Benefits and Challenges of Self-Service Kiosks in Financial Institutions

Author: Source Technologies

Two things characterize today’s consumers: they are tech-savvy and they are in a hurry. To meet their needs, your financial institution should consider deploying self-service kiosks to provide them with the modern, consumer-centric experience they expect.

Self-service kiosks

If you fail to deliver the speed and convenience that self-service kiosks offer, you will see consumers close their accounts and move to institutions that offer better service and a faster, more streamlined user experience.

But before you start your search for self-service kiosk suppliers, you should consider the advantages and disadvantages of self-service kiosks for financial institutions.


What Is a Self-Service Kiosk?

When we talk about self-service kiosks for financial institutions, we’re talking about the freestanding devices that let consumers initiate and complete 90% of transactions that typically require the help of a teller. These devices feature an interactive, touchscreen display, leading cash handling devices and core integrations to conduct transactions or perform a task.

Also known as personal teller machines (PTMs), self-service kiosks are the financial services equivalent of the kiosks at airports that let travelers check in and print boarding passes, the kiosks at fast-food restaurants that let guests order their meals without speaking with anyone behind the counter, and the self-checkout stations at grocery stores.


How Do Self-Service Kiosks Work?

Unlike traditional ATMs, self-service banking kiosks integrate directly with your institution’s core system. This independence from the ATM rails allows consumers to enjoy a richer, more value-added transaction set.

Self-service kiosks at banks and credit unions perform a number of functions that give consumers the modern retail experience they have come to expect from other retail institutions. These functions include:

  • Accepting cash deposits
  • Dispensing cash and coins
  • Accepting checks
  • Printing official checks
  • Printing receipts
  • Transfering money
  • Printing statements


Advantages of Self-Service Kiosks

Benefits of Self-Service Kiosks for Retail Customers

Self-service retail kiosks offer two significant improvements to physical branch locations.


Consider the common occurrence of a consumer walking into a branch and requesting an official check from a teller. When branches provide self-service kiosks, this time drops from 9 minutes to 40 seconds.


According to Javelin (formerly Mercator Advisory Group), consumers who don’t like using mobile and online banking prefer to use self-service kiosks at physical branch locations rather than dealing with a teller. Millennials prefer to conduct routine financial transactions on their own and prefer using self-service kiosks whenever possible.


Benefits of Self-Service Kiosks for Financial Institutions

The good news for financial institutions is that the benefits of self-service kiosks are not just being enjoyed by retail customers. Branches of all sizes benefit from giving consumers modern ways to transact their business.

More Meaningful Face-to-Face Interactions

One benefit, of course, is that self-service kiosks offload the need for face-to-face contact with tellers for simple and minor transactions. This not only reduces wait times but also gives consumers control over their day-to-day transactions.

Increased Higher-Value Transactions

When the burden of mundane transactions is removed from your teller staff, they can focus on more complex transactions, such as mortgages, car loans, financial planning, and investments.

A bank in Connecticut, for example, used self-service kiosks to handle 40% of their consumer transactions. This gave employees more time to work on more valuable tasks.

Transition to the Universal Banker Model

Self-service kiosks allow financial institutions to transition from the teller model to the universal banker model. The universal banker model is one in which employees are trained to handle a wide range of tasks related to banking. Universal bankers are capable of being tellers one minute, financial consultants the next, and loan officers the next.

Increased Sales

Kiosks transform your business to be consumer-centric by meeting client needs and increasing quality face-to-face time for transactions that matter. When your tellers are freed up to deliver higher-value services, they increase sales. Thanks to self-service kiosks, tellers are free to cross-sell, up-sell, and promote other products and services.

Improved Internal Efficiencies

If you are like most financial institutions, you are continually faced with inefficiencies from an operational standpoint. Self-service kiosks at banks and credit unions streamline internal work processes and make branches more efficient.

Reduced Expenses

Installing a self-service kiosk at a branch reduces teller expenses. A credit union in North Carolina decreased bank teller costs by 40% when it began offering its customers self-service options with a kiosk.

Increased Foot Traffic

Because consumers find it easier and faster to use a kiosk than to wait in line for a teller, they are more likely to visit a branch to conduct simple transactions. They are no longer deterred by long lines at the counter.

Improved User Satisfaction

Serving individuals more quickly and offering them more convenient ways to make transactions will lead to happier consumers. Personal teller machines empower staff to deliver high-touch, personal interactions.

Better-Informed Consumers

Self-service kiosks let you keep your consumers up to date on your latest products and services. They let them browse entire ranges of products and services at their convenience.


Disadvantages of Self-Service Kiosks

Just because self-service kiosks offer multiple benefits to consumers and institutions alike doesn’t mean their deployment is easy or simple. There are challenges to installing and operating kiosks at any financial institution. You may even be concerned about the impact kiosks will have on your current account holders and members.

A Dehumanized Experience

Ironically, one of the benefits of self-service kiosks is also one of their challenges.

Yes, kiosks have the advantage of letting users conduct their banking without talking with a human. Many consumers prefer kiosks because the process is faster and more convenient. But plenty of retail banking clients prefer to do their banking at the counter. They prefer talking with a teller and transacting their business with a human being.

If you operate a branch in a busy, urban setting, this may not be a challenge for you. But if you are located in a rural area, and if your clientele consists largely of seniors or individuals who are less tech-savvy, you may experience plenty of pushback.

The rule of thumb is pretty simple: If your tellers know your clientele by name, and vice versa, installing a self-service kiosk at your branch may be a challenge.

High Upfront Cost

Installing a self-service kiosk that does the work of a teller isn’t like hiring and training a teller. It’s more complex, more technical — and more expensive.

Although there is a high upfront cost to purchasing self-service kiosks, your business will see a greater return in the long run by implementing them into your everyday operations. The cost of hiring a teller long-term will cost more than purchasing kiosks to manage regular, simple financial transactions.

All in all, the high upfront cost shouldn’t be a deterrent as long as you take two vital steps:

  1. Calculate your total cost of ownership. Look beyond the initial, upfront numbers and calculate the cost of the entire system over time.
  2. Calculate the return on investment you anticipate generating with each kiosk you deploy.

A high upfront cost doesn’t have to scare you if that investment stands to generate a satisfactory return.

Technical Malfunctions

Which is more frustrating: Walking into a branch that has many teller stations behind the counter but only one teller on duty? Or walking into a branch to discover that the self-service kiosk machine is out of order?

For many of today’s consumers, the more frustrating scenario is number two. Broken, vandalized, and out-of-service kiosks are a major inconvenience for retail bank clients.

This means part of your due diligence in choosing a kiosk vendor is reviewing their record for preventive maintenance, their average service response times, and their reputation for offering hardware and software that has above-average scores for uptime and reliability.


Should Your Financial Institution Switch to Kiosks?

Once you’ve studied self-service kiosk disadvantages and benefits for financial institutions, you have a decision to make. Should your financial institution switch to kiosks? To help you decide, here are four things you should consider:

1. Consider Your Institution’s Self-Service Vision and Goals

You are best positioned to switch to self-serve kiosks when you start your journey by describing your self-service vision and goals. Only when you have a clear vision and goals can you have success in selecting the right hardware and software to bring your vision to life.

Nailing down your vision and goals helps you choose a vendor who will build the modern client experience that consumers demand — and that your business requires.

2. Consider Your Hardware Configurations

You are highly unlikely to find a hardware vendor that delivers a kiosk that performs all the functions you need right out of the box. Installing a kiosk at your branch with no customization can lead to reduced functionality, poor client adoption, and failure to meet program expectations.

To avoid these shortfalls, look for a self-service kiosk hardware vendor that lets you create a custom kiosk configuration, one that facilitates your specific transaction set and use cases.

As you evaluate your hardware options and draw up your shortlist of vendors, make sure your preferred provider can support custom configurations and integrate peripheral devices to drive a successful deployment.

3. Consider Your Software Options

In the self-service kiosk market, vendors typically bundle the hardware and software. If you buy the one, you must also buy the other.

But a few hardware vendors are “software agnostic.” They give financial institutions the flexibility to select from one of many industry-leading self-service kiosk software providers — or to develop their own client-facing experience.

Hardware vendors who are software agnostic ensure that your self-service strategy accomplishes your goals, meets your account holders’ expectations, and can adapt to today’s rapidly changing marketplace.

4. Consider the Benefits for Your Clients, Employees, and Institution

Finding, interviewing, screening, and choosing a kiosk vendor is a lot of work. But finding a vendor who delivers individually configured hardware and best-in-class software gives you the best chance of achieving your institution’s self-service banking vision. It should also lead to:

  • Reduced operational costs
  • Enhanced internal efficiencies
  • Improved employee morale
  • Higher client satisfaction

As you evaluate your in-branch kiosk needs, be certain the vendor you choose will help you define your overall vision and objectives, configure your hardware, and select software to exceed your program goals. A good kiosk vendor makes sure your self-service strategy drives your larger institutional goals.

That said, the good news about deploying self-service kiosks at your financial institution is that your decision doesn’t have to be either/or. While you may not be ready to make the switch to a full universal banker model, you can instead adopt a hybrid approach that uses both kiosks and some teller employees. That’s a good starting point to begin your transition.


Get Started With Source Technologies’ Self-Service Kiosks

Are you ready to transform your business to be more efficient and customer-centric? Talk to one of our financial transaction specialists. Book your free consultation to find out more about our self-service kiosks.

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