When it comes to video banking, the jury is still out - way out. Ask industry insiders about the concept and you'll get reactions ranging from outright hostility to predictions of a revolutionary retail delivery channel.

For NationsBank Corp., the best way to judge the new technology was to try it.

Late last year, the Charlotte, N.C based company conducted a three-month pilot program at three sites - a corporation in McLean, Va., a downtown Washington banking center, and a banking center at a strip mall in Rockville, Md. The pilot used freestanding kiosks developed by Personal Financial Assistant Inc., Charlotte, N.C., to deliver installment loans, bank cards, retirement accounts, and deposit accounts.

"We want to be in a position in which we can proactively meet changing customer needs," said Chuck Hieronymi, vice president, marketing planning.

When attempting to sell banks on video, PFA accents the allure of cutting branch staffing costs and the potential of increased sales.

Richard J. D'Agostino, president of PFA (which recently was purchased by New York Life Insurance Co.), claimed a bank can potentially get by with only one person in the back office for every four video banking units delivering traditional bank services.

The kiosk installed in downtown Washington featured full-motion, interactive video, an industry first in a live customer pilot. The other kiosks used one-way, still-motion video displaying head shots of NationsBank product specialists.

Customers choosing to bank by video picked up a phone and pressed a button corresponding to the product of their choice. Product specialists located in Bethesda, Md., guided customers through the transactions.

A customer applying for a car loan, for example, saw a graphic presentation of various payment options on the video screen. The product specialist, with oral input from the customer, filled out the application form, which was displayed on-screen. A laser printer then produced a hard copy for the customer's signature.

Then the customer placed the application (and proof of identification) in a scanner, where it was digitized and transmitted to the back office.

As NationsBank sifts through its pilot results, preliminary figures are showing that usage at the bank-at-work facility was significantly lower than at the banking centers. This disparity was probably attributable to the fact that staff was available to direct customers to kiosks at the banking centers, said Mr. Hieronymi. In addition, the kiosks were installed in a prominent location in the branches, while the one at the bank-at-work site was in an out-of-the-way corner.

Consumer feedback reveals that offering transactions involving cash may be more difficult than envisioned. Although they could not receive cash from the kiosks, customers could make deposits. But asking in to fill out deposit tickets and bundle the transaction complicates matters, Mr. Hieronymi said.

Cash transactions also introduce another level of operational complexity. "We now have another point where we need to collect, count, and balance all those transactions" said Mr. Hieronymi. "That isn't free."

In addition to the operational issues, some consultants say customer interest simply hasn't been so great thus far.

"The video banking tests I've seen have not been terribly successful because the consumer doesn't yet perceive the technology as offering any capability that is an evolutionary step up from current practice," said Rolland Johannsen, senior partner at Furash & Co., Washington, D.C. Banks that have installed video banking units average a close rate of 67% to 73% for product sales - comparable to human branch personnel and 40% better than telemarketers achieve, according to PFA.

Mr. Hieronymi, while stressing that he doesn't have firm figures from the pilot, indicated that even when the final numbers are in there will be uncertainty about sales figures.

"We may not know if that was a loan we would have gotten anyway," he said. "Some people look at this as a way of introducing new revenue. I haven't seen anything yet to convince us of that."

The bank is not ready to predict where it will go with video. However, the technology might be most effective when customers need access to bank staff - such as mortgage or securities specialists - which the bank cannot afford to place in all branches.

In addition, the future does not necessarily include deployment of only stand-alone or self-service video devices.

"It may be feasible to integrate the product specialist delivered on the video screen with platform personnel," said Mr. Hieronymi.

Nationsbank also is evaluating video banking as a component of fully automated branches. Coupled with automated teller machines and information stations, it would provide customers with a broader range of banking activities, Mr. Hieronymi said.

"Video," he said, "would also let us deliver high touch with the high technology."

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