State nonmember banks do not need the FDIC’s consent to establish a bank branch when setting up interactive teller machines in locations without a physical branch, the agency said today in a financial institution letter.
Nonmember banks must obtain the FDIC’s permission before establishing a new branch. However, federal law specifically excludes automated teller machines and remote service units from the definition of branch. The agency said it has received several inquiries on whether ITMs would fall under that exemption given the technology allows customers to remotely interact with live tellers.
The FDIC said it would not consider an ITM to be a “domestic branch” subject to approval as long as two conditions are met. First, the ITM is an automated, unstaffed banking facility owned or operated exclusively for the bank. Second, customers must be able to perform transactions without the involvement of bank personnel and must have the sole discretion to initiate and terminate interactive sessions with bank personnel.
“ITMs that operate outside of these parameters may require a branch application,” FDIC said.
