Financial institution adoption of interactive teller machines, slow at first, has seen a marked boost since the start of Covid-19. 25% of financial institutions currently deploy ITMs and 60% plan to include the machines in their networks in the next three years, according to research conducted by Adrenaline.
However, consumer use of these machines — which offer an ATM-like interface with two-way, real-time video — has lagged. Adrenaline did, however, uncover strong consumer interest in the machines among all age groups and strong satisfaction among people who had used an ITM.
At the same time banks and credit unions that have implemented the technology have found it cost-effective in dealing with customer expectations of 24/7 service, as well as addressing issues of hiring scarce new talent to fill in-person teller positions.
Financial institutions see big potential in using ITMs as branch networks continue to change. Consumers need a little more convincing.
The research by Adrenaline, conducted in two waves, also identifies a disconnect between how financial institutions perceive customer comfort with using ITMs, and how customers themselves actually feel about the technology. This disconnect must be dealt with through education before ITMs can achieve their potential return on investment, the branding agency concludes.
“For financial institutions, the benefits are clear,” says Juliet D’Ambrosio, Adrenaline’s managing director of strategy. “This self-service technology serves as a bridge between the physical and digital, improving customer experience and increasing revenue per customer. It can serve dual purposes — automating routine banking activity while providing access to bankers for higher-value consultations.”
Consumers and Institutions Surveyed
ITMs operate on a “hub-and-spoke” structure, where a relative handful of live tellers often in a central location connect with a financial institution’s network of remotely placed ITMs. Far from being glorified ATMs, interactive teller machines are capable of processing up to 95% of all transactions traditionally done by in-person tellers. depending.
Depending on the units, the software and the training of those supporting them, transactions can include managing accounts, paying bills, making deposits and withdrawals, submitting credit payments, applying for new credit and checking accounts, and even disputing charges.
One of the Adrenaline surveys probed consumer perceptions and experiences with ITMs, and the other looked at the subject from the financial institution perspective. In an interview with The Financial Brand, D’Ambrosio says her agency wanted to establish objective parameters covering the present use, acceptance, and issues with ITMs, from both the user and provider perspective.
ITMs from the user’s point of view
Adrenaline’s survey of consumers, in brief, shows:
- Only 6% of consumers report using an ITM in the past year, based on a census-balanced national sample. The firm says the reason more consumers have not used ITMs is because the units have not been widely deployed yet.
- All generations surveyed said they’d be comfortable with using an ITM. In order this is: 86% of Millennials, 85% of Gen X, 80% of Gen Z, and 72% of Baby Boomers.
- By function, consumers would be comfortable using ITMs for making a deposit or withdrawal (68%), making a credit payment (40%), applying for credit (26%) and paying bills (21%).
- 84% of those who have used ITMs report some level of satisfaction, from “somewhat” (32%) to “extremely” (52%). 16% were “dissatisfied.”
One issue with ITMs that has not yet been resolved is the matter of privacy, especially when ITMs are used in a branch or a public space. Many units use a telephone handset to enable users to speak to and hear the video teller privately. That’s a problem in the Covid era.
“It’s necessary to deliver privacy and great audio quality without the use of a potentially contaminated phone,” D’Ambrosio observes. One avenue that’s being considered is the use of highly directional speakers which can be heard only by the user, but can not be overheard by others.
ITMs from the financial institution’s point of view
Some of the extensive data from the survey of banks and credit unions which have deployed ITMs shows:
- Non-ITM branch employees spend 60% of their time on routine transactions.
- 77% of financial institutions with ITMs report sale close rates better than or equal to other channels.
- While 25% of financial institutions currently deploy ITMs, 60% plan to include them in the next three years.
- Branches enabled with self-service technology, including ITMs, report 60-70% improvement in branch effectiveness as measured by cost savings and increased sales.
- Improving customer experience and increasing revenue per customer are the top objectives that drive financial institutions to deploy ITMs.
The Main Disconnect
When meshing the two surveys together, one unexpected finding emerged. While financial institutions and their customers generally agree on how often the machines are used, the respective perceived satisfaction rates differ significantly.
Consumers who use ITMs, though generally satisfied, are not as satisfied as bank and credit union managements think they are.
“What we found was financial institutions, in some ways, overestimate how comfortable their customers or members are using ITMs,” says D’Ambrosio. “There’s not a huge difference but there is a difference that is significant enough to take notice of.”
For example, while 16% of users were dissatisfied with ITMs, none of the financial institutions thought any customers were dissatisfied. On the other end, only 24% of users were extremely satisfied, while providers believed 61% of users were extremely satisfied.
“There is a need for more investment in upfront education to get consumers to use ITMs more comfortably and therefore to have a more positive perception,” D’Ambrosio states. This can be accomplished in a number of ways, including:
- Having customer representatives available to walk customers/members through the process.
- Placing extensive signage in and around the ITM explaining procedures.
- Providing how-to videos available on the institution’s web site, emailed to clients, and presented on YouTube.
- Launching advertising campaigns, first touting the initial rollout and following with ads offering useful tips.
The End of Traditional Tellers?
An old question has gained added resonance with the increased interest in ITMs: Why have traditional tellers at all?
“We think it’s not going to be an `either/or’ situation but it’s going to continue to be a `both/and’ situation,” says D’Ambrosio. Human beings need other human beings, especially with something as emotionally fraught as your money, your bank, your future. The role of the teller will adapt to become the role of financial guide and advisor, while the transactions that are able to be automated easily will be done by self-service, such as ITMs.”
( Read More: The Future of Video Banking )
More immediately, retail financial institutions, like other service industries, are “in the throes of the `Great Resignation,’ where it’s hard to attract talent for positions like tellers,” D’Ambrosio observes. ITMs, which use fewer people to service more and widely dispersed clients, could fill in that gap.
ITMs as Brick and Mortar Substitutes
Branch consolidation is continuing, but D’Ambrosio points out that even if a potential customer never sets foot in a branch, “66% of consumers want to bank with a branch that is within 15 minutes of where they live and work. ITMs have an increasingly important role because they are going to enable a bank or credit union to continue to have a community presence, to continue to make a psychological connection with a potential or current customer or member and do it in a highly convenient, 24/7 manner.”