What is Digital Banking? ITMs, VTMs, and Video Banking

What is Digital Banking? ITMs, VTMs, and Video Banking

Welcome to the Executive Innovation Show Podcast, brought to you by One Touch Video Banking. During this podcast hear host Carrie Chitsey, talk about digital banking trends in 2021. Listen to this episode of The Executive Innovation Show Podcast as we discuss what exactly digital banking is. Listen as we break down the difference between ITMs, VTMs, and Video Banking. 

Carrie Chitsey led the CRM Financial Services practice in Big 5 Consulting and then went on to own a financial services contact center. She has advised some of the largest banks in the US. Since founding one of the first mobile companies in the US in 2008, she is known in the industry as a leader in digital/mobile innovation. 

Named Top 50 Mobile Executives in the US, Top 100 Female Founders, and Top 40 Marketing Execs in the US. She hosts a podcast “The Executive Innovation Show” and is published in many magazines and online resources

We’re going to be talking about digital banking and what are the differences between ITMs, VTMs, and video banking. We get that question all the time. Today we’ll break down the differences and what you should be looking at. 

ITMs and VTMs 

First ITMs and VTMs are sometimes used interchangeably. Whether it’s an interactive teller machine and that interactive teller machine is through video, then it’s typically a video interactive teller machine. A lot of banks and credit unions have put a lot of strategy around having that face-to-face connection with their existing customers. 

What is an ITM?

ITMs are for existing customers only, they’re not for acquisition. When you look at ITMs, they have to be tied to a physical location. Some banks have it where they already have a drive-thru and some banks are using it as a strategy where it’s a strip mall instead of a physical expensive branch. And it’s just a drive up interactive teller machine that connects back to a branch within a certain driving distance. Yes, ITMs are good but they’re very expensive. They’re good for servicing customers when they want to make a deposit or have questions. You are limited to certain servicing type behaviors that you want to do. And as a bank, you want to have that high touch, be able to see the teller type thing. It’s typically manned and the workforce behind the ITMs is all teller focused. 

You’re not having ITMs that go to a relationship manager or a loan specialist, it’s all typically transactional type of things. Costs for ITMs are all across the board. We get this question a lot on the video ITM side. It can be $50 to $80,000 per ITM – $3000 to $5,000 a month to service it. And you know, you need a high-speed internet connection as well. Most banks and credit unions don’t have that at every one of their drive-throughs because of the cost associated with it. 

ITMs vs Video Banking 

Let’s compare a little bit to video banking. Video banking is NOT video conferencing. In 2020 we saw a huge surge in video conferencing, video interactions across every facet, every segment, and every industry. 

One of the top priorities for banks in 2020 and 2021 was implementing video banking. Banking executives that have seen true video banking solutions have completely changed their mind on their ITM and VTM strategies. Video banking significantly lowers costs and allows critical customers to stay home without driving to a location, convenience is key. This also allows you to broaden the footprint to open it up for acquisition. 

Acquisition and Servicing via Video Banking 

Video banking is for acquisition and servicing. From an acquisition standpoint, having video banking, right on your website, where you’re spending your digital marketing dollars and driving your acquisition efforts – will help with your conversion rate and help build relationships. You now have a competitive advantage right out the gate. ITMs don’t allow that from an acquisition standpoint, you’re not going to have somebody that’s going to drive to a physical location and try to open an account through an ITM. You’re not going to want to spend your digital marketing dollars trying to get them to go there. The conversion rate would be terrible. 

Video banking expands way beyond the tellers. Most banks and credit unions from video banking start with their high margin products. They start with wealth management, they start with their small business folks, they start with loans, mortgages, auto, etc. That competition is critical and you want to be able to develop that relationship from day one. 

Increasing Conversion & Retention Rates with Video Banking 

Think if you went to a bank’s website, you started an online application process. Maybe they have a text chat, maybe you have to call into a call center if you have a question, that’s your experience. Now, let’s say you go to a banker credit union’s website. You start an application for a business banking account or something to that effect. You click a button because you have a question and boom, that video banker is right there as if they were across the desk from you. Who are you going to bank with? You’re always going to bank with a good relationship that has a face to face rapport. 

If you ask a customer, “Hey, when you called, do you remember the person you talked with?”. Nine times out of 10, it’s going to be a no, unless they wrote it down. If you ask someone that’s going to do video banking, “Do you remember the person you spoke with?”. Nine times out of 10 they’re going to say, “Oh, I talked to Sally, she had blonde hair. She had this sitting on her desk behind her. She had this color shirt on.” All the details are remembered. We are a visual demographic. 

Video banking helps with retention and your NPS and C-SAT scores. With video ITMs, you might move a slight needle on that. Not on retention, but on customer service, especially if it’s after hours or the teller lines are close. But from a retention standpoint, building that relationship, having that relationship manager being proactive with that is going to move the needle. You will see customers and members adding more products, making them more valuable to your organization from an active user standpoint and evaluation. In addition to moving the needle on that retention, making your margins much higher. And the payback on that acquisition moves from three years to two years, one and a half years. 

When you’re looking for the comparison and what is right for your organization, if you’re putting in ITMs to service customers locally, not within driving distance, probably a decent solution. If you have the capital expense and you have the maintenance money set aside. If you’re looking at video banking, you’re trying to extend that, video banking is a portion of the cost. You could roll it out to all your branches, all your locations for the cost of one ITM. 

If you have any questions for this podcast if you want to ask our next guests that are coming up, feel free to submit questions, let us know what you want to hear on the Knowledge Knugget podcast in 2021. 

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