PNC banking on new ATMs to cut costs

More advanced machines could encourage customers to skip teller lines

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PNC Bank wants to encourage customers to use ATMs more instead of stepping up to the teller window. So the Pittsburgh-based banking giant is rolling out more automated teller machines with special features to help sway them, Senior Vice Chairman William Demchak told a gathering of analysts in New York City Thursday.

"As you'd expect, a transaction at the bank branch is much higher cost than at an ATM or online," Mr. Demchak said.

Roughly 80 percent of PNC's customers use ATMs to get cash. In contrast, only 10 percent use the machines to make deposits and just 1 percent use them to cash checks.

If PNC could bump up those percentages so that 40 percent were making deposits and 20 percent cashing checks, the bank projects it would save more than $50 million, Mr. Demchak said.

To help ease the qualms some people have about depositing checks into a machine, PNC is deploying more ATMs that stamp check images on customer receipts.

The advanced-function machines also cash checks by dispensing the dollar amount and depositing any change into the customer's account.

PNC spokesman Fred Solomon said he didn't know exactly how many of the bank's roughly 7,000 ATMs have the image technology, but said there are dozens of them in the Pittsburgh area, mainly at new or refurbished branches.

"By the end of this year, we will have thousands of these image ATMs located across our [19-state] footprint," Mr. Demchak said.

With fewer customers coming inside branch offices, PNC also is using new technology to help sell banking products and services electronically, he said.

For example, the bank is offering customers pre-approved credit cards through targeted "smart messages" that pop up on ATM screens. The acceptance rate so far is running about 3 percent, Mr. Demchak said, "which is way over what we get in direct mail response."

"As far as we know, we are the only U.S. bank at this point offering this service," he said.

Mr. Demchak said it was a tough time to be in the financial services industry, which is struggling with new regulations that have cut revenue and raised costs at the same time that record-low interest rates have hurt profitability.

He expects the recovery to remain "tepid" and for interest rates to stay low well into 2014.

The good news, he said, was that loan losses have eased in virtually every sector except for housing.

The nation will "continue to face heightened foreclosures and losses on mortgage-based products going forward," Mr. Demchak said.

In the meantime, PNC will continue to focus on cutting expenses, investing in technology and adding customers, he said. "Overall, I remain confident that we're well positioned to have another good year in 2012."

PNC posted $3 billion in profits in 2011, flat compared with the previous year.

Patricia Sabatini: or 412-263-3066.


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