers; and other services.

Coastal Federal has been able to achieve a 40% reduction in teller staff, while at the same time offering extended hours, Ross said. "If we have a big branch where we have seven on the teller line, we'll only put three in the teller center to accommodate them."

A bank of machines also occupies less space than a conventional teller line, letting the credit union put member-service agents at locations where there might not be room to put a conventional branch, Ross said. "We're very excited about the possibility of doing mini-branches."

The strategy also lets Coastal use its best tellers to serve more of its customers, and "load balance" its teller staff based on traffic flows at all of its branches, Ross said.

Nicole Sturgill, the research director for delivery channels at TowerGroup Inc., said video banking is becoming a viable option for several reasons, including advances in video technology, the financial crisis and consumers' changing expectations.

"Banks have always been interested in improving customer service and cutting costs. Now it's not an option," she said. "This is a way of centralizing your subject-matter experts but making them available to anyone, anywhere."

Technology has advanced markedly in the last few years, and bankers who may have rejected two-way video systems five years ago may want to reconsider, Sturgill said. "Before, it would have looked like cost cutting, because it was such a choppy, uncomfortable experience."

Consumers are now accustomed to watching online videos on YouTube, and may have even placed video phone calls using Skype or similar technologies, Sturgill said.

"If you are using it at home, you certainly expect to be able to use it at the bank," she said. "It's not much of a leap to walk into a branch and not just have video, but to have nice video."

Other banks have also introduced video systems. Bank of New York Mellon Corp. used a multipoint videoconference in November 2007 to introduce 250 members of its technology staff to its internal social-media strategy.

And Citigroup Inc. is introducing video commentaries from its subject-matter experts for cash management customers.

At Compass the video system is considered a way to augment the services its staff can offer, rather than replace tellers. The video workstation is typically set up in a private office, and a branch employee usually joins the customer while they are working with the remote agent, Carriles said. "We don't see this as a self-serve unit like a kiosk. We see it as a partnership with the local branch."

The system includes a printer and scanner, so customers can send documents to the agent and receive printouts. The device also features a card reader for transactions that require fees, such as paying for a property appraisal.

It does not have a keyboard or mouse, Carriles said. "We wanted to take all the technical complexity away from the user."

Virtual Banker uses off-the-shelf hardware and a software system that was adapted from a call-center system, Carriles said. It uses a high-definition computer monitor from Hewlett-Packard Co., which features a high-end video camera, with microphone and speakers built in.

The monitor includes a touch-screen feature that customers can use to expand or shrink images, or to scroll through a document. The Houston tests, using the Windows Vista operating system from Microsoft Corp., used buttons to zoom in or out. Next year's units, using Windows 7, will incorporate multitouch technology, so users can resize on-screen images by pinching or stretching them with their fingers, or drag their fingertips to scroll, Carriles said. "You cannot shake hands, but you can play tic-tac-toe. It's almost like touching hands."

The workstation costs less than $10,000 per unit, in contrast to high-end conference room systems, which may cost $250,000 or more, Carriles said. "You would have to sell a lot of mortgages to pay for that."

In the Houston test, users adapted quickly to speaking with an on-screen agent, Carriles said. "For the first 30 seconds, they're looking at the screen. After that, they're talking to the person."