Jim Kinney is a very busy man these days.
“I have two this week,” he said recently. “I’ll do another one tomorrow. We’ve got a few left to install that are in a warehouse, which we should finish by the end of the year, so we’ll have close to 45 around North Alabama.”
Kinney is referring to ITMs, Interactive Teller Machines.
Kinney, executive vice president, chief information officer and chief operating officer at Peoples Bank of Alabama in Cullman, is responsible for overseeing the installation of the bank’s ITMs, which have been sparsely used for the past decade or so but are now increasingly coming into favor, thanks in part to the spread of COVID-19. And Peoples Bank has been one of leaders in ITM installations.
An ITM is essentially a “branch in a box” system that uses a combination of touch screens and video technology to offer a virtual version of the in-person banking experience — sort of like an ATM with live video chat. Customers can walk up to the ITM, press “begin,” and then start a video conversation with a live operator based anywhere in the world. The operator functions like a bank teller inside a normal bank and can perform a variety of services for the customer.
ITMs can replace traditional banks entirely or be placed alongside a larger physical location with live staff inside to handle more complicated requests. Some banks also like to keep an
ITM open outside of normal banking hours to give customers more flexibility.
Chris Nelson, president of STS Group in Madison, which builds ITMs, has done consulting for a number of banks since he started at STS in 2010. He says he has seen a number of different technologies impact the banking industry, and “the ITM is big.”
“Business has started to boom,” he says. “I have a lot of customers who are interested in it but the technology isn’t for every bank or credit union. Truly, it’s to help your retail customer have a more efficient and personal transaction than what they get in a drive-through.”
Nelson says when COVID-19 exploded and banks were shutting down branches, “We had an influx of inquiries from people wanting to go to this and from our existing customers that wanted to buy more.”
Scott Latham, president and CEO of the Alabama Bankers Association, says ITMs are “excellent tools for consumers” that allow them to do things like deposit checks and order new credit cards.
“Many people think the reason for doing them is to cut costs, and I guess there are some situations where you can, but frankly, I don’t think we see it as cost-cutting,” Kinney says. “They are expensive to buy, they are expensive to own, a lot of ancillary parts go with it, such as specialty alarm systems and security devices, especially cameras, so each machine probably has a minimum of three cameras on them from different angles, so they are expensive.”
Like ATMs, the cost of ITMs can vary widely depending on business goals and requirements. The machine itself will likely cost between $60,000 and $80,000, depending on the model and vendor. ITMs come in different versions, including drive-up, walk-up and stand-alone.
“That’s just the machine itself,” says Kinney. “You have to remember the machine is run by someone in a different location who is the ITM teller.” So, there’s some personnel cost savings, but not that much.
Latham says the ITMs are particularly well suited for use in smaller communities.
“It is absolutely worth the look to see if an ITM can service a small rural community,” he says. “So if in rural Shelby County, for instance, there is a market for say, XYZ bank and they’re kind of all around, but maybe not at this particular part of the county, but the bank has a well-known presence there and a strong customer base within that area, it could certainly look at and probably make a wise decision in strategically placing one of these in an area like that because it’s almost like an electronic branch bank.”
Patrick La Pine, president and CEO of the League of Southeastern Credit Unions with members in Alabama, Georgia and Florida, says, “I think if you look pre-pandemic, credit unions were slowly migrating to ITMs. ATMs were pretty much king, but more and more credit unions were looking at ITMs as a way to provide some cost savings long-term, as well as pretty much a different member experience.”
What with the pandemic, where financial institutions closed lobbies or entire branches, sending customers to drive-throughs or appointments, ITMs seem like a good option, La Pine says. For some, it was “almost part of their disaster recovery plan.”
Many financial institutions are now “knee-deep in their strategic planning processes and budgeting for next year, and I’m sure everyone’s talking about the future of the branch,” La Pine adds. “What does the branch of the future look like given what we’ve learned and experienced through the pandemic, and how do we best serve our members, not only digitally but also through other means? And ITMs are definitely part of the conversation.”
ITMs offer a lot of advantages to credit unions, La Pine says. They allow for a centralized staff able to serve members at any location with an ITM. Moreover, data shows people spend less
time with an ITM teller than at an in-branch teller window.
When credit unions plan the branches of the future, he notes, ITMs will clearly be part of the planning.
La Pine believes consumers will eventually see more ITM stand-alone locations in malls and other heavily used locations, and the ITM costs will start to drop.
“Some people don’t like it because it’s less personal,” La Pine says. “A lot of times when people go into the branch, they go to the teller line because they like this teller. But ultimately, as people learn there’s a convenience factor to it that they didn’t have before, especially after hours and in certain locations, I think members will typically adapt to it.”
Customer Feedback on ITMs
How customers feel about ITMs “kind of depends on where they are,” Kinney says. “For instance, we have walk-up machines in downtown Birmingham. No one has a problem at all using them. So, in that case I would say it’s pretty much customer neutral, but no one has had an aversion to using them. We have 26 locations and a lot of them are rural customers, smaller markets, and typically, that’s where we find the resistance, probably because we’re still a community bank and that’s a personal hands-on relationship type of banking.”
Kinney says people also need to remember that ITMs are still machines.
“As modern as they are, they still have to handle paper money, and paper money is difficult to handle when it’s been circulated,” he says. “And lots of people deposit cash, so feeding cash into a machine is still a mechanical process and you are subject to jamming and those kinds of things.
“They are tools of the trade,” Kinney adds. “I think it is important to tailor the use of this tool to the positive end of the market, having ITM tellers who can identify with the customer using it and adapt the conversation, the style to really serve the customers. That’s the key for us.”
Another factor in the ITM discussion is security for both customers and financial institutions.
“Another thing you’re seeing is that a lot of times you walk into the lobby of a credit union branch, there’s the entry lobby and then there’s the door into the lobby of the credit union,” La Pine says. “They put an ATM in that entryway so that at night, they can lock the main entrance into the credit union and members can still go into that area where they would have their ATM in the old days. Now you can go in there and because a lot of the ITMs are staffed like you would your call center in extended hours, you can go in there at
7 o’clock on a Wednesday night and you can still literally talk to a teller through the ITM.”
And, Nelson says, the ITMs offer an additional level of security.
“With an ITM, the bank employee is typically in a call center, not a branch and there is no cash. So if somebody was going to try to rob an ITM, they can’t come up and put a gun to it and tell it to spit out the cash,” he says.
Bill Gerdes and David Higginbotham are freelance contributors to Business Alabama. Gerdes is based in Hoover and Higginbotham in Decatur.
As seen in October 2021 issue of Business Alabama.