An Oklahoma bank kept customers and saved a bundle by developing a homegrown video ATM network
By Ingrid Case
Call it an operational efficiency trifecta.
Video ATM technology helped a community bank outside Oklahoma City save $1.5 million in operating expenses. It did so by allowing the bank to retire four branches while maintaining its highly personalized customer service—and here’s the most surprising part—without laying off any of its valued employees.
Citizens Bank of Edmond, a $250 million-asset community bank headquartered in Edmond, Okla., considered video ATMs as a delivery channel while analyzing the profitability of its branch locations for a couple of years, says Jill Castilla, the bank’s CEO. Four of its branches—three owned, one leased—were located within two miles of the bank’s headquarters, and combined they were losing $1.5 million annually.
“We didn’t want to lose customers, and we wanted to maintain the feeling of a personal connection with them,” Castilla says, recalling the necessary challenge of re-evaluating the bank’s longstanding high-touch service delivery and profitability formula.
Virtual Currency ATMs
Virtual currencies, sometimes aided by technology providers, are trying to adapt to all sorts of mainstream financial services. ATMs—which, among other things, by allowing people to exchange virtual currency with a government-issued currency—are one of them.
Today about 30 companies are developing ATM models that can conduct transactions in one virtual currency or another. Those companies in the mix to serve nonbank virtual currency shops include names like Robocoin, Cephas Holding Corp., Coin Cloud and Lamassu Inc.
Most virtual currency ATMs are outside the United States. However, this year Manhattan, the Las Vegas strip and the state of New Hampshire landed their first specialty ATMs handling bitcoin transactions. New York’s machine is located inside a ritzy jewelry shop. “It’s a cute little machine that fits the design of the shop perfectly,” PYC Bitcoin company executive Matt Keller told the New York Business Journal.
What’s the lesson for Main Street community banks? Possibly that virtual currencies need not only the universal legitimacy of mainstream financial service providers but also their widely convenience and accessible services.
Diebold Inc. in North Canton, Ohio, released a new series of ATMs with features to enhance security and reduce costs. The company’s new 5500 series machines include security features such as anti-skimming card readers to prevent skimming fraud, biometric finger vein readers, security camera improvements and encryption technology. Cost-saving features include dispenser technology to increase ATM operational service time and a smart power management system.
However, existing interactive ATM technology systems weren’t available without a delay, and Citizens Bank couldn’t wait. So after some old-fashioned innovation and late-night homework sessions, Castilla and her team found two local technology firms—Monsierge Inc., a software developer for the hospitality industry, and OrderMatic Corp., which builds audio-visual systems for drive-through restaurants and other retail businesses—to help the bank create its own customized video ATM network from scratch.
All video systems go
Of course, the bank’s homegrown video ATM system had to be secure, but it also had to offer customers high-quality personal, accessible service, Castilla explains. “We wanted audio and video that’s as good as FaceTime,” she explains, “the kind that lets a teller greet a child or dog who is in the car with the customer.”
Today three new video ATMs stand within a block of the former branch locations. They include motion detectors, “so we can tell when someone drives up and respond to that.
“It can startle people a little bit at first,” Castilla says. It’s not possible to send a customer’s dog a biscuit or hand a child a lollipop, but video ATMs do have the ability to give customers preloaded gift cards for local businesses.
Citizen Bank’s system, which it began beta testing in July 2013, delivered. A video touch screen lets customers interact remotely with tellers at the bank’s single downtown location, where staff who worked at the previous branches now serve customers remotely. If necessary, YouTube videos are available to explain to customers how to use the ATM.
Before introducing its video ATMs, the bank operated three standard cash machines and a video kiosk, costing about $16,000 each. Along the way it purchased another three ATMs, and spent about $90,000 to develop and install an interwoven ATM and video kiosk system on all of them. (“It would be cheaper if you used a less state-of-the-art ATM,” Castilla points out.)
In trading its branches for video-enabled ATMs, Citizens Bank is part of an overall banking trend, says Kevin Blair, CEO of NewGround in St. Louis, which designs and builds bank branches. “The recent surge in video tellers has gained significant traction because it’s gotten more consumer-friendly, and people are happier to use it than they were four or five years ago,” he says. “Banks came to a standstill in 2007-2008, in terms of what new technology they were buying. We’re seeing banks scrambling to catch up and introduce technology that they think customers are looking for.”
It’s possible to use video ATMs to create a virtual bank that’s always open, but Citizens Bank hasn’t gone that route. The video portion of its ATMs is staffed from 7 a.m. to 7 p.m. on weekdays, and from 8 a.m. to 2 p.m. on Saturdays, but the ATMs function without video support during other hours.
“We didn’t want to lose customers, and we wanted to maintain the feeling of a personal connection with them.”
—Jill Castilla, Citizens Bank of Edmond
Castilla points out that she and other colleagues are always available to help someone who might encounter a problem working one of the ATMs while the video connection is off, a point the bank widely publicizes in part through its energetic social media efforts.
In the future, Citizens Bank might offer 24/7 video tellers, but only if the bank’s own staff members will be connected to provide top-notch service during those hours. “There’s a lot of value in having our people provide the support,” Castilla says. “When you delegate customer service to a third party, you’re giving away something big. There’s a potential for embarrassment and for people not understanding your bank’s culture.”
Citizens Bank’s executives also have talked about developing branches in the future with very small footprints, staffed by video tellers. “We could expand to more remote locations and still have quality service,” Castilla says.
However, with video ATMs there’s no rush to consider branching again just yet, Castilla says. “My philosophy is that we’re not trying to grow for growth’s sake,” she adds, pointing out that Citizens Bank doesn’t need new branches now to drive deposits or loans.
Still, she says, “it’s nice to know that we have the freedom to expand if we want to, without spending $2 million on a new branch.”
Ingrid Case is a freelance writer in Minnesota.