Rising personnel costs, the pandemic and the changing transaction environment are pushing financial institutions into considering branch self-service kiosks. Consumers are following suit, though maybe not in the ways you’d expect.

Branch self-service kiosks, sometimes known as interactive teller machines (ITMs) or interactive branch kiosks (IBKs), have proliferated in recent years. While they might initially look like the ATMs that have graced our industry for 40 years, these kiosks typically feature a wider range of transaction and service options, even teller video machines with an audiovisual connection to a live person. That behind-the-screen teller can handle all the interactions a teller on a teller line can, but more efficiently since they are not reliant on the branch traffic at one specific location.

As branches transition from being about transactions to being about service and relationship management, being able to centralize transactions through self-service kiosks makes sense. It’s more efficient to have a centralized group of tellers serving an entire market than a few at each branch, often waiting for accountholders to arrive.

How much more efficient? One institution with about $250 million in assets installed self-service kiosks at its six branches and was able to reduce its teller staff by more than half. At the same time, by moving the redundant tellers into accountholder service positions, the institution doubled its loan growth.

While banks and credit unions may have embraced self-service kiosks, the question remains whether consumers have. Our research, which will be released in March as part of our new Raddon Research Insights study, Delivery and Payments Insights: The Changes Continue, points to a significant split among consumers.

First off, it’s important to remember why consumers visit a branch in the first place. While the role of the branch has gradually been changing from transaction-focused to relationship-focused, basic deposits and withdrawals are still the most common reasons to visit a branch. As we see in Figure 1, however, younger consumers are less likely to visit for teller transactions and far more likely than older consumers to come to the branch for other reasons.

Figure 1: Type of Business Conducted at Branch, Millennials Versus Older Generations

(Indexed: 100 = Average for All Consumers)

Source: Raddon Research Insights, Delivery and Payments Insights: The Changes Continue, 2022

The challenge facing banks and credit unions is the mismatch between who uses kiosks and what transactions or interactions they come to a branch to do. Millennials are far more likely to use a kiosk than older accountholders, with 68% having used a kiosk, while only 19% of baby boomers have done so.

Kiosk Use, by Generation

Source: Raddon Research Insights, Delivery and Payments Insights: The Changes Continue, 2022

Once they do use a kiosk, consumers show a dramatic difference in the activities they perform at the kiosk. Older generations use them as ATMs to withdraw money but for very little else. Millennials, on the other hand, are more likely to use kiosks for a wider variety of interactions. For example, 24% of millennials who used a kiosk opened a new account there, compared to only 9% of older kiosk users.

Percentage of Consumers Using a Self-Service Kiosk for a Given Activity, Millennials Versus Older Generations

Source: Raddon Research Insights, Delivery and Payments Insights: The Changes Continue, 2022

Institutions face one notable challenge when it comes to kiosks. The kiosks are designed to migrate teller transactions to a central contact center, yet the accountholder most likely to use the kiosks are the ones least likely to be coming into a branch for those teller transactions.

Ultimately, self-service kiosks have become tools of the major banks; 51% of major bank primary customers have used a self-service kiosk, compared to only 22% of credit union primary members or 18% of regional or community bank primary customers. Because most millennials are major bank primary customers (75%), it’s perhaps no surprise that kiosks have been accepted at those institutions.

Smaller institutions, with their older accountholder base, face more resistance.

Self-service kiosks hold great potential for efficiency and improved service, yet institutions with older accountholders will face resistance the largest banks haven’t faced. How you roll out your solution and keep your staff involved in the process will determine your success.