Iowa bank builds store in Sioux Falls

American State Bank is experimenting with a new branch strategy at its downtown Sioux Falls, S.D., location. Opened in January, the location has no vault, no safe-deposit boxes and no teller line. The only teller services the location offers are provided by an Interactive Teller Machine – which can function as an ATM but also can complete teller transactions remotely via video call..The goal for American State Bank, which is headquartered in Sioux Center, Iowa, is to grow deposits by efficiently serving potential customers who live, work or shop in downtown Sioux Falls. It also plans to serve clients in Sioux Falls generally with digital banking products..Part of the $816 million bank's attraction to Sioux Falls is the total makeover to its downtown. Much like many other large Midwest cities, Sioux Falls is seeing an inflow of new companies, restaurants and housing to its downtown area.."It's very different than it was eight years ago when it was even hard to find a place to go to lunch," said T.J. Speer, vice president of corporate affairs for the bank's holding company, Ambank Company, Inc. "Companies like the Duluth Trading Company and others are moving in. We expect the number of people who live in downtown to double in the next decade. Right now, the number of people living in downtown is the same – about 10,000 – as the number of people living around our Sioux Center location.".The population inflow to downtown Sioux Falls isn't coming just from young people, Speer said. "It isn't just the millennials, there are a lot of empty-nesters and retirees moving there too," he said..While the bank already has $60 million in assets in Sioux Falls, a physical location in town has been the gateway to many new digital deposit relationships, Speer said. "We are finding that individuals want the convenience of digital but they want to know who they are talking to. They want that local connection," Speer said. "About 80 percent of our new accounts were opened online in Sioux Falls; some of these accounts are as large as small commercial deposits.".Rather than trying to entice customers to the branch, it is designed to accommodate whatever activity customers desire. "The branch offers a few offices, meeting rooms, a lounge and a place to demo our online banking on a touch screen television," Speer said. "We have developed an interactive display where you can look at CDs, accounts and rates. If you want mobile banking you can type in your email address and our system will send you a link to the mobile banking app so you can try it out.".The Sioux Falls branch is staffed by just two employees, called client services agents, who are experienced personal and residential mortgage bankers. Because of its low staff count and limited square footage − 2,000 square feet compared to the bank's last location built in 2004 at 6,000 square feet – the branch has entered the market with much lower cost..Because of the ITM, the branch is able to serve clients well with just two employees, compared to an average 14 employees at its other branches, Speer said. "The ITM is really what makes the branch capable of going without all the infrastructure required for teller services," he said. The ITM is located in the entrance to the branch which doubles as a 24-hour-banking vestibule..Creating flexibility.ITMs have introduced more fluidity to bank staffing, said Josh Banta, vice president of service and technical sales at Data Business Equipment, Des Moines. American State Bank worked with DBE to bring ITM service to Sioux Falls. "With the ITM technology banks can leverage assets and people to offer teller services when and where it makes sense," he said. "Every bank we do business with has a little different solution they are trying to bring. In the case of American State Bank, they use it to allow customers 24-hour access. It also allows the branch's two staff people to be sales focused. They can potentially sell more.".Deploying ITMs isn't only about cutting teller jobs. Many banks use ITMs in a way that creates teller jobs, Banta said. "Banks are using them to expand the branch footprint cheaply into new markets; they then hire in the call center," he said. "Expansions of this kind also bring other benefits for things like staffing. Since local talent pools in small rural markets can be limited, it can be easier to staff with an ITM strategy, especially for banks based in a city like Sioux Center or Des Moines.".Banta said many bankers he meets with are concerned that an ITM is not right for their market. "Even I thought years ago this would be a metro solution," he said. "We have found the opposite to be true. We have seen it be a very attractive solution for rural banks.."I have met with bankers who don't believe customers will use an ITM," Banta continued. "They do not believe, for example, that older customers will use it. We have found it has nothing to do with age; customers can resist change at age 25 just as much as 85. If people try it once, they have a 90 percent adoption rate.".Clear communication.Success getting customers and employees to accept ITMs depends on a bank's communication, said Jed Taylor, general manager, community financial institution solutions and global video services, NCR Corporation, Duluth, Ga. "Communicate to employees as well as customers about how the ITM fits into the bank's strategy," he said. "Make what's in it for customers clear to them. Most of our banks extend hours; some have done 24-7 banking. Explain that benefit to customers as you deploy ITMs.".Tellers who move from the branch to an ITM center often like the change as well, Taylor said. Working in a call center with more employees increases flexibility in hours and makes them feel safer because they no longer have cash on hand..Banks use various strategies to help customers get used to ITMs, he said. Some have an employee who introduces customers to their options as they walk into the branch. In areas with many senior customers, banks often have an older customer on hand to introduce the product..In terms of the customer experience, banks are finding that customers like an ITM more than even a drive-up, Taylor said. "Drive-up transactions range from six minutes to nine minutes. I have sat in my drive-up longer than that," he said. "An ITM transaction takes 2.5 minutes to 3.5 minutes.."Then, there is also the experience of seeing a banker in the drive-through window but they are not helping you as far as you can tell," he continued. "The ITM is much more one on one. It is less frustrating for the customer. You're not in a pool of people being helped. The teller on the ITM is focused on you."