PHOENIX – Seeking to be out-front with its members on new Internet technology and automated branch networks, the Arizona Credit Union League has hooked up with a Virginia Beach, Va.-software firm to license a sophisticated home banking/cash dispensing product in the state. The licensing venture, which has been in the works since May 2000, links up with Virtual Branch Technologies, the Virginia firm which offers custom kiosk-style branches with e-commerce and home banking capabilities. The League said it has begun developing a formal pricing structure for the kiosks and has scheduled formal demonstrations of the equipment to Arizona CUs interested in signing up to operate the system which is designed to sharply reduce brick and mortar branch expense as well as cut the cost of home banking “by 50%.” Todd Pearson, vice president of ACUL Services Inc., a subsidiary of the League and who has handled negotiations with the Virtual Branch, said a letter is being mailed to all 66 members of the League inviting them to Phoenix to inspect the automated branch and discuss pilot testing. The kiosk device was on display during the League’s annual convention in Scottsdale in June. The device is extraordinary, say League officials, because the branch facility does an array of Internet-related tasks in addition to currency dispensing, bill payment, card and currency reading plus balancing functions. Loan applications can also be handled on the device. Virtual Branch on its Web site describes a “Web-e/commerce based technology platform” that offers “an automated delivery channel in an integrated” format. Pearson said the Virtual system has attracted interest outside of Arizona with top League executives from California and Utah on hand in Scottsdale in June to view the system. The president of Virtual Branch, William Maloney, who was in Scottsdale for the convention demonstrations, said the Arizona League is furthest along in testing his kiosk product “in a channel situation,” but there are other CU clients, many on the East Coast, that have versions or elements of his software branch products. For one, the $260 million Paragon Federal Credit Union in Washington Township, N.J. confirmed that it is working with Virtual regarding an online home banking system. Its Web site invites members to “join” a pilot test of what it calls its “NETime online” product which was not described. While declining to discuss specifics of the Virtual test, the president of Paragon, Richard Rays, said his CU has long been eager to “serve the Internet needs of small to medium size credit unions” particularly on Web hosting and design. Rays said as Internet products diversify, Paragon seeks to capture more of this “niche” market and offer services that only the largest CUs can afford. Paragon Services Inc., its CUSO, lists 90 CUs as clients for Web site development and hosting. Mahoney of Virtual Branch said both the Arizona League and Paragon represent “alliances” where groups of CUs could eventually sign up for his kiosk network. Meanwhile, the Arizona League said the versatility of the Virtual kiosk system is that it would allow small CUs to install the automated branches in select employee groups, thereby saving the cost of setting up full-service branches. “By putting in one of these kiosks, a credit union could save as much as 80% on brick and mortar,” said Pearson noting the kiosk can perform “everything that a teller can do.” He said the Arizona League got involved with Virtual as a result of contacts made a year ago between a sales representative for Diebold Corp., the ATM vendor, and Gary Plank, the president of the Arizona League, who became intrigued with the system. So far no Arizona CU has made public its intentions on the Virtual system although, it was understood, a few have made “verbal” commitments to pilot test the system, the league said. Pearson said “in a perfect world” he would expect eight to 12 Arizona CUs would sign up for the system in the next 18 months. – [email protected]

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