By Kristabel KontaInteractive teller machines are finding new relevance in post-pandemic banking. Introduced to much hype in the mid-2000s, ITMs did not live up to the initial excitement (although many banks found ways to fit them into their strategies). The rise of digital banking, consumers’ reduced reliance on cash and significant advancements in smartphone performance diverted customer attention from ATMs to web and mobile banking applications, overshadowing ITMs in the process.
The COVID-19 pandemic changed customer expectations and behaviors around technology, reopening the door for ITMs. As video conferencing and telehealth solutions gained prominence, consumers honed a new skill: interacting virtually for personal and professional needs. ITMs offer benefits that play into this trend, and some banks are taking a fresh look at the technology.
What are ITMs?
ITMs combine the experience of using an ATM with speaking to a teller. They can be deployed in a variety of locations as stand-alone machines or alongside drive-through lanes associated with a branch. ITMs can be used as traditional ATMs, performing all functions customers are familiar with; however, they also offer several additional functionalities often thought to be limited to in-person interactions:
- Real-time support: Connect with tellers via phone or video to receive financial advice or assistance with specific transactions.
- Cardless transactions: Verify identity through ID scanners or facial recognition technology.
- Account services: Modify existing accounts and open new ones.
- Diversified cash withdrawals: Withdraw cash in increments of less than $20, including in coins.
- Check processing: Cash and issue checks.
- Signature pad: Authorize loan applications, fund transfers, and other confidential transactions.
- Replacement cards: Report stolen, lost, or damaged cards and order replacements.
- Investment transactions: Conveniently perform various transactions related to their investment accounts and efficiently process savings bonds.
Benefits and added value
ITMs offer significant benefits in customer service, enhancing accessibility, extending service hours, or even providing access to multilingual tellers, particularly when navigating complex banking services not easily accessible online or through mobile apps.
Case 1: Accessible banking for individuals with disabilities
Though ATMs are required to comply with communicative—that is, speech output—requirements, some individuals with hearing impairments may feel limited in their ability to conduct complex banking transactions independently. ITMs can rewrite this experience by integrating accessibility features. Imagine an ITM that includes an option to initiate a video call with a skilled teller who is proficient in American sign language. Customers can then engage in clear and effective communication, conveying their banking needs and receiving real-time responses in ASL.
Case 2: Seamless experience for busy customers
Those who value banking services tailored to their limited availability can also benefit from ITMs. For instance, after finishing work in the evening, a person is still able to visit an ITM offering extended hours (perhaps staffed by local employees at a centralized location who prefer a non-traditional schedule or by remote employees in different time zones). They can quickly establish a secure video connection with a teller and discuss financial goals or specific transactions. The customer can now receive personalized recommendations and guidance that are otherwise only available to those who can visit a branch during business hours.
Case 3: Increased efficiency
Optimizing the distribution of video tellers allows banks to decrease labor expenses, while reducing the number of branches helps lower real estate costs. This not only benefits the bank’s financials but also contributes to minimizing their environmental footprint by reducing electricity and water expenses and lowering emissions from worker commutes. Standardizing processes and utilizing a shared platform among remote video tellers further enhances operational efficiency. And as discussed above, ITMs can leverage out-of-market remote employees or in-market employees who prefer non-traditional schedules, expanding the bank’s talent pool.
Limitations of ITMs
ITMs may not be a good fit for every bank. In addition to significant cost considerations, banks must consider broadband availability and the relative merits of enhancing other mobile and web-based tools to achieve similar benefits.
Cost considerations. Implementing ITMs involves a higher upfront investment compared to ATMs. A 2020 estimate points to costs ranging from $55-80,000 per machine and a one-time network infrastructure development cost of at least $200,000, whereas ATMs typically cost between $15,000 and $40,000 per machine. Additionally, training, hiring remote tellers, technical support, and security measures for these advanced stations may incur additional expenses.
Broadband availability. ITMs can be a valuable solution for banking services in rural areas where physical branches are not feasible–given the critical component of broadband connectivity. The lack of reliable and robust internet access can undermine the effectiveness of ITMs, hindering the goal of improving accessibility. It is essential to assess the broadband infrastructure and potential connectivity issues before implementing ITMs in rural communities to safeguard the intended benefits.
Compliance. As with any customer-facing technology which delivers financial products and services, banks must ensure that ITMs comply with a host of applicable laws and regulations. Many of these will comply with the Americans with Disabilities Act mandates and disclosure requirements of ATMs, but given the broader scope of ITMs, a more thorough review may be required. Ideally, a bank will adopt a cross-functional collaborative model in which business units work in real time with compliance and risk management. By embracing a comprehensive approach to innovation that marries development with the compliance function, banks mitigate risks and pave the way for a more secure and user-friendly customer experience.
Alternative solutions. Investing in improving existing digital platforms may be more effective than deploying ITMs. By expanding online and mobile banking apps, banks can offer a wide range of services, ensuring a comprehensive digital banking experience. This approach allows scalability and adaptability as platforms can be continuously upgraded. Many banks — such as Massachusetts-based Stoneham Bank in Stoneham, Main Street Bank in Marlborough and Lee Bank in Lee — have integrated video banking, enabling customers to open accounts, apply for loans, and sign documents remotely and securely. Considering these capabilities, banks must carefully evaluate the added value of ITM deployment compared to enhancing digital platforms to meet a broader range of customer needs.
An assessment checklist
Given the range of considerations outlined above, banks must carefully evaluate their position and the preferences of their customers before implementing ITMs. To guide this assessment, banks can ask themselves the following questions:
- What is customer interaction with our online platforms or mobile banking applications like?
- Has there been a significant post-pandemic return of customers to our physical branches?
- What areas are we trying to reach through ITMs—do these areas have the necessary broadband infrastructure?
- How much of our financial and human capital is available to invest in additional digitalization?
- What is our readiness to provide technical assistance?
- What security measures can we implement to ensure that once deployed, ITMs are not the target of vandalism and crime?
ITMs offer valuable features that can support banks’ digital transformation journeys and be vital tools for delivering essential banking services and personalized experiences. However, the continuous evolution of digital platforms and mobile apps may soon provide comparable functionalities without the investment in an ITM platform. By carefully evaluating the evolving digital landscape and customer preferences, banks can make informed decisions on how to use ITMs alongside other digital channels to provide seamless and convenient banking solutions.
Kristabel Konta, a student at Dartmouth College, interned for ABA’s innovation and strategy team in summer 2023.