A JPMorgan Chase branch on Chicago's North Side joins about 100 others that let customers use special kiosks as an alternative to waiting in line at the teller window.

Chase began testing the self-service banking kiosks at 10 of its locations a year ago with the mission of eventually lowering costs through technology. Chase reports it operates nearly 5,500 bank branches, though only 102 have the new self-serve ATMs, with three now in the Chicago area.

"It's a slow rollout, but the rationale has always been that many customers who come into the bank to use teller windows hate to wait in those in lines," says Christine Holevas, Chase's Midwest media representative. "These units allow customers to skip that line and use the self-service option."

The bank branches will continue to have tellers, who have the additional task of helping customers use the new self-serve machines, Holevas says.

During a presentation to investors in February, Chase executives estimated new digital technology at its branches could save the bank up to $500 million a year. The bank also estimates its teller lines deal with about 1 billion pieces of paper annually.

"Over the next two to three years, we're going to introduce a lot of new technology into the branches and ATMs, and that's going to generate head-count savings for us and it's going to encourage more transactions going mobile and ATM and other forms of self-service," Todd Maclin, chief executive officer of Chase's consumer and business banking, said at the bank's investor day. "Branch and ATM self-service has the capacity to be a game changer for us."

Though Maclin mentioned a "head-count savings," Holevas says Chase is "not replacing tellers with technology."

The new ATMs significantly reduce the cost per transaction from $4 for teller interaction to 59 cents at an ATM, Chase estimates.

Maclin told investors that more than 90 percent of customers who once asked a teller to withdraw cash were now doing it themselves at the locations with kiosks in place.

Chase will focus future kiosk deployments in California and Florida, Maclin told investors.

The branch can choose four denominations it wants the machine to offer. For example, the branch can set up the ATM to issue $100, $20, $5 and $1 bills, Holevas says.

"Each branch receiving the new ATMs has to pick the [cash] denominations it wants the unit to offer," Holevas says. "They first study the customer analytics at that branch to better understand what the customer wants."

When a customer wants to withdraw $380, the Chase kiosk screen will default to three $100 bills and four $20 bills. The customer has the option to change this before receiving any cash.

Customers can deposit checks or cash in the new ATMs, with a maximum of 25 deposits through a single slot on the machine during one visit. Chase set a $1,000 withdrawal limit on the new machines, Holevas says.

Chase is one of the first larger banks to deploy self-serve ATMs, and a key strategy behind it may be the bank's pursuit of younger customers, says Scott Strumello of New York- and London-based Auriemma Consulting Group.

"We did some research [at Auriemma] that indicated younger consumers don't particularly like interacting with tellers, it's just not endearing to them," Strumello says. "If they can do some key tasks at self-service kiosks, that's what they will choose to do."

The deployment of self-service banking kiosks also allows Chase to serve what may be categorized as "marginally profitable" clients in a more efficient manner, Strumello says.

"When Chase started its private client initiative two years ago, it grew rapidly as a way to attract high-end clients, with the vision to serve those clients in the branches," Strumello says. "But it would also be ideal to serve the less profitable clients in a quicker manner that is helpful to the client."

Chase is likely experiencing a learning curve with the new technology, but it won't take long for large competing banks to add kiosks in the near future, he adds.

Chase intends to update the systems in the first quarter of 2013, raising the withdrawal limit and adding technology to allow customers to cash checks for an exact amount, Holevas says.

"A customer could cash a check for $20.18 and get that amount to the penny," she adds.

The ATMs also will allow customers to purchase money orders in the future, Holevas says.

Irving, Texas-based Nautilus Hyosung America Inc., a unit of South Korea-based Hyosung, manufactured the kiosks.

Chase owns all of the design patents on the units and has been working with NCR Corp. to bring NCR's self-service teller ATMs to production for Chase, Holevas says. NCR confirmed that its work with Chase ATMs could take place in the Boston area in 2013.

NCR announced in October that it was placing its Aptra Interactive Teller machines in the Indianapolis-based Salin Bank branches and drive-throughs

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