JP Morgan Chase’s new branch in the Texas Medical Center in Houston is special because of what is not in it – teller stations. Instead of a teller line, the new branch features an express banking kiosk or “EBK.” Basically a giant 21.5 inch iPad that customers can swipe, point and click to dispense cash in increments of $1, make deposits, pay bills, withdrawal up to $2,000 and even issue a new, permanent debit card.
We used these EBKs when they were tested in California last year and can tell you for simple transactions, it is an efficient experience akin to a self-service grocery checkout line. Average transaction time is cut in half, reducing wait times to almost nothing. Equally important for the bank, delivery cost is reduced by more than 70% in the average location. In some low traffic locations, transaction costs are reduced from an average of $7.00 to $0.55 or about 93%. The strategy is to use as overflow or in locations where traffic is light and personnel costs are high.
This is part of a growing trend to reduce channel costs and follows PNC who has upgraded more than half their ATMs to have expanded capabilities, Wells Fargo that rolled out their 19” screen ATMs that dispenses various bills between $1 and $100, Bank of America with their live video-supported “Teller Assist” and Citibank that is testing a set of ATMs in Asia that not only does all the above, but can open accounts, issue cashier’s checks and approve credit card applications.
By introducing these high powered ATMs, banks can provide customers with a best-in-class experience. Live video specialists, multi-lingual support and a growing array of products allow the location to assist a wider range of their customer base. These new ATMs not only make the bank experience more efficient, but makes the experience more inclusive. Yes, some will yearn for the days to talk to a live banker, but for a transaction, the ATM is a superior experience because it gives the customer back their most valuable asset - time. It was only 40 years ago when 86% of customers wanted a live gas station attendant - Now, not so much.
We view an investment in these turbo-ATMs and kiosks as an interim step to control labor costs in existing branches and expand a bank’s footprint in a cost efficient manner. Mobile will soon be able to handle all as cash and cards become digital and mobile video conference support is the norm. Until then, these ATMs fill the gap for the next five to ten years. Placing these machines in high traffic areas like malls, airports, large office complexes and medical centers will give a bank a cost effective way to provide basic physical coverage in a transactional manner. At a fraction of the cost of a branch, these ATMs/kiosks will allow the community bank to better compete against large banks.
Already in alpha test, by 2016 the first artificially intelligent ATM/kiosks will be rolled out that will be able to handle natural language. Not only will these bankers be transactional, but they will start to have basic advisory and sales capabilities as they will be able to suggest product, resolve problems, answer questions and further streamline a more broad banking experience. By 2020, this will also be the norm for the smartphone banking application.
Community banks need to build this transition from live teller to ATM/kiosk to smartphone into their plan for at least a portion of their channel delivery strategy. To survive, service delivery costs will have to drop to half of where it is today and efficiency ratios must be under 45%. Including these ATMs and mobile applications as part of your ten year strategic plan is a must, as is taking the first step to get educated and gain experience by using some of these machines in your current market area.
Submitted by Chris Nichols on May 20, 2014