According to the NCUA's release, to qualify as a service facility, a video teller must be physically located in the service area, provide real-time, face-to-face video access to credit union or shared branching employees during regularly scheduled hours, and allow the member to conduct all the transactions he or she could if visiting another sort of service facility permitted by NCUA.

NCUA Chairman Debbie Matz credited NAFCU with the move, saying the trade association encouraged the change. NAFCU President/CEO Fred Becker confirmed the kudos, saying the idea was promoted during NAFCU's 2011 Annual Convention as a best practices strategy.

“[Credit unions] are on stage talking about this, and then afterwards I go home and think, 'wait a minute here, why wouldn't this work as a service facility?'” Becker said.

The NCUA's ruling will transform the way credit unions view their retail distribution network by opening their minds beyond branching into new ways to serve members and still provide a return on investment, Pranger said. Because personal teller machines provide members with real-time deposit verification and tellers with control over peripheral devices like scanning devices and cash dispensers, they provide more emotional comfort than ATMs.

“It's an assisted-serve environment, not self-serve,” Pranger said. “The magic of the system is that the teller can control everything that is going on.”

Video tellers also allow credit unions to beef up security, Pranger noted. The physical separation between members and tellers empower credit union employees to check questionable items without fear of physical threat or confrontation. Criminals may quickly realize there's no easy cash drawer to rob like in a branch.

Pranger said one credit union was able to foil a fraudulent check casher that had successfully cashed back checks in the area. Photos of the woman had been distributed to financial institutions, including the credit union's video call center.

When the woman attempted to cash a bad check using a video teller, the teller recognized her through the video feed and asked her to please wait while she obtained approval to cash the check. Instead, the teller called the police, then returned to tell the woman she was unable to get approval to cash the check.

“She was arrested as she walked back outside,” Pranger said. “Not only do these machines prevent theft, they prevent fraud if you have the right management and tellers.”

Video teller machines cost about the same as a full-service ATM, Pranger said. Additionally, uGenuis technology is also available on full service NCR ATMs that enable credit unions to upgrade to video teller technology.

“So you could use the same machine to conduct a personal teller transaction, or a simple cash and dash,” Pranger said, adding that the NCR hybrid machine would meet NCUA's service facility requirements. The only difference between the two is that the NCR machine doesn't have the same check dispensing capabilities as uGenius hardware.

Video tellers can also increase market penetration, said Bruce Foulke, president/CEO of the $1.15 billion American Heritage Federal Credit Union in Philadelphia. The cooperative placed a personal automated teller – or PAT, as the patriot-themed credit union has branded it – in a low-income grocery store last year and has since gained 200 members per month off the location.

“People in low income areas love the technology because it makes them feel like they're ahead of the game,” Foulke said. Additionally, the voting booth style PAT machines also provide more privacy than traditional open teller counters.

American Heritage has seven PAT machines in operation that supplement its 26 brick and mortar branches. In the future, new branches will have PAT machines instead of teller counters, Foulke said.

“If somebody doesn't show up for work, I don't have to worry about an empty teller window. I can just go over to the call center and fill that void instantly. Same thing if they get swamped,” Foulke said. “Plus, you don't have that down time when you have five or six people standing in the branch staring at each other.”

Foulke said eventually, video teller technology will also allow staff to work from home.

Although American Heritage is also placing PAT machines into large SEG facilities, the credit union isn't going to use them to expand its field of membership as now allowed by the NCUA.  That's because the credit union is focused on market penetration, not geographical expansion. Foulke said he thinks the technology would work well for field of membership expansion.

“It especially would for credit unions out west where there are miles between branches and they can't serve members outside of that,” Foulke said.

CO-OP Financial Services is betting its members will want to use video teller services both for field of membership expansion and to improve operational efficiency, said Eric Porter, executive vice president of business development for the Rancho Cucamonga, Calif.-based ATM and shared branching network provider. The CUSO expects to offer a beta version to credit unions during the fourth quarter.

CO-OP Financial began developing the technology before the NCUA added the service facility designation, Porter said. The CUSO's video teller service will allow members to conduct all the transactions they currently can through shared branching, he pointed out.

“This technology will really provide relief at a time when the cost of labor and transaction costs are on the rise, and will offset some of the fully staffed locations,” Porter said.

CO-OP is working with both Diebold and NCR to offer video teller services, although not all shared branching transactions will initially be available on both systems, Porter said. For credit unions planning for 2013 and considering video teller services, he suggested budgeting for a secure, full-service ATM, plus the cost of video hardware.