Hartford Business Journal

14 Hartford Business Journal • May 1, 2017 www.HartfordBusiness.com "micro-branches" in central Connecticut. Their embrace of video tellers is anoth- er step in the financial- services industry's march toward using technology for such commodity services as taking deposits, dispensing cash, and providing account balances while free - ing up staff to deliver more value-added ser- vices, such as open- ing accounts, loan- making and pitching financial and wealth advisory services. Finex, an $80 million credit union with 9,194 members, recently brought online the last of its three "micro- branches" equipped to provide video- teller services. Credit unions are owned by their members, who through their check- ing-savings deposits, acquire "shares'' in the cooperative. "It saves on every- thing,'' said Ian Hough, marketing director with Solidus Inc., a Bloomfield financial- services contractor who assisted with Finex's and Connex's ITM installation- design and implemen- tation. "It saves on the financial cost of a full-size branch. You don't have tellers sitting unoccupied.'' "You can do anything there that you can do in a full-size branch,'' Hough said. Atlanta's NCR Corp. (formerly National Cash Register Co.), through some propitious acquisitions, is the world's leading maker- provider of video-teller hardware, software and services. NCR Vice President Jose Resen- diz said major banks, including Bank of America, JPMorganChase and Wells Fargo, along with a number of smaller community banks and credit unions, have added its ITMs to their networks. In 2013, Bank of America, which operates the most branches in Connecticut, rolled out modified ATMs so consumers could talk to a live teller. The rollout's status and whether any are in Connecticut is unclear. The bank did not respond to a request for comment. Using mobile apps and other digital tech- nology, consumers nowadays have more ways to interact with their bank, and thus expect those institutions to put in place digital networks that allow customers to do more for themselves what tellers used to do, Resendiz said. "Financial institutions have started evolv- ing their thinking from a service strategy,'' he said, "to a holistic strategy, looking at how their customers are engaging with them across all channels.'' Video tellers, Resendiz said, have provid- ed flexibility to banks and CUs as to how they deploy their human resources. Also, many have built or modified branches, minus the traditional "teller window'' setup that often served as a barrier to efficient, personal ser- vice, observers say. NCR estimates that eight in 10 bank trans- actions, such as cash withdrawals, deposits, account transfers and balance information, can be performed with an ITM. That, in turn, he said, frees human tellers to handle more complex transactions such as open- ing savings, checking or credit-debit accounts, or applying for car loans and mortgages. Overcoming resistance Finex's use of ITMs is the result, said Finex CEO Michael Palladino, of a top-to- bottom strategic review of the 79-year-old credit union founded to serve schoolteachers and other educators in the region. Its first conversion to video tellers occurred at its Vernon branch, he said. Next to be con- verted was its Manchester branch, inside the ShopRite Supermarket, 214 Spencer St. Finally, Finex's main branch, 616 Burnside Ave., was converted to house a pair of walk-up, indoor ITMs, and one drive-thru ITM. At the same time, Finex yanked its teller counter and remodeled its branch interior into an open space, featuring a "concierge'' station where members are directed either to the ITMs, or to a waiting member-services associate who can assist them with opening accounts, applying for car, home or personal loans, or with other complex financial transactions. Palladino declined to state the CU's investment in the conversion. The ITMs aren't cheap, run- ning around $80,000 each before installa- tion and other costs are weighed, he said. Using ITMs allowed Finex to open its branches to members seven days a week. The toughest part about implementing ITMs, Palladino said, isn't acquiring or set- ting up the technology, it's convincing reluc- tant customers to be open to change and embrace the technology. Finex regularly surveys its member-own- ers as to their service preferences and expe- riences. When it surveyed members before implementing its ITM network, Finex discov- ered plenty of reluctance among them. So, Finex employed a simple but effective approach to persuade some 130 Finex mem- bers that ITMs would be good for them and the CU, Palladino said. He and his managers called each of them to explain the technol- ogy. Nine out of 10 of those contacted over- came their concerns, Palladino said. Similar to ATMs Connecticut's bank regulators don't have direct say as to how financial institutions deploy technology, but the banking depart- ment says it's aware of ITMs' growing pres- ence in this state. "We're finding banks are using these to improve their efficiencies and services to their customers,'' said Matthew Smith, the state Banking Department's general counsel. ITM's have plenty in common with their older, more ubiquitous cousins, the automated teller machine (ATM). Both have software-driven elec- tronics, housed inside thick, steel chassis, that are linked to banks', thrifts' and credit unions' centralized customer-account databases. Recently, officials and staff at Finex, former- ly First New England Credit Union, demonstrat- ed how using an ITM isn't much different than using an ATM, except that customers actually can talk to a live person in real time. Using his Finex card and personal iden- tification number, Palladino, through the ITM, instantly summoned one of the credit union's five video tellers on duty in its call center inside its Burnside Avenue headquar- ters. Within one minute, Palladino withdrew cash, collected a transaction receipt from the ITM and bid the teller farewell. For privacy-security, users have the option of the machine's phone receiver to talk to the teller. Otherwise, they use the machine's built-in speaker-microphone. Another security edge is that video tellers eliminate vulnerable cash drawers, with money deposited into, or withdrawn from, the ITMs' thick, armored chassis. ITM roots Video-teller technology in the U.S. got its jump-start in 2001, when North Carolina's $2.9 billion Coastal Credit Union introduced its "remote teller system.'' Though a technol- ogy leap at the time, the video system relied on noisy pneumatic tubes tellers used to do transactions with members, Coastal spokes- man Joe Mecca said. In 2011, Coastal became the world's first financial institution to convert all of its branches to accommodate ITMs, Mecca said. Today, 22 Coastal branches house 78 ITMs and plans are to upgrade to more. With them, Coastal has nearly doubled its service hours to 12 hours a day, seven days a week — but with 40 percent fewer staff than Coastal's old teller-window setup, he said. Its members — despite some initial reluctance — too, are sold. "After they use it, we find they actually like it," Coastal's spokesman said. New Haven's Connex Credit Union has installed ITMs in its branches — five in all, said President/CEO Frank Mancini. The machines, most of which are from point-of- sale and automated-teller machine equipment maker NCR Corp., cost about $80,000 each. Mancini describes many of the same ben- efits to Connex and members as Finex — longer service hours/days, speedier transac- tions and more efficient staffing. But he, too, acknowledges consumers don't share the same enthusiasm for ITMs. "There's still a discomfort with technology in the financial-services sector,'' the Connex CEO said. "We're trying to bring customers along at their own pace with this technology.'' Jill Nowacki, president of the Credit Union League of Connecticut, says that a relatively small community of CUs nationwide is lead- ing the trend in using video-tellers, ahead of much larger banks and thrifts, reflecting CUs' service commitments to their owner- members. Video-tellers, Nowacki said, offer the dual benefit of personal customer service and efficiency in delivering that service. "People's finances are so personal. They'll always want that personal touch,'' Nowacki said. Can she and Palladino see the day when Finex and other financial institutions oper- ate "virtual'' branches, in which all banking transactions and interactions are done by mobile devices without any branch employ- ee or customer stepping foot in a brick-and- mortar space? "I don't think that's going to happen for a long time,'' Palladino said. n from page 1 Depositors warming to video tellers Finex Credit Union video teller Michele Fox helps a customer with a transac- tion via its interactive tell- er machine. P H O T O | C O N T R I B U T E D Number of ATMs worldwide (in millions)* * I N C L U D E S A S M A L L , U N S P E C I F I E D N U M B E R O F I N T E R A C T I V E T E L L E R M A C H I N E S ( I T M S ) . S O U R C E : R B R ( W W W . R B R L O N D O N . C O M ) 2.0 2.5 3.0 3.5 4.0 4.5 5.0 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

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