RETREAD
For Banking Kiosks, a Second Chance
It's an idea that gasps and wheezes but won't die.
Nearly every bank that's installed Internet kiosks, or anything like them, has seen them flop. But that isn't stopping Bank of America, First Union and others from making fresh attempts to deploy online interfaces in their branch banks.
Four years ago, First Union bet heavily on kiosks. The bank spent more than $250 million modernizing its branches, equipping them with souped-up ATMs and kiosks with phone connections to specialized call centers. The plan was supposed to give customers extra services while letting the bank cut its staff.
Only one problem: Customers hated the devices. They complained that branch personnel used the machines to steer them toward phone conversations with staffers hundreds of miles away. The experiment failed, and two years later the bank had to hire more than 2,000 tellers, many for positions earlier eliminated.
This time, First Union is taking a softer approach, says senior VP Parrish Arturi. The bank will make Internet kiosks available to customers, but it won't push the service - and it will provide employees to guide users around the bank's site.
"It's a different twist. Rather than forcing people, it's about showing people other ways to interact with the bank," says Arturi. First Union is hoping the machines will lure more customers to its online division, which already has 1.7 million accounts. It's the same goal that's leading Bank of America to experiment with in-branch kiosks for the first time.
It's easy to see why banks are so eager to bring customers online. The average cost of a Web transaction is just 20 cents, reports the financial services research firm Tower Group. A visit to a teller, by contrast, costs a bank eight times as much - and a typical meeting with a bank officer to ask about a complicated product like a mortgage costs a whopping $4.20. Even if kiosk users never convert to Net banking, banks are still way ahead: Tower Group puts the average cost of a kiosk transaction at about 40 cents.
While offline banks are using kiosks to point clients to the Net, online banks are embracing kiosks as a way to offer a physical presence to their customers. Directbanking.com, one of the few profitable Net banks, recently opened a Boston branch packed with online workstations. And WingspanBank.com has set up kiosks in Phoenix-area branches of its offline parent, Bank One.
To be useful, though, the kiosk has to offer something the banking customer can't get at home, says Richard Bell, an analyst with Tower Group. "What's the value add? What am I going to get at a bank kiosk that I won't get by surfing the Web or by reaching the call center? That's the problem. They haven't answered that one yet." / Joel Obermayer
PERSONAL PEDIGREE
A Vague Plan for Success
Last August, when venture capitalists were busy sewing shut their wallets and new-economy CEOs were running scared for cash, Richard Vague (above right) closed a $94 million round of funding for Juniper Financial.
How did he do it? Well, it wasn't the business plan. So far, Juniper, which launched in October, promises to be an online bank much like other online banks, none of which have turned out to be gold mines. Sure, there are differences, but not many. Juniper advertises better customer service and more wireless options than its competitors. It offers, for instance, to alert customers by phone when their balances fall below a certain level. It has a distinctive marketing plan, heavy on direct mail, and the late fee charged by its credit card is $10 less than rival fees.
More likely, the reasons for Juniper's funding success are - forgive the pun - entirely Vague. The CEO has enormous stature in the financial services community as the man who, in the 1980s, built First USA into the nation's No. 2 credit card issuer.
