The Division of Banks has issued a legal opinion that provides guidance on the regulatory approval process for the installation of an Interactive Teller Machine (“ITM”) at a location other than an existing banking office. According to the June 7 opinion letter, an ITM would be considered an “electronic branch,” as are Automated Teller Machines (“ATMs”) under Chapter 167B of the General Laws of Massachusetts and the Division’s regulations at 209 C.M.R. 31.00. The application process for an ITM therefore would follow the existing procedure for an application to establish an ATM, which is to submit a notice to the Division within 30 days after opening the ATM location. As described in the opinion letter, an ITM generally has the functionality of an ATM, but with an additional interactive video component. The video component allows the customer to interact with a bank employee, allowing the bank to deliver typical call center services to the customer through an ITM. These are services that customers can typically access over the telephone, such as placing a stop on a debit card, verifying account history and ordering checks. ITMs also allow customers to initiate a stop payment order, request reissue of a debit card, make reports of loss of a money order or treasurer’s check, and notify the bank of a change of address, each of which requires the customer to return a form to the bank by mail.
Nutter Notes: The Division also considered whether the interactive features of ITMs would make them “manned electronic branches,” which are prohibited under Chapter 167B, Section 3 of the General Laws of Massachusetts unless located at a banking office. The Division concluded that ITMs are not manned electronic branches but instead are automated machines operated by the customer because there is no bank employee onsite to operate the ITM on the customer’s behalf. According to the opinion letter, each of the transactions available through an ITM are initiated by a customer, certain of which require the customer to return a signature form by mail to complete the transaction. The opinion letter also noted that the OCC has considered whether devices similar to ITMs, called remote service units (“RSUs”), were bank branches, concluding in a 1997 interpretive letter that RSUs are not branches. In 1999, the OCC adopted a regulation defining an RSU as an “automated facility, operated by a customer of a bank, that conducts banking functions, such as receiving deposits, paying withdrawals, or lending money,” and may be equipped with a telephone or video component that allows contact with a bank employee. The OCC regulation also provides that RSUs are not subject to state geographic or operational restrictions or licensing laws.