A.T.M.'s Pick Up Web Site Tricks

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Those ubiquitous A.T.M.'s are about to get considerably smarter.

Wells Fargo, the Bank of America and other financial institutions are giving
their painfully low-tech A.T.M.'s a dose of Internet technology aimed at
speeding transactions, reducing paperwork and exposing customers to a
much wider range of transactions.

Behind these upgrades is a broader effort to attract more online customers, all spurred by recognition within the industry that Internet
customers are more profitable than the unwired masses. Analysts said the
cost per transaction is considerably lower for online banking than offline,
but more important for financial institutions is that those who bank online
are simply more desirable customers.

According to Sanjay Gupta, e-commerce executive at Bank of America, the
company's 12.6 million online banking customers are 27 percent more
profitable than their offline counterparts. "They carry higher balances, their
attrition rate is lower," Mr. Gupta said. "The loyalty effect far exceeds the
cost required to serve those customers." A.T.M.'s that replicate services
offered on a bank's Internet site could also encourage offline customers to convert to online banking, analysts said. The link does not go to the bank's Web page, but instead lists services that the customer selects by touching the screen.

Wells Fargo, which along with Bank of America has been at the forefront of Web banking, completed a five-year effort to revamp its roughly 6,200 A.T.M.'s last week, allowing them to replicate many of the functions found on WellsFargo.com, as well as offering some new twists on the typical experience of automated teller machine users.

Late last year, the company began testing A.T.M.'s in northern California that can accept envelope-free deposits. Because the A.T.M.'s are equipped with scanners and are connected via the Internet to Wells Fargo's clearing system, customers can place checks directly into the machine, which records the check amount and displays an image of the check on the screen and on the customer's receipt.

Cash deposits are treated in a similar manner. Customers place a stack of bills - in any order or condition - into the machine, which then scans the cash and displays the total amount on the confirmation screen, along with a list of how much money was deposited in various denominations. Because the transaction is entered into the bank's central accounting system via the Web, those funds can be used immediately in, say, a Wells Fargo investment account. With other A.T.M.'s, bank employees had to collect the cash from the machine before the money was available to the customer.

According to Jonathan Velline, senior vice president of Wells Fargo's A.T.M. banking division, the company is not finished evaluating that test.

"But so far we have about a 96 percent satisfaction rate with the new A.T.M.'s," he said. "I do think this is something we'll be deploying more of."

In the meantime, the company's existing A.T.M.'s still represent a big step up from the machines they replaced. For instance, customers can log on and access any of the 22 account services the bank offers, from its brokerage to its mortgage lending division.

"We don't expect our customers to stand in front of the A.T.M. and browse the way they do at WellsFargo.com," Mr. Velline said. Rather, he said, customers are using the newer A.T.M.'s to quickly check account balances and transfer funds among accounts, rather than hunting down an Internet connection or going to a teller to achieve the same thing.

The Web-enabled A.T.M.'s represent just one effort among banks to introduce more of their customers to online transactions. That initiative has gained considerable momentum over the last year or so, as more Internet users log on through fast connections at home and as more users gain enough experience and confidence in online transactions.

According to a report last month from the Pew Internet and American Life Project, a research organization based in Washington, online banking was the fastest-growing activity among Internet users in the last five years. The report said that 53 million people, or 44 percent of online users in the United States, did their banking online, an increase of 47 percent from late 2002.

And although establishing secure and well-tuned online systems has proved more expensive than many executives expected, banks have been equally surprised at how much more profitable their online customers have been than those who drive up or walk in.

"What banks love about it is that people who bank online tend to hit their bank, so to speak, more times per month than people who just go to the branch," said David Hallerman, an analyst with eMarketer, a consultant based in New York. "So it gives banks more marketing opportunities."

But banks must convince customers to do more than log on for a moment or two, he added. "The majority of what people do online is simply check their savings or checking account balances," he said. "So it's really a glorified A.T.M."

Mr. Hallerman said that nearly two-thirds of online banking customers transferred money between accounts. "So one-third of people don't do something as minor as making a transfer," he said.

Executives said that one of the most effective ways to increase a customer's use of online banking was to offer free online bill payment services to most or all customers, which Bank of America, Wachovia and Wells Fargo, among others, have done in recent years.

Marketing, of course, will also play a role. Wachovia, for instance, already has the most active online banking customers, according to Nielsen/NetRatings, an Internet research firm. In January, Nielsen/NetRatings said, Wachovia's online banking customers spent more than 20 minutes on Wachovia's site, compared with an industry average of about 10 minutes.

But according to Lawrence Baxter, chief e-commerce officer at Wachovia, the company will probably follow the lead of Wells Fargo and Bank of America, which have far more online banking customers, in marketing its online banking services more heavily. Until now, he said, Wachovia has only advertised new online services to existing Internet banking customers.

Between the increasing interest among Internet users in electronic banking, and the growing effectiveness of online advertising, Mr. Baxter said, the timing was good to aggressively spread the word.

"In previous years, a lot of online ads were like shots in the dark," he said. "Now it's much more credible to say dollars should be spent there."