While Interactive Teller Machines — ITMs — haven’t delivered all the promoted financial benefits yet, they have proven to be an important addition to the physical distribution network. The question many banks and credit unions should be asking isn’t “Should we deploy ITMs?” but rather “How should we integrate ITMs into our branch and ATM network?”
But that doesn’t mean the decision is a simple one.
ATMs has been around for over half a century, with over 3 million machines worldwide. They proved effective as cash dispensers and evolved to more useful services such as deposits, transfers between accounts, and basic account maintenance.
Consumers’ adoption of higher function machines led to a long-term decline in teller transactions. Manufacturers increasingly marketed the machines as branch replacements. I view them more as “branch complements,” but ATMs have clearly proven their value.
Roughly a decade ago, a new function was added that allowed users to “interact” with a human teller by video link, producing the ITM. Manufacturers have been marketing this next evolution of the ATM aggressively, initially as a cost-effective alternative to live in-branch tellers.
In many cases, so far, those cost savings proved elusive and the customer experience troublesome. But like many new banking technologies, adoption is only a matter of time. Remember, ATMs weren’t a hit initially and many early efforts at online banking failed. As consumers are exposed to more ITMs, their comfort with the technology increases. Over time increased functionality will be introduced.
Keep Savings Promises in Perspective:
ITMs don’t eliminate tellers, they relocate them to a call center.
While the ITM customer experience may not work for every bank or credit union, it can be an effective solution in certain situations, augmenting the functionality of ATMs.
The challenge will be siting ITMs cost-effectively and intelligently. Here are insights into what works and doesn’t work when deploying ITMs.
Beginning the ITM Deployment Discussion
Incorporating ITMs into your branch network should begin with a decision about the customer experience your institution want to deliver. Among the elements to consider:
1. Replacement of the branch teller. This is the most challenging, but perhaps most transformative action you can take. If you approach it from an expense-saving viewpoint, you will likely be disappointed. However, if your goal is to transform customer experience over the long-term you may find success. Some guidelines:
- If you are replacing live tellers, make it a complete replacement in the affected branches. If you offer your customers both live tellers and ITMs, I’m confident they will head to the teller windows more frequently. Bluntly, rip off the band-aid quickly.
- Start with a few branches, so you can study consumer and staff reactions and adjust your messaging and training. It’s important to work out any issues early before rolling out a broad program.
- Whatever path you choose, track performance and issues in great detail so you can learn from these early experiments.
2. Upgrade drive-up ATMs into ITMs. This is the least challenging and likely the least expensive alternative. ATMs need to be replaced every five to seven years, and drive-ups enjoyed a resurgence of popularity during the pandemic. Instead of replacing them with a next-generation ATM, consider spending a few more dollars on the latest ITM. The cost to implement isn’t that much more and people will appreciate the after-hours access to tellers. Some suggestions:
- Make sure your staff understands the strategy so they can answer people’s questions about the upgrade.
- Make sure you tell your customers about it, both in the branch and with signage at the drive-up lanes.
- Consider using social media to announce the upgrades to your followers.
3. Upgrading all ATMs. This is a middle-ground position. Using the same logic about leveraging routine ATM upgrade programs, spend a little more to provide consumers with access to tellers, even though sometimes remotely, at more places. You will gain faster adoption by giving people more opportunities to try the new machines. Here are some things to watch out for:
- ITMs in walk-up situations face different challenges than drive-up implementations. Queues tend to be more compressed so there is less privacy for the customer using the device. Study those that have gone before you, to learn from their approaches.
- Consider deploying live ITM “ambassadors” at the machines to explain the new functionality and help people learn how to take advantage of them.
Five Issues Every ITM Deployment Discussion Must Cover
Certainly, there are more options than these three suggestions. In all cases, you must take into account these elements:
- How much risk do you want to take in introducing change to your customers? Are your customers already comfortable with ATMs? The more they are, the easier the transition.
- How well does your call center operate today? Can it easily be modified to set up an ITM support teller function? Remember people will be seeing the call center staff, so their attire and backdrop are important.
- Messaging to your staff is critical. The natural first reaction will be that tellers are going away, and jobs are at risk.
- Messaging to your customers is critical too. People will initially be worried about losing access to tellers and that their favorite teller will be let go.
- Track results carefully. You will want to track usage over time to learn about adoption rates and track teller volumes too in order to see if transactions are migrating.
Ask the Obvious But Often Unasked Question
Taking the big plunge by replacing all tellers with ITMs may seem to have long-term benefits for your institution. But step back and answer a critical question before implementing this tool:
Ground Your Decision in Reality:
If customers are getting out of their cars and walking past your existing ATMs today to get to an in-branch teller, would they be willing to give up that experience for a video teller?
Ultimately consumers, not your strategic plan, will decide how quickly ITMs become the norm.
Be patient. Remember it took years before ATMs became commonplace and adopted by most of the consumer population. ITMs likely face a similar adoption curve.