Videoconferencing once delivered spotty, unreliable images, but some banks now have high-speed Internet connections that could let them conduct face-to-face meetings with customers in far-flung areas.
Several U.S. banking companies are testing videoconferencing systems, a vendor says, and a credit union company in Australia is using the technology in its branches.
David Cook, the general manager of operation at New England Credit Union Ltd. of Armidale, Australia, said it has 22 branches spread out across New South Wales. "It takes us three days" to drive to all the branches, he said. "Our furthest branch is four and a half hours away" from the headquarters.
New England has installed videoconferencing units in 16 branches, so its wealth management agents can handle customers at any branch, he said. It started installing the machines in October, and the branches that do not have them are within a half-hour drive of those that do.
Mr. Cook says his company still makes the initial customer contact in person, so its wealth management agents often have to drive several hours, but it uses videoconferences for follow-up chats. So far the technology is used only for wealth management customers, but in the next three to six months New England will also start using it for loan interviews, he said.
One reason New England is using the technology in its wealth management business is because not every branch has someone certified to advise customers about their investments, while there are more employees who can conduct loan interviews, Mr. Cook said.
The video units would be used during the loan process only when all of a branch's personnel are tied up with other customers, he said.
David Luff, a global marketing manager for financial services at Tandberg ASA, which manufactured the credit union's equipment, said several U.S. banking companies (which he would not name) are performing 90-day tests of its videoconferencing system.
The devices create an encrypted, digitized video stream that is routed through the Internet. If the banks' data networks are fast enough to support real-time video, they plan to continue using the equipment after the trials are concluded, Mr. Luff said. New England had to upgrade its network from one that moved data at 128 kilobits a second to one that moved data as quickly as 2 megabits a second, he said.
The machines feature plasma screens, video cameras, microphones, and speakers. They have numerous ports in the back that could appear intimidating to a user, but they really only need two wires: one for power and one for a network connection. (The remaining ports allow for more creative uses, such as letting it double as a computer monitor.)
"It's like a TV - you plug the thing in, and it works," he said.
Tandberg has dual headquarters in Lysaker, Norway, and New York.
Alenka Grealish, who manages the banking group at the Boston market research company Celent Communications LLC, said that a videoconference could be a more effective sales tool than a phone call.
"Just placing a face to a product - that's valuable," she said. "That could be a clincher when closing a deal later."
Mr. Luff agreed that by using video, bankers could create "a deeper level of trust" with customers than they would by using the phone.
International Business Machines Corp. of Armonk, N.Y., has incorporated Tandberg's hardware and software into its own branch systems. There are several sizes of screens available. Tandberg said no one has bought the version that has a screen large enough to display life-size images, but Stephen Onufrey, an IBM financial services solutions executive, said a screen that large could help a bank increase its profits.
In fact, he said that after interacting with someone through a life-size video screen, some customers "didn't recall if the person was in the room or not."
Mr. Onufrey estimated that 20% of U.S. banks have Internet connections that could handle a smooth video feed, and that roughly half of the banks that do not have one are in the market for one for their other data flow needs.
Ms. Grealish said that even though videoconferencing is now being used in various corporate applications, banks have shown little interest in using the technology in its branches. "The technology is only part of the execution. The other part" is encouraging branch employees to use it to interact with customers, she said.
