Banks Race to Add 24/7 Banking Via High-Tech ATMs

(The News & Observer/MCT) -

The ATM race is on.

The availability of a new generation of ATMs with extra bells and whistles has triggered mass upgrades by some banks.

The initial ATMs launched more than 40 years ago were limited to a single function: dispensing cash. But today’s “enhanced” or “smart” ATMs can do much more, and some banks that have them are featuring them prominently in their advertising campaigns.

Transferring funds between accounts. Issuing receipts featuring an image of the check you just deposited. Speeding up transactions by making it easy to create preferences, such as whether you want a printed receipt, or how much you want to withdraw when you opt for “fast cash.” Accepting deposits of up to 50 checks at once.

Features differ from bank to bank, but these are some of the functions available in the latest generation of ATMs. And there’s even a new wrinkle in cash dispensing: issuing $1 and $5 bills.

Among the changes:

– Pittsburgh-based PNC Bank has upgraded half of its 7,200 ATMs since last year. “We want to be responsive and provide the technology that customers want,” said Mariko Suzuki, retail market manager for North Carolina and South Carolina.

– Wells Fargo, with headquarters in San Francisco, revamped the user interface on all of its 12,000 ATMs, to make them faster, easier to use and more personalized.

“We really want to deliver to our customers a differentiated service,” said Alicia Moore, who heads ATM banking for Wells Fargo. “ATMs process more transactions than our tellers.”

– Atlanta-based SunTrust Bank replaced all of its 2,240 ATMs with new machines in the past two years. SunTrust is evaluating whether it wants to add another feature to its ATMs – enabling customers to access ATMs through their smartphones instead of using debit cards. “The benefit of having state-of-the-art machines is we can do that,” said Tom McDermott, senior vice president.

– First Citizens Bank, with headquarters in Raleigh, N.C., replaced 150 of its 484 ATMs with enhanced models earlier this year. “We’ll be changing out another 30 machines in the first quarter of next year,” spokeswoman Barbara Thompson said.

Meanwhile, Bank of America is advancing into new territory by installing ATMs that enable customers to interact with a video image of a teller at another location. Bank of America installed the first of these video ATMs, also known as video tellers, in Boston and Atlanta in the second quarter, and has since added them in other cities.

The video ATMs can handle virtually every transaction that an in-person teller can handle, including dispensing coins.

An American Bankers Association survey of consumers released this month found that ATMs rank third, behind internet banking and visiting branches, among the most popular ways to bank.

Nessa Feddis, senior vice president at the ABA, chalks up the banks’ ATM investments to the emergence of innovative technology, combined with the industry’s quest to make banking more convenient for customers.

Increasing the banking tasks that ATMs can handle is “a way of extending banking hours, and that goes to customer convenience,” she said.

Or, as PNC’s Suzuki puts it, “Having these ATMs gives our customers the sense they can truly bank 24/7.”

Competitive pressures also are at work.

“It’s a keeping-up-with-the-Joneses sort of thing,” said Tony Plath, a finance professor at the University of North Carolina-Charlotte. “Banks are enhancing their (ATM) technology to make sure they’re not a step behind in terms of convenience.”

The banks don’t disclose how much they’re plowing into new ATMs, but it’s a major investment.

NCR, the No. 1 producer of ATMs worldwide, sells models that range from $2,000 for “a machine you find at a 7-Eleven that only spits out cash” to $75,000 for a top-of-the-line unit, spokesman Jeffrey Dudash said.

Banks report that customers use enhanced ATMs more than they use the older models.

SunTrust’s McDermott said that in each of its markets, the first month after the bank rolled out its new ATMs, the volume of deposit transactions doubled.

Some banks have given their customers an incentive to take their new ATMs for a test drive.

First Citizens has been offering its customers a $5 credit if they make three deposits of at least $50 each over a two-month period in one of its new ATMs. Customers where new ATMs were installed also received a $1 check in the mail along with a suggestion that they deposit it in a new ATM.

“That was very successful in getting people to see how these machines operate and how easy they are to use,” Thompson said.

For the most part, adoption of the latest ATM technology is being led by the national and regional banks.

Raleigh-based TrustAtlantic Bank, a community bank with five branches, is taking a wait-and-see approach, given the expense involved.

“Community banks have to draw a fine line between offering the technology that is being demanded the most versus using our competitive edge, which we almost all believe to be the high-touch type of banking,” said John Anthony, chief administrative officer.

“We don’t get the traffic volume, frankly, that a lot of the large banks do at our ATM machines,” Anthony added.

UNC-Charlotte’s Plath is convinced that video ATMs are the wave of the future.

“The potential cost savings for the banks is huge,” he said. “The problem with branch retail demand in the industry is it’s lumpy. You have times when you’re really busy, and you have a lot of times during the day when nobody is in the lobby.”

That creates a staffing problem that video ATMs solve by having centrally located tellers that interact with customers at multiple branches.

“The idea is to do more with less, to provide more in the way of services and also reduce the overhead, the operating expenses associated with a branch,” Plath said.

At the same time, customers who may be reluctant to deposit cash or a check in a faceless machine are less so “if they can see another human on the screen,” Plath said.

The future is now at Coastal Federal Credit Union. The Raleigh-based credit union began testing a video ATM in 2007, “officially” installed them in one of its branches in May 2009, and today has them in all 15 of its branches.

“Coastal Federal Credit Union has been really a pioneer in this space,” said NCR’s Dudash.

Many Coastal Federal Credit union members speak well of the technology.

Sheri Leider, a clinical social worker who lives in Raleigh, said it recently took her 40 minutes to obtain a cashier’s check at her bank. But when she visited a Coastal Federal video ATM for a second cashier’s check, it took her about “five seconds.”

“What I love most about it is, I never have to worry about someone trying to come in and hold up the teller,” Leider said. “It’s safe.”

Jared Morris, 21, a junior at North Carolina State University, said the video ATMs at one Coastal Federal branch have reduced waiting in line.

“Across the street (at the branch’s former location), there would be a long waiting line, where you could wait forever,” he said. “You typically don’t run into that here.”

Morris does see one downside.

“It’s a little more impersonal, if you will,” he said. “I still think people are just as friendly, but there’s a difference between talking to a person in front of you and talking to a screen.”

Jon Rowe, 53, a mortgage banker who lives in Chapel Hill, N.C., said he was “taken aback” when he first encountered a video ATM, but quickly found it was easy to use.

“I’ve never had an issue,” Rowe said.

With regard to the shorter lines cited by some members, Coastal Federal spokesman Joe Mecca noted that transactions are faster because the ATMs dispense cash faster than human tellers, who always count the money twice.

In addition, branch traffic is less concentrated, because centralizing the credit union’s 49 tellers at its headquarters enabled the bank to dramatically expand its teller hours – from 8:30 a.m. to 5:30 p.m. five days a week to 7 a.m. to 7 p.m. daily, including Saturdays and Sundays.

“We get a lot of efficiencies by staffing to overall traffic rather than branch by branch by branch,” Mecca said.