Best Thing Since Sliced Bread?

Some credit unions find their personal teller machines make better member service possible, and transactions more accurate and efficient. But at least one found PTMs frustrated members and drove them right back to “regular” branches—despite the best efforts of enthusiastic and well-trained staff members.

Whether personal teller machines are the greatest thing since sliced bread or the biggest flop since Ford’s Edsel automobile depends on whom you ask—and what their goals are.

PTM Pioneer

Willard G. Ross, chief retail officer at Coastal Federal Credit Union is one of the cheerleaders for PTMs. It’s no wonder: The $2.3 billion, 200,000-member CU doesn’t have a single human teller in any of its 16 branches. What it does have is 55 tellers who can be reached electronically through its 73 PTMs—machines that show a video of a teller working in the CU’s “teller contact center” at headquarters. [The CU outsources its call center function to CUES Supplier member CO-OP Financial Services, Rancho Cucamonga, Calif.]

Coastal FCU was a pioneer of remote teller systems. Ross says executives there installed a system that used pneumatic tubes around 2002. It was a loud, always-breaking-down failure, he says, with one giant exception: It gave them the idea to work toward a better system.

The credit union helped start the uGenius PTM company, which was bought by NCR, Duluth, Ga., at the end of 2012, after the CU was a partial owner for about a year. Coastal FCU was a beta site for uGenius for some time and now does demos of NCR PTMs for credit unions researching this technology.

Three years ago, the CU completed the conversion of its entire branch network to PTMs. They are operational seven days a week, from 7 a.m. to 7 p.m.; previously, most branches were open from 8:30 a.m. to 5:30 p.m. weekdays, with one open 9 a.m. to 1 p.m. Saturdays.

“We have had a competitive advantage for three years, because nobody can touch our teller hours,” Ross says.

The conversions were performed one at a time, with the machines placed in branch vestibules. Once members began using them, it became clear the PTMs were about a minute faster than traditional tellers, Ross says.

“Our teller transactional scores are really high,” he says, noting that members aren’t dealing with an avatar, but with the video image of a live teller.

The machines allow members to perform 95 percent of traditional teller transactions, Ross says. Executives have come up with clever ways to work around limitations.

For example, a cash advance can’t be done using a PTM because of a requirement for the teller to have the Visa card in hand. A workaround is in place, and platform staff, such as account and relationship managers, help to handle the few such transactions.

Additionally, you can’t put coins into the PTMs, so the CU installed CoinStar machines in all its branches. Members put their coins into the CoinStar machines; they then deposit the value of those coins into their accounts by putting their CoinStar receipts into the PTMs.

Coastal FCU’s PTMs don’t do anything except teller transactions, although Ross says the CU is looking at using video technology to open accounts in future small-footprint locations. At present, sales activities are strictly left to account and relationship managers, who are on the premises during regular branch hours to open accounts and make loans.

Since all teller transactions went to PTMs, sales volume at branches has almost doubled, Ross says, although staffing has decreased. The CU now has half the number of branch managers. Since they don’t have to manage tellers, branch managers are able to handle more than one branch, he says. What’s more, managers can be chosen solely for their sales-oriented skill set.

“When you centralize tellers, you can really focus on sales—opening accounts, making loans, even calling members,” he says.

The more obvious savings is in teller labor costs. The CU now has 40 percent fewer tellers than six years ago, changes made through attrition. Ross says approximately 80 percent of teller savings are offset by machine depreciation, licensing costs and maintenance.

Pulled Back From PTMs

But despite some CUs singing the praises of PTMs, they don’t work for every institution. One that has pulled back from them is $1.1 billion, 90,000-member Corning Federal Credit Union.

The Corning, N.Y.-based CU is expanding, placing a lot of emphasis on both Wilmington, N.C., and Franklin County, Pa.—areas where Corning Inc., the credit union’s original sponsor, has or had facilities.

President/CEO Gary Grinnell says the CU started looking at video teller technology several years ago. The first personal teller machines, made by uGenius, lacked an efficient hardware delivery platform to support their innovative video teller software.

Grinnell anticipated NCR eventually would come out with its own machine after it bought uGenius, so he delayed making a decision on using the technology.

“We believed it had the potential to further enhance member service in some of our branches,” Grinnell says, so the CU started on a rigorous financial analysis. Executives realized that if deployed only as a cost-saving measure, PTMs would have to be used across most of its teller lines. So they focused on the qualitative angle.

“We did a lot of analysis and scenario planning,” Grinnell says. “What if we deployed this many, or made these changes in the organization?”

In the end, Corning FCU decided to mount a pilot program. It installed NCR interactive teller machines (NCR’s name for PTMs) in a new branch opened last March in North Carolina. The staff at that location included a concierge to support members through a successful interaction at the ITM, as well as employees to serve members’ individual membership, lending and deposit services needs in person, one on one.

“We thought it would be easier for members to accept this new service model in a new facility,” Grinnell says, following the approach taken by most CUs.

There was a lot of enthusiasm for the ITMs, Grinnell says. “Our team was fully on board with this, supported it 100 percent to make the concept work,” he says. “We had great people on the other end in Corning, serving the members.”

The team tried to get members comfortable with the ITM, Grinnell adds. When new members joined, the concierge introduced them to the remote operators and helped familiarize them with the machines.

But ultimately, the members didn’t take to ITMs. The pilot included a hard checkout after six months. The results: “We decided we were no longer going to use this technology,” Grinnell says. “The prime reason to stop was the member experience.

“Members just weren’t wild about it,” he says. “They were reluctant. We felt we were pushing people, and we didn’t like it. A few members even went to different branches. Plus the (machine-assisted) transactions actually took longer to process than at the conventional teller line.

Adopting ITMs is difficult to do part way, he says. “If you want to save money, you really have to go all out, and dramatically change your organization. I think that credit unions that have really driven down costs have replaced tellers completely.”

PTMs at Branch Locations

Maybe Grinnell’s thinking will have applied when TCU Financial Group opened its fifth branch on Nov. 1. This “non traditional” branch was designed not to have any transaction staff or anyone giving financial advice.

“We’re putting in a couple of PTMs and ATMs, and two hosts (people),” explains Morris A. Smysnuik, CEO of the $650 million CU in Saskatoon, Saskatchewan. “Their responsibility is to educate members about the different ways they might use our technology.”

Both the CU’s culture—its passion statement says it stresses “... delivering progressive financial solutions in support of what is important to you”—and competitive pressure are behind the move.

“It’s a transition that needs to be made. We’re already made the decision to use a PTM in a micro-branch in Regina. The service level will be the same, maybe better,” Smysnuik says. “If we’re going to be competitive with ING Direct, Google, whatever the new flavor of the day is, we have to do something to be different, do more with the same or even less.”

TCU Financial Group already has a PTM in each of its four traditional branches. The machines allow the CU to have tellers available from 8 a.m. to 8 p.m. on weekdays, and from 8 a.m. to 3:30 p.m. on Saturdays.

“We would have never been able to do that otherwise,” Smysnuik says. “We would have needed two to three people in each branch. Now, two people provide teller service to four branches. Members can transact 96.4 percent of all the transactions they can do with a person.”

The exceptions: The PTMs (originally the from uGenius, now NCR) can’t disburse foreign cash or perform wire transfers. And they don’t do loan applications because the CU thinks the process would take too long.

When Grow Financial Federal Credit Union, Tampa, Fla., got serious about PTMs, it was planning a new branch in Wesley Chapel, Fla.

“It was a new concept for us—very retail-oriented,” says Peter Mazurkiewicz, VP/call center operations for the $2 billion, 165,000-member CU. (See a 360-degree video of the branch.) Led by the interest in PTMs held by CEO Robert L. Fisher and Executive Vice President Thomas R. Feindt, both CUES members, the CU added two PTMs to the drive-ups at the new location. 

“We’re really into doing things that are new and different,” Mazurkiewicz says. “We want to be bold, and keep moving forward. The technology looked neat and expansive. We thought it would capture members.”

And it did. “The reaction was fantastic,” Mazurkiewicz says. The machine was even featured on a local television news program.

PTM Adoption

Smysnuik says TCU Financial Group must deliver services the way members want. Since the first PTMs were installed in May 2013, transactions have climbed steadily. “Acceptance is very good,” he says. “Most usage of the PTMs is during the day, which tells me people are getting very comfortable” with the machine.

Older people are embracing the machines, too, Smysnuik adds. “That’s not an issue at all. They have established a relationship with the person on the other end.”

Grow Financial FCU also had feared seniors would reject the new technology. In fact, the machines got such positive word of mouth that a bus filled with seniors came from a large 55-plus community more than an hour away.

Mazurkiewicz says seniors—and members of other ages—like the PTMs for a number of reasons. An important benefit is their speed; average transaction time is less than three minutes. What’s more, the screen is easy to see and read.

But No. 1, he says, is that you are always talking to a live person.

Among the biggest pluses for Grow Financial FCU are the expanded teller hours PTMs allow. “We can have extended hours at the machines,” Mazurkiewicz says, adding that they are available from 8 a.m. to 6 p.m., while the branches are open from 9 a.m. to 5 p.m. “We can open on Saturdays, yet the branch doesn’t have to be open.”

Mazurkiewicz notes that what the PTM can do largely depends on what the representative on the other end can do. To extend the machines’ uses, Grow Financial FCU is training call center employees to take loan and, especially, credit card applications.

One of the few things that Grow Financial FCU’s machines don’t do is issue a certified check; the humidity in Florida makes storing the check paper problematic.

PTMs to Extend Reach, Sales

Most of Grow Financial FCU’s market is in West Central Florida. But the CU is expanding into South Carolina, where it will soon have five branches.

To date, Grow Financial FCU has 17 PTMs deployed; it will have 23, including its first in South Carolina, by the end of the year. Mazurkiewicz expects to install more in-branch kiosks in South Carolina.

PTMs may also have potential when placed at a sponsor or SEG location, especially where people work shifts, he points out. “In a hospital, a third-shift nurse can go to a machine to cash a check,” he says.

Mazurkiewicz is grateful to executives at Dayton, Ohio-based Wright-Patt Credit Union, which had deployed PTMs six months before Grow Financial FCU, for sharing experiences. “They were very gracious,” he says.

Indeed Wright-Patt CU has developed a service-delivery strategy, including PTMs, designed to build deeper relationships with members.

Chief Operating Officer Darrick Weeks points out that transaction counts are going down industry wide. “We’re going up, but that’s because we’re adding new members,” says the CUES member. And transactions are not climbing as much as membership, with a difference of 3 percent a year vs. 10 percent.

That’s where PTMs come into the picture.

“We can do a lot more because our partners [employees] in our member centers can concentrate a lot more on sales,” Weeks says, instead of money handling.

Like Grow Financial FCU and TCU Financial Group, Wright-Patt CU has been deploying NCR PTMs in new locations. The CU installs the machines in both lobbies and at drive-ups, and currently has 22 machines deployed, with more in the pipeline.

Weeks says that the CU has looked at the PTM offering from Diebold, N. Canton, Ohio, as well, but decided to continue to build on the investment it already had in NCR machines. A chief difference between the Diebold and the NCR machine is that tellers staffing a Diebold machine can’t control the screen members see. With the NCR machine, tellers can remotely navigate the machine with or for the member.

Unlike some other credit unions, Wright-Patt CU isn’t using PTMs to add teller hours. “Our strategy has always been extended hours