Two years ago, there was little chance Bob Michaud's credit union could compete for customers with the national chains down the street.

But that was before he began keeping some of Hudson Valley Credit Union's doors open for personal service 24 hours a day using ATM kiosks that connect customers to bank representatives using video-conferencing. "This is something we chose to do because we are way overbanked," says Michaud, Mid-Hudson Valley's chief marketing executive. "I compete with Chase that has full-service ATMs. I compete with Bank of America that has full-service ATMs ... I compete against TD, the world's most convenient bank, and yet I have unlimited hours."

Today, Mid-Hudson Valley has 16 personal teller machines. And for a bank with only 10 branches, with at least two more on the way, the plan makes sense. Mid-Hudson Valley plans to nearly double the number of PTMs-made by a Sandy, Utah company, uGenius-by the beginning of next year.

In the United States, credit unions have been the first to adopt the latest in branch self-service. It is their ability to move quickly over relatively few locations that gives them an advantage over larger banks with a national reach.

Executives at those outfits say they see these machines as a way to provide a unique service that separates them from competitors. "Branches are the number one or number two predictor of deposit growth. Branch convenience is the number one or number two reason that customers chose a bank," says Jed Taylor, vp of uGenius. uGenius is partnering with NCR Inc., as well as other automated teller machine makers, to premiere their personal teller machine platform on third-party ATMs.

In the meantime, bigger banks have not entirely been left in the dust. Wells Fargo and Bank of America have been rolling out new ATMs that remember customers and their preferences. "The usual complaint is: 'I've been with my bank for 20 years. Why do they still ask me if I want English-they ought to know that,' " says Bob Meara, a senior banking analyst at Celent. "It's not real gee whiz innovation, but if you have a Wachovia card, it tailors the experience automatically."

Many others have been implementing check-imaging and bulk cash acceptance. Worldwide, emerging markets, such as Brazil and Russia, have traditionally had a leg-up on advances in branch technology that might not make its way here for at least several years. Today, there are ATMs abroad that employ "true recycling." The concept takes cash that others deposit into an ATM and doles those bills out to customers who withdraw cash. Traditional ATMs use separate pools of cash for each of those functions. "When I talk about what the future potential is, you can take these [examples] and we can give you seven more, and the opportunities are very real," says Thomas Swidarski, the chief executive of Diebold Inc.

Today, however, there is a distinct disconnect between what American banks are actually doing and what analysts and self-service advocates say they should be doing. For the most part, a majority of the nation's branches haven't made much headwind this past year. Patterns in how customers use their ATMs, at least in the United States, stayed on an even keel as bankers navigated the waters of a troubled economy that seemingly has not improved much, despite some news to the contrary.

Some banks have even found themselves struggling just to standardize multiple ATM platforms across their companies in the wake of mergers. "Most banks haven't even seriously considered making the technology available to their customers based on either fraud concerns or compliance fears," Meara says. But that is destined to change-both inside and outside the branch. "I think the challenge for banks is they can't just be a good branch banking bank, or have a website, or a mobile banking application," Meara says. "They have to be really good in ways that meet the unique needs of each person. They have to use all those things together."

Overall, industry experts and executives agree that the innovation occurring in bits and pieces in Europe, and in the United States will amount to groundbreaking moves going forward.

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