Interactive Teller Machines Crucial in the Digital Banking Age

As banks and credit unions rethink their brick-and-mortar strategies, some are now looking to ITMs as a means to combine human service with digital convenience through the use of live video, and as a low-cost option to reach new markets or infill others.

Having faded into obscurity for a time with the rise of mobile banking, interactive teller machines (ITMs) have made a comeback during and since the height of the pandemic in the U.S. Once touted as the next-big banking technology that could offer the best of automated service combined with human service provided by live two-way video, ITM installations failed to live up to the fanfare. They were still purchased and used by many institutions — particularly for drive-through operations — just not in the numbers expected.

Due to the pandemic and the growing comfort with live video interaction, more banks and credit unions are taking a closer look at ITMs to increase customer convenience and extend their physical presence.

More Than an ATM With Video

Also known as video remote tellers or virtual teller machines, ITMs offer an ATM-like interface with a video screen that offers real-time access to a human representative, sometimes centrally located. Current proponents of the technology say the “branch in a box” concept can open new, low-cost distribution channels that marry digital convenience and human-based service.

Key Difference:

Most ITMs – particularly when used as a standalone kiosk – can support not only basic ATM services but also enable consumers to open accounts, order replacement cards, obtain cashier’s checks, and even obtain investment advice.

ITMs have been around for more than a decade. Bank of America rolled them out in Boston in 2013 as “ATMs with Teller Assist” with the intent of expanding the service nationwide, but then things went silent. The simultaneous rise of digital banking led many consumers to look to their phones instead, says Joe Sullivan, CEO of Market Insights. “In-app video capabilities took some of the thunder out of the ITM. They’re around, but there has been this cultural resistance over fear of cannibalizing staffing from the in-person experience. ITM adoption has been slow,” says Sullivan.

Some have also questioned ITMs’ effectiveness in meeting their return on investment goals. Ron Shevlin, Director of Research at Cornerstone Advisors, wrote in an op-ed in The Financial Brand that while banks can yield gains from ITMs, it can be challenging and take time. He added, however, that “When we got past the hype and inflated sales claims, we found solid proof that financial institutions can improve branch productivity and realize a positive ROI from ITMs – if they make a commitment to making them work,” said Shevlin.

Read More: Future of Branches Debated in a Transformed Digital Ecosystem

Pandemic Changed Attitudes Toward Live Video

That lack of excitement over ITMs could be changing now that Covid has thrown consumers and banks more deeply into the digital and remote-service world. Sullivan said the shift to zoom meetings and teleconferencing has made consumers more comfortable interacting with others over video screens.

Updated View:

ITMs may be perfectly suited for the post-Covid world because they offer the efficiency of technology with the value of human interaction.

According to a report by, the global bank kiosk market is expected to grow at a rate of 12% annually, from $744 million in 2021 to more than $1.3 billion by 2026. Some Market Insights clients are now starting to deploy ITMs in branch lobbies or vestibules to offer convenience and socially distanced human interaction. “I hadn’t seen many institutions adopt them before, but since Covid, we’ve had a number of banks saying they want to see if they make sense. Some banks are putting the ITM in their lobby to use it as a training ground before moving it to the drive-through,” says Sullivan.

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John Voorhees, Director of Distribution Strategy and Business Development at TerraStrat Group LLC., said in an earlier article that while in-branch deployment of ITMs rarely met the expected usage levels and cost savings, “we’re in a different world now.” Voorhees believes that supplementing on-site staff with remote-operated ITMs could be a valuable tool to help meet the growth in drive-through traffic.

Others note interest in ITMs was slowly starting to rise even before the pandemic. Doug Brown, senior vice president and general manager of NCR Digital Banking, for example, told the growing interest in digital-first strategies led banks to explore them as a component of “branch anywhere” deployments.

“Aside from maybe a cashier’s check if they don’t have a check printer embedded, modern ITMs can do 90% of anything a lobby teller can do.”
— John Hyche, LEVEL5

When Atlanta-based Cadence Bank announced plans to introduce 46 Cadence LIVE Teller ITMs across its six-state footprint in early 2020, it called ITMs the “perfect blend of high-tech, high-touch, whereby customers can complete their banking at times convenient to them while talking with an experienced live teller for any assistance they may need.” The Cadence units even permit customers to request a HELOC advance.

It does help that ITMs are now more advanced than they were a decade ago, notes John Hyche, SVP and Principal at LEVEL5. While ITMs started out as an “ATM plus Skype,” they now have greater capabilities and enable the teller to control the machine. And when tellers aren’t on the clock or connected to the network, the ITMs can still serve as traditional ATMs. “Aside from maybe a cashier’s check if they don’t have a check printer embedded, these machines can do 90% of anything a lobby teller can do,” says Hyche.

Read More: The Future of Video Banking

ITMs As a Branch Infill Tool

As financial institutions double down on their digital-first strategies, ITMs offer customers greater flexibility, visibility and traffic exposure. Hyche says some banks that are adopting ITMs are leveraging them as an easy and low-cost way to expand their footprint. He noted one credit union in Augusta, Ga., using ITMs to expand their presence in the community.

Footprint Booster:

Some financial institutions are using ITMs as a low-cost way to expand their presence where a full-service branch isn’t justified.

By placing billboards, kiosks and ITMs as infill between their limited branch locations, the credit union can create the perception that “they’re everywhere,” he says. “There’s an economy of scale. The idea is you can use ITMs where a full-service, freestanding branch isn’t feasible.”

Thomas Hay, COO of consumer banking at BOK Financial, said in an NCR report that there are many promises in the technology. Hay noted that BOK, parent of Bank of Oklahoma, purchased ATMs over the past year and pays roughly $1,500 per unit to run software that can quickly turn them into ITMs. The bank is now starting a pilot program that would put the machines in the market as early as 2022.

As banks and credit unions explore the possibilities with ITMs, they’ll not only have to consider placement but how they’ll operate the machines and spread their investment. Piloting one machine is unlikely to yield a measurable benefit, in John Hyche’s view. He recommends financial institutions start with a half dozen or more to spread the investment and generate more economies of scale.

In addition to the machines, institutions also have to invest in the back end, including staffing, training and software. “You’ve got to invest in the back of the house along the way. You need the connectivity, the software and some dedicated employees. On a one-off basis, you’re not gaining much, you need to get the number of installations up to see that economy of scale,” says Hyche.

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