Article

The interactive ATM: 'It requires a new way of thinking'

An Atlanta banker says realizing new efficiencies from an interactive teller device requires a new operational mindset.

March 26, 2014

Zebulon, Ga.-based United Bank has $1 billion in assets, 12 traditional branches and four store branches. The bank operates 22 cash dispense ATMs and 12 NCR APTRA Interactive Teller devices.

I recently had the pleasure of interviewing Bert Watson, general counsel at United Bank. He discussed the bank's recent implementation of APTRA Interactive Teller and his thoughts about its impact on the bank's customers, employees, operations and bottom line.

TR: Were you specifically looking for branch transformation solutions?

BW:The simple answer is yes. I had been discussing with a number of people the idea of how nice it would be to have a device we could place in the drive-thru lane that would perform deposit automation and recycle cash so we could reduce our workload.

Everybody thought it was a great idea and they asked if there is such a thing. And I said, "No, there's not such a thing."

[T]wo years later I happened to be at NCR's headquarters in a meeting where we were talking about branch transformation solutions. At the end of the meeting they asked if there was anything else I'd like to see. So I described what I wanted and basically described the APTRA Interactive Teller.

TR: Was that your tipping point to move forward?

BW:My normal rule would have been to wait a year and let others mitigate the bleeding edge. But as I reviewed the marketplace and our competitors, and weighed what I believed to be the limited alternative solutions that would be available down the road — also the migration of a large demographic toward mobile apps — I felt like the only way to really get a strategic benefit from this product was to move in quickly. We didn't want to be perceived as a bank that brought this in after the big banks already had it. Waiting for the market to become mature would have been a mistake.

TR: What was your deployment strategy?

BW:We decided to deploy two ITM units at a time and currently have 12 live devices. That was on purpose because we put them into some smaller locations so we could test out any potential issues. We had some sunlight issues at one location where we ultimately decided we needed to plant some trees to block the early morning sun. The little details need to be worked out in every location. We had to replace the drive-thru lights because in many locations it was too dark for the ITM tellers to see people in their car.

TR: How important was an ROI analysis?

BW:United Bank would never consider buying a product without performing an ROI or cost-benefit analysis. We did our ROI/payback period for five years or less because we felt it was important to create a worst-case scenario because of the bleeding-edge factor. Typically we would have been looking at something more in the neighborhood of three years.

And yet I think it will end up being a three-year basis because customers seem to really enjoy this product. If it had not paid for itself in a rational period of time, we would not have done it.

TR: Were you concerned about consumer adaptation?

BW:Of course! In fact it was a major concern. Any time you have technology competing with human beings you're at risk. We all like to deal with human beings. Maybe the younger generation is not that way, but most of the older generation would prefer to deal with a person instead of a machine.

But we've seen a real change in places like grocery stores and retail where they have self-service checkout and it seems to be a common acceptable thing. So we didn't feel like this was a radical shift for most of our customers. But we knew there would be some holdout for green eyeshades and quill pens.

I think it's a nice trade off! We have been able to cut the overall hours of our traditional tellers by close to 50 percent in some of our locations. We have reallocated some of those people to different roles and have actually added staff because we are serving our customers longer. Part of the beauty of this technology is that it allowed us to extend our hours and leverage our workforce more efficiently.

TR: Have you seen a decline in transactions performed at the traditional teller line?

BW:Yes, I have both statistical and anecdotal data that tells me that this is becoming an extremely successful way to migrate people away from traditional teller lines. Anecdotally, we've got one customer that I have known for years … she has a restaurant and typically makes three or four deposits a day — and all she talks about is how wonderful the ITM is.

The reason is because she feels very safe using the device after 5 p.m. and she doesn't have to worry about meeting any cutoff times because we extended our cutoff to 11 p.m. at night. And she also feels like this is a much better solution than a night depository.

TR: Do you think this will ultimately earn United Bank more market share?

BW:We are already seeing customers that are coming to us because of the ITM. Their friends tell them that they can use United Bank at 10 at night and cash a check to the penny. They realize there are other technologies that can provide cash such as an ATM, or you can use your mobile phone to take a picture of a check and make a deposit, but there are still many transactions that can't be performed without a financial institution being open.

TR: How did implementing NCR APTRA Interactive Teller affect your ATM strategy?

BW:We decided not to take deposits at ATMs anymore. Our thought process was this: the only people that make deposits at our ATMs were our customers. There are no foreign deposit transactions coming through.

So from our point-of-view it seemed logical that the ITM was a place that our customers could make deposits and the ATM was a place that customers and non-customers could go to get fast cash.

Granted, you cannot make a deposit at United Bank between 11 p.m. and 7 a.m., but we haven't found that inconvenienced anyone … We've had no pushback on that at all.

And you need to remember that the Intelligent Deposit at the ATM is not a cheap solution. The ITM is not cheap either, but the difference in price versus the value-add was not cost-justifiable — not when we could just skip that investment and go straight to the ITM.

TR: Was your staff concerned about the impact this would have?

BW:We assured our people that some of the roles might be different, but there would actually be more jobs — not less. The reality of course is that ITM operators have a different skill-set, so not all of our tellers were automatically moved into those roles.

We took a very proactive approach to making sure that everyone found a role that they felt good about doing. With our ESOP, our bank is owned by about 92 percent of the people that show up to work every day, so taking care of their needs is very important to us and we had to make sure they were on board.

TR: Do you plan on expanding this solution into new locations?

BW:By the end of 2014, we will probably have about 14 or 15 ITMs implemented. We will probably spend Q1 of 2015 performing an impact analysis before we deploy any more. I would suspect that we will probably implement another 15 next year and probably max out somewhere around 45 ITMs ultimately.

We would like to see a market presence with a strategy of micro-branches, where ITMs are handling the routine transactions and our staff working in concierge and lending-focused roles. This would allow us to reach markets where we couldn't afford a traditional branch. We will probably have a mixture of strategic branches, with some being the larger more traditional, and some being the micro-branch style.

TR: What, if any advice would you offer to those considering the ITM solution?

BW:We have hosted many visiting banks and the biggest issue that we see is that many of them are trying to box this solution into a set of traditional banking rules. This is not an ATM, and it's not a teller. It requires a new broader approach and way of thinking.

As an example: 80 percent of a teller system was designed to keep up with how much money is in the teller drawer. With the ITMs, multiple tellers are in multiple machines. It's simply not the same — the old fashion way of balancing doesn't make sense.

Our auditors initially wanted these machines balanced once a day, but when they realized that the tellers can't touch the bills, they understood that balancing the machines once a month was more appropriate.

It takes a new operational mindset to do this and it's helpful to speak with people who have used it, so you don't waste the efficiencies that this solution can deliver operationally.