🔒Teller 2.0

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At first glance, the two newest branches of Five County Credit Union might reflect hard times at the 56-year-old financial institution.

Located at Brunswick’s Cook’s Corner and in the lobby of the Skowhegan Walmart, the year-old branches are still shiny and new, but noticeably empty, with only one employee in sight.

Looks can be deceiving. Instead of a conventional teller line, what looks like an oversized ATM greets customers. By touching its screen, a customer will connect with a teller located at least 20 miles away in a centralized call center who can conduct almost any transaction remotely.

Five County is the first financial institution in Maine, and one of just 36 worldwide, to adopt video banking technology in its branches. The technology, showcased in the two new branches, allows the credit union to consolidate resources while maintaining services through personal teller machines (PTMs).

“These are two different branches in almost every way,” says Mike Foley, vice president of sales and business development for Five County Credit Union. “In a traditional model, when you open a branch, you have to staff it with X number of employees. Whether it’s busy or not, they are there and waiting for someone to come in; it’s not always efficient.”

The new technology developed by Salt Lake City-based uGenius Technology allows the 24,000-member, 14-branch credit union to reduce employee downtime and increase staff efficiency.

Five County also uses the company’s suite of SmartOFFICE software, allowing members to conduct more involved tasks like applying for a loan or discussing a mortgage in a private booth wired with a webcam. Although the transactions are conducted electronically, they still require personal interaction.

“These are not ATMs at all, there is nothing automatic about them. They are fully controlled by our call center agents,” Foley says.

When a customer touches the screen of a PTM at the Brunswick or Skowhegan branch, they are connected to a call center, situated in the credit union’s Lewiston branch. Call center employees, who sit behind desks in glassed-in offices normally reserved for loan officers and management, are flanked by two monitors topped with a webcam, beaming their visage directly to the PTMs.

Once a call center employee accepts a call from a PTM, a member’s face appears on the monitor, where employees can zoom in and out, verify ID and perform basic teller functions.

“They are already taking calls, making calls and acting as support staff for our branch employees, so this is really leveraging their time and availability more efficiently,” says Foley.

While Foley says the technology is very intuitive, and most questions could be answered by the call center employee on the other side of the video screen, the credit union provides an option to allay technology trepidation. Both branches have an employee on site to walk members through the PTM routine, answer questions and bolster user confidence.

“This is not designed to be self-serve at all, there is always someone on-site to facilitate the process,” says Foley.

The video-driven branches have processed over 14,000 transactions in 2012 and have made inroads with consumers, whose usage of the system has increased by 15% since the first fiscal quarter of the year.

“We have regular members who walk in and go right for the PTM, they’ve become comfortable with it and now they are pros,” he says.

Next phase services

For Five County, video banking works toward its goal of being one of the state’s most accessible financial institutions. The Bath-based credit union has offered extended hours since 2004, staying open until 8 p.m., six days a week at eight of its branches.

“The PTMs and SmartOFFICE was just a good fit for something we’ve already been doing [in] trying to be more convenient and accessible,” says Foley.

The technology has also allowed Five County to open two branches that might not have otherwise come online.

“Whenever you open a new branch, you have to consider overhead, staffing, etc.,” says Foley. “While we did expand the Lewiston call center to handle the additional volume, it’s been kind of a win-win in that we didn’t have to staff the new individual branches as heavily as we would have.”

Without the need for vault rooms and employee offices, these new branches can occupy a much smaller footprint than the traditional facility. The Skowhegan branch is one example: located in the town’s Walmart, it comes in at just around 500 square feet, compared to an average branch of about 13,000 square feet, according to Foley.

While the credit union has no plans to expand its video banking presence beyond the two branches, Foley says “it’s been a growing trend in the [industry] and something we absolutely believe in.”

Many in the industry agree with Foley’s assessment.

“It’s the future from a financial institution perspective, and it’s pretty impressive” says John Murphy, president and CEO of the Maine Credit Union League.

Murphy says consumer demand for accessibility has been a driving trend in the industry as of late, a trend strengthened this summer when the National Credit Union Administration revised a rule allowing credit unions that meet certain criteria to classify video-driven branches as “service facilities” to meet NCUA’s accessibility requirements.

As a state-charted credit union, Five County does not fall under the purview of the NCUA, but Foley says the group’s validation of video banking technology is good for everyone in the industry.

“The NCUA is recognizing it as a trend in the financial services arena and saying that it meets the guidelines of a service facility,” allowing financial institutions to expand their presence in a community without building a traditional branch, according to Foley.

“Today in financial services, you have to be mobile, you have to be online and you have to have a strong ability to serve your members in-branch,” he says.

But human interaction is still important, says Murphy.

“I think these PTMs allow a credit union to take advantage of their member’s familiarity with technology while still having a human on the other end of that transaction,” Murphy says. “Despite all the technology, people still like to go into branches, and I think Five County has identified this as a way they can do that efficiently and effectively.”

Retail thinking

uGenius founder and CEO Gene Pranger has been working to integrate technology into the financial services industry since 1985, something he believed could change the business model of the modern bank.

“We wanted to change financial institutions into being much more retail driven and effective at selling products and services,” says Pranger, head of the 65-person banking technology company that has been developing video banking technology since 1996.

“Back in the ‘90s and early 2000s people were not used to seeing this kind of technology in a retail setting, and there was some inhibition on the part of the consumers,” says Pranger.

But two things changed that.

“The first is called the Internet. As people get more comfortable with it and the younger generation grows up with it, the technology becomes second [nature],” he says.

The second boost to video banking descends from the friendly skies.

“The airline industry’s introduction of video check-in was really a big push in terms of retail applications. That was the major hurdle that allowed people to say, ‘Now I can see this technology be integrated into a retail setting’,” says Pranger.

Video banking has helped some financial institutions increase hours by as much as 40% to 50%, allowing banks and credit unions to better address consumer habits.

“Instead of being open 9 to 5, they’re open 7 to 9. It’s more of a retail-based environment that is trying to change the way banks operate,” says Pranger.

uGenius currently has 36 customers — both banks and credit unions — in the United States, Canada and Australia, with 200 PTMs and 18 SmartOFFICE units.

At Coastal Federal Credit Union, a uGenius client in North Carolina, Pranger says the video banking system helped employees double sales of retail products while reducing sick days, emotional fatigue and even crime.

“No [robber] can figure out where the teller is, so they would just say ‘I’m out of here’,” says Pranger.

The uGenius founder says the integration of video banking technology stands to change expansion plans among financial institutions.

“It allows them to think of branch distribution differently. A traditional branch is around 3,500 square feet, but ours get as small as 16 square feet,” says Pranger.

The savings with the video banking branch can amount to as much as 40% on teller staff costs, says Pranger. “It’s really the only solution as a lot of financial institutions look to transform their retail branches for the future and it creates that presence they need,” he says.

Pranger says uGenius holds the patents on most of the technology associated with the video banking platform, and expects steady growth.

“By the end of 2013 our projection is around 600 to 700 units between us and [ATM company] NCR,” that have purchased the rights to use the uGenius software, according to Pranger. The relationship with the established ATM company will help uGenius to reach further into the market.

“That’s really where the volume is going to come from because financial institutions are used to buying their software,” he says.

Credit unions are currently a stronghold for video banking technology, but Pranger expects that will change with greater public exposure.

“Right now, we are 80% in credit unions, next year it will be a 50-50 split, and the year after that it will probably be 80% banks,” says Pranger. “If the larger banks get online, we are going to see orders of hundreds of units as opposed to three to 10,” says Pranger.

Other technology

While financial institutions recognize the importance of integrating technology into their services, video banking is not the answer for everyone.

“It’s good technology, it’s just not something we’re focused on,” says Gene Ardito, president and CEO of cPort Credit Union.

Ardito says cPort has found success in its adoption of mobile banking technology, allowing members to do things like deposit checks and transfer funds from their smartphones.

“I think mobile banking is the future, and it’s here,” says Ardito. “We are doing [it] because it’s so convenient for people 24/7.”

While mobile banking might not have the same level of accessibility as video banking — it requires a smartphone and a certain degree of tech savvy — Ardito says that cPort’s 13,000 members are becoming more comfortable with that sort of technology every day.

“We’re seeing a shift, and in a year or two, I bet more and more of our older generation of folks are going to be using smartphones,” he says, noting “one of the first members to use the mobile check deposit when we launched was a 70-year-old.”

But a mobile banking app or video console can only do so much, says Ardito, who emphasizes the importance and comfort of the traditional bank branch.

“Branches are important because of that face-to-face personal interaction. You need to have people with offices where they can close the doors and have a conversation in private, so I don’t see us ever moving away from traditional branches,” he says.

That sentiment spans the ages, according to Ardito, who says that cPort’s younger generation of members are not content to do all their banking in the digital domain. “Even younger folks want to talk to someone when they are getting financial advice and I’m not sure that video, for me, does that,” he says.

Ardito says cPort will pass on video banking technology, but he lauds Five County for doing something “very innovative” and hopes it will help shift the public perception around the technological prowess of credit unions.

“The credit union as a whole has a lot more technology than people think, but I think some consumers might not think [they] are as sophisticated [as banks],” he says. “Highlighting Five County’s use of video banking is good for cPort because it tells people credit unions are technologically advanced.”