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As banking technology and strategy evolve, ATMs can provide consumers with all the conveniences of branch banking.

6 Steps to Deploying New ATM Functionality

To wring the most out of new ATM deployments, Forrester Research offers the following tips:

1. Measure branch counter transaction levels. Banks should measure how many customers use the counter for routine interactions, such as depositing cash or paying bills, in a representative sample of their branches. Using video cameras and computer simulations can help banks understand customers, staff workloads and queue length, and will aid in planning branch layouts and ATM deployments.

2. Compare investment decisions with other channels. Banks should evaluate new channel developments, whether on the Internet, in the call center or on the ATM network, on a consistent basis - the overall impact on costs, revenues and customer lifetime value. Only by looking at transaction levels on all channels in detail can banks measure the economic impact of investing in new ATM functionality.

3. Place ATMs precisely. To maximize the adoption of new ATM functionality, banks must plan carefully where they site their ATMs. Smart ATMs buried at the back of the branch won't achieve the results banks hope for. Instead, banks must place ATMs prominently at the front of the branch and use signs, branch layout and branch staff to encourage customers to break their counter habit and try the new ATM instead.

4. Lure customers back to your own ATMs. To exploit the marketing potential of ATMs, banks need their customers to use their own machines. Banks should consider reducing any fees on their own machines, promoting the new functionality on their Web site and marketing literature, and introducing competitions to give customers an incentive to return.

5. Ensure branch employees are available to help. Most customers will need guidance on how to use new ATM functionality, particularly the frequent branch counter users whose behavior banks most want to change. Banks should station a staff member at the front of the branch to direct customers to the new ATMs, show customers how they work and help them through their first few transactions. To overcome staff resistance and boost adoptions, best practice banks reward branch personnel for the number of routine interactions that they help to migrate to self-service channels, or increases in active self-services users.

6. Use incentives to drive adoption. The customers that banks hope to reach with new ATM functionality (frequent branch counter and call center users) won't change their behavior without incentives. To persuade customers to change their habits, banks should explore incentives, such as extending the hours for same-day deposit credits at ATMs but not at the branch counter, reducing branch counter hours or disallowing branch counter transactions below a certain dollar amount.

Source: Forrester Research report, "The ATM Functionality Quandary"

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