By Ray Birch
NORTH CANTON, Ohio—When interactive teller machines (ITMs) were first introduced five years ago, one ATM expert said he was unsure what to expect from the devices.
“When we launched our first product, then called Concierge Video, no one was sure what was going to happen,” said Devon Watson, chief marketing officer for Diebold Nixdorf, about the machines that let people interact via video with a financial services representative. “There were a few banks out there experimenting. I had this nightmare scenario in my mind that grandmothers would be holding up pictures of their kids to show the teller on the video screen, just chatting away and creating a big backup. But when we launched, what we found was that these super-long interactions never really happened, which is really good.”
Watson said his company found that financial services reps have been well trained to be efficient with consumer video interactions, and that transactions, for the most part, have been as speedy as necessary.
But Watson said Diebold Nixdorf has also learned that FIs have found many additional use cases for the technology, such as cross sales, and also determined that ITMs will likely never replace the traditional ATM, remaining a niche solution.
Machines Tied To Marketing
“What we found really interesting is that some FIs will tie these machines into marketing,” explained Watson. “They display an offer, relevant and personalized to the consumer. They flash up a message on the screen and say things like, ‘Devon, we know you have a line of credit with us, would you be interested in a 5% loan from us? If so, click here.’ Then, if a person is interested, a teller pops up and answers questions and schedules a meeting with a personal banker. That is a use-case we did not foresee.”
Today, Watson said banks and credit unions have two primary reasons for deploying ITMs.
“To be clear, ITMs have always been a niche solution, not something that has gone mainstream, because it takes a pretty specific strategy to require an ITM,” he said. “The two main reasons for their use are competitive differentiation and addressing a specific cost efficiency the institution is trying to achieve.”
Watson said that these use-cases apply to all sizes of financial institutions, noting that Diebold Nixdorf ITMs are used by some of the biggest banks in the world, as well as by smaller credit unions.
“The reasons they all deploy ends up being similar from a business-case standpoint,” Watson said. “They often want to get some transactions automated.”
Watson said reasons range from offloading everyday interactions to lighten the load at the teller line—or even replace tellers—to shifting a certain customer segment over to using more electronic delivery.
“Maybe they see one demographic that is not moving to using the traditional ATM, or maybe they want to move more small-to-medium business transactions over, because those can be clunky to fully automate on a regular ATM,” said Watson.
He said that just having an ITM with a button people can push for help can make a significant impact on a financial institution’s ability to migrate more account holders over to using the ATM.
“If you want to move over small-to-medium business transactions, there some very neat things you can do, such as providing different ways to authenticate a person,” Watson said. “Say you own a pizza shop and you send your cashier to make a deposit. The cashier can’t do that at a regular ATM unless you are willing to give that person your card and PIN.”
But with an ITM, if the business has OK’d an employee’s use of the company’s account with the FI, then via an ITM the staffer can ID herself at the video screen with a driver’s license or some other form of identification, Watson explained.
The ITM is more costly than an ATM—generally a hardware and software upgrade to an existing ATM—which Watson said makes the use of the machines a balancing act.
“That is why the ITM fits in an interesting space,” he said. “It is a slightly higher cost.”
Watson said the ITM becomes even more costly when it is in “dual-mode deployment,” working as a fully functioning ATM while also remotely controlled by a teller. “To do that you need to integrate the ITM pretty deeply into your backend systems, so that is where some more cost and complexity come along.”
What is most important, in Watson’s opinion, about what ITMs can do for a bank or credit union is extend the FI’s ability to make an impression with a personal interaction.
“There is that precious moment of consumer interaction everyone is fighting for—banks, credit unions, payment companies, fintechs . . . Whoever is in front of the consumer most often will win, and that is the model Amazon, for instance, is using. Amazon is in front of you in your living room with your video player, in your kitchen with Alexa and on your phone and laptop. They have a better chance of winning than Walmart or Target because of their prevalence.”
Diebold Nixdorf research shows that the average consumer uses an ATM at least once a month, often twice.
“That is a really good rate for interactions, and shame on us if we let those go and just dispense 50 bucks and call it a day,” said Watson. “You are passing up opportunities to make a personal connection.”
Looking at the deployment of all Diebold Nixdorf ATMs/ITMS, Watson said ITMs claim less than 10% of the total market. He said that banks are not more likely to employ an ITM than a credit union and that CUs are often willing to experiment with new technology more quickly than a bank.
Financial services technology provider Finastra has also forecast the ITM won’t overtake the traditional ATM, or the branch, anytime soon.
ATMs Will Be Around
Saying ATMs will always have their role, Mike Dionne, managing director of North American community markets for Finastra, said the ITM won’t also replace the branch, especially as offices move toward more consultative roles.
While an ITM is excellent for offloading more transactions from the teller line to free up staff for deeper conversations with consumers, Dionne said they simply can’t replace an in-person consultation on more important banking matters.
“The notion that ITMs can completely replace all that people can do in a branch is a misnomer,” Dionne said. “The branch is evolving and is becoming a place where you have these advisory services as opposed to transactions. It would be difficult for an interaction on a video screen to replace the high-touch personal interaction, especially for more complex needs.”
Watson believes what will drive greater deployment of ITMs are needs for “surrogate branches,” for example, locations where the financial institution cannot afford to deploy a new office or has recently closed one.
“Say you just closed four branches but you still want to maintain a presence in the area, then an ITM jumps to the top of your to-do list,” Watson said. “And, too, there are these unique use cases for the ITM financial institutions are finding. For instance, giving a consumer another means to authenticate if they don’t have their debit card. These are the things that will drive greater usage of ITMs.”