With automated teller machine volume falling, U.S. Bancorp aims to boost transactions at its processing operation by offering machines that can do more than accept deposits and dispense cash.
The Minneapolis bank holding company said last week that it is developing a line of self-serve kiosks that will be able to handle a wide variety of consumers' financial activities.
The Pass+ machines are similar to the Vcom kiosks in place at many 7-Eleven Inc. convenience stores.
"What we've seen over the last few years is that more and more clients have been asking for a breadth of functionality other than traditional cash withdrawals," Janet Estep, the president of Elan Financial Services, U.S. Bancorp's processing subsidiary, said in an interview Friday.
U.S. Bancorp expects the Pass+ machines to be deployed at merchant locations, where it says they should attract unbanked users, and at bank branches, where it says they would provide some of the services commonly provided by tellers.
Besides standard ATM activities such as depositing cash and checks and making withdrawals, people will be able to use the kiosks to pay bills, cash payroll checks, transfer money, and purchase money orders and prepaid cards.
Because many of these transactions can be more time-consuming than basic ATM activities, many retail customers have said they would consider installing a Pass+ alongside a standard ATM, according to Ms. Estep. "There is great consternation at an ATM when someone is waiting to get cash and another person is perhaps using an ATM for a much longer transaction," she said.
Elan, of St. Paul, will handle transaction processing for the Pass+ machines.
Brian Koehler, Elan's vice president of emerging technology and ATM product management, said unbanked consumers have "become comfortable making cash payments, paying utility bills, and cashing checks" at convenience stores.
U.S. Bank is developing the machines with Infonox Inc., a Santa Clara, Calif., software and systems provider. Safwan Shah, Infonox's president, said ATM operators are concerned about the steady decline in transaction volume and looking for ways to attract more users.
The number of ATMs installed has been climbing for years, which is driving down the volume, and revenue from transaction fees, for individual machines. According to the 2006 EFT Data Book, published by ATM&Debit News, a sister publication to American Banker, there were 140,000 ATMs deployed in 1996, averaging 6,399 transactions per month; last year there were 395,000 ATMs in the field, averaging 2,131 transactions.
George Peabody, the director of emerging technologies for Mercator Advisory Group Inc. in Waltham, Mass., said that with so many ATMs in the field, operators are looking for ways to make their machines draw users. "We have to add these new capabilities to the ATM fleet to get the foot traffic."
Mr. Shah said banks and retailers want to automate tasks that are generally handled by people. "If you put in a single kiosk, you basically replace one employee, and it runs 24 by 7," he said.
He noted that regulatory compliance issues have merchants seeking to automate financial product offerings. For example, the Patriot Act requires companies to keep better customer records for money transfers.
"Where will … [merchants] keep these files? In filing cabinets," where they could be lost or stolen and create the risk of identity theft, Mr. Shah said. "That's very dangerous."
Mr. Koehler said several manufacturers have been certified to use Infonox's software on the kiosks, including NCR Corp., Diebold Inc., and Triton Systems of Delaware Inc.
Brian Kett, Triton's president, said his company has tried in the past to offer ATMs that among other things could top off mobile phone accounts and allow money transfers and bill payment. U.S. consumers did not take to them, though they did better in Australia and the United Kingdom.
But he said that offering such capabilities at kiosks alongside standard ATMs "may have legs," because consumers that only need standard banking services will not have to wait in line behind someone initiating a more time-consuming transaction. And eventually, if the idea catches on, some of these kiosk transactions could be "migrated" back to ATMs.
Mr. Shah said the Pass+ kiosks are expected to cost from $5,000 for a basic unit to $20,000 for one with "all the bells and whistles."
Bruce Cundiff, a senior analyst for Javelin Strategy and Research in Pleasanton, Calif., said banks have been "reluctant to utilize their existing ATM networks for" to offer services to the unbanked because "they don't want to alienate their existing customer base, by potentially having longer lines at their ATMs."
Using kiosks with additional transaction capabilities and putting them in convenience stores or supermarkets could help banks develop "starter relationships" with this pool of prospects, Mr. Cundiff said.
