What can we learn from early adopters of video teller technology?

When financial institutions (FIs) first introduced ATMs to their customers, many in the industry predicted that teller jobs in branches would plummet—that technology would eliminate many of those jobs.

But that didn’t happen, says James Besson, executive director of the Technology & Policy Research Initiative at Boston University School of Law. Besson’s research showed it took 21 tellers to staff the average branch before ATMs and only 13 once ATMs arrived on the scene. ATMs made it significantly cheaper to run a branch, so banks opened more branches. In the end, Besson said, the number of installed ATMs and the number of tellers employed rose in tandem.

So, as FIs—first largely in North America but spreading around the world—begin to incorporate interactive teller machines into their channel mixes, should we expect a similar effect on branch staffing?

As FIs explore the efficiency and customer experience value of ITMs, teller jobs are being transformed into new, higher-tech roles as ITM video tellers, which in many ways are more desirable to FI staff.

ITMs are emerging as a transformative technology for small and mid-sized financial institutions, bridging the gap between automated and personalized banking services. Unlike ATMs, which sparked fears of branch obsolescence, ITMs are proving to be catalysts for strategic optimization.

The lines between ATMs and ITMs are blurring and the lines between in-person service and ITMs are blurring. That’s a good thing because it can deliver a consistent customer experience across all channels—it just takes a simple introduction.

For example, Renasant Bank in Tupelo, Mississippi, didn’t have to work too hard to find a simple introduction that worked for them.

“I think the key is just telling the customer we can help them with just about anything they need,” said Michelle Rivers, EVO/chief experience officer at Renasant. “We introduced our ITMs as ‘ATM with live banker’, so customers know they’ll get the service they expect from us there.”

Why FIs are choosing ITMs

In a 2022 NCR + Forrester study, FIs who adopted ITMs selected “to provide better time convenience/ expanded service hours” and “efficiency/cost reduction” as their primary reasons for doing so.

But when the same question was asked a year later, over 60% of those decision makers had different answers. In 2023, “to provide better time convenience/expanded service hours” was still cited as important, but “improving customer/member experience” had moved up and “increase capacity for sales and advisory functions” was in first place.

At the same time, several of the drivers that were considered pain points by FIs decreased in importance. “Customer demands for faster service” was cited by 39% of FIs in 2022, but by the following year only 33% of FIs listed that as a concern. And “insufficient product knowledge for sales” dropped from 26% to 19% after ITMs were deployed.‍

More learnings from the first wave

FIs who have already gone all-in with ITMs said they’ve learned valuable lessons from their experiences, including:

1. Location, location, location.

The Forrester study found that, while customers/members didn’t experience much of a learning curve for using ITMs, most hesitated to use them near the teller areas inside branches—perhaps because they sometimes had to walk past the traditional teller line to get to one.

FIs learned from these experiences that customers don’t tend to use the device if it’s in the back of the branch—they found that they work best when they’re the first thing the customer comes to. Afterwards, if they want in-person help, they can get it.

Several FIs reported that, going forward, they will be placing more ITMs in drive-thrus, walk-up kiosks and in office, retail and standalone positions rather than deep inside the branch.

2. Customer awareness makes the difference.

While customers/members are generally comfortable using ITMs, most tend to only use them for the same basic transactions they’re used to doing at regular ATMs. In fact, 25% of customers said they thought they were using a regular ATM but realized they were using an ITM after they started their transaction.

When asked which features would motivate them to try an ITM, most customers polled mentioned the same four basic transactions they say they usually request from tellers: cash withdrawal with specific bill types, check deposits, cash deposits and check cashing. All in all, 91% of customers who hadn’t yet tried an ITM said they might be convinced to try one.

But if your customers are only using your ITMs for things they’re used to doing at ATMs, your FI isn’t getting the full benefits ITMs offer: to deliver exceptional omnichannel customer experiences that create unexpected value.

The key to getting customers to use ITMs for advisory services as well as transactions is to increase awareness of the ITM experience one step at a time. Marketing tools such as handouts, digital ads, social media posts and in-person mentions by staff are excellent ways to plant ideas about the key benefits of ITMs in your customers’ minds, including: extended ITM hours, what you can do at an ITM, how secure it is, and most of all (cited by 43% of customers polled in the survey) to talk with a teller in person without having to wait in line.

The key to getting customers to use ITMs for advisory services is to increase awareness of the ITM experience one step at a time.

For example, Bank Midwest, One Place, profiles its video tellers on social media to help customers get to know them.‍

3. The more functions the better.

FIs reported offering up to 16 different services when rolling out their ITMs. Yet the services most often included at the point of rollout tended to be the most transactional ones (withdrawals, account inquiries, etc.) rather than the more advisory ones (new account opening, payments, etc.).

And to a certain extent, that’s what people want: the Forrester study found that 66% of consumers like having the remote teller option in case they need help, even though they don’t need or want help for every transaction.

But customers who say they have used an ITM for both basic and advanced transactions are more likely to say it delivers a positive customer experience. The Forrester study found that 36% of those who have used both said the ITM experience was more positive than that of using an in-person teller, 39% said the experiences were equally positive and 25% said the in-person teller experience was better. Of those who have only used an ITM for basic transactions, just 11% said the ITM was more positive than with an in-person teller, 57% said they were the same and 32% said the experience with an in-person teller was better.‍

In conclusion

Early ITM adopters have paved the way for FIs who decide to deploy them later. By learning from their experiences with ITM placement/location, function offerings and customer and staff awareness, FIs can successfully incorporate ITMs into their multi-channel mix with the branch at its center.