Bank tellers are in danger of extinction as the ATM of the future takes over

Retail bank branches remain stubbornly relevant, despite an onslaught of digital and tech innovations.

But bank tellers' days in those branches could be numbered.

The largest banks in the US have been investing millions in updating the capabilities and physical appearances of their thousands of ATMs — an invention that turns 50 years old this month.

As those capabilities continue to grow, customers at retail branches will spend more time interacting with machines for their day-to-day needs, while branch personnel will move from behind the counter and focus more on complex transactions such as coordinating loans for homes or small businesses.

"Branches physically are changing — they're becoming smaller and the technology is moving to the front of the branch," Gordon Smith, the CEO of Consumer and Community Banking at JPMorgan Chase, said during at keynote address at an industry conference last week. "The tellers behind the [counter] are moving out into the branch." 

By 2018, a new wave of ATMs — with larger, digitally enabled screens akin to tablets — will start to become the norm, offering almost all of the services human tellers now provide as well as new capabilities like setting up cash withdrawals on your phone that you can seamlessly complete at a nearby ATM.

Already banks have outfitted ATMs with more flexible denominations — $1, $5, and $10 bills instead of solely the $20 bill — and debuted cardless transactions, wherein customers can log in more securely just with their phone.

JPMorgan Chase, which boasts a network of more than 16,300 ATMs and 5,300 branches across the US, saw its teller transactions decline by 25% from 2014 to 2016. Customers used ATMs for 90% of withdrawals and 60% of deposits, though they still exclusively cashed checks with tellers.

Teller transactions will continue to wane, as check cashing and most other services that require face-to-face contact will soon be available via ATM. About 60% of the transactions performed by tellers can be executed via ATM today, and that number is expected to rise to 90% by 2018, said Ryan Crowley, the head of branch systems and innovations for Chase.

As part of the evolution within their branches, the bank is moving away from the hulking, refrigerator-size machines in favor of a compact design with a digital-friendly interface that's more compatible with the website and mobile-app experience (Outside the branch, traditional ATMs will still persist, albeit with updated software). Chase now has 45 million active digital users, many of whom also use branches.

Customers "want it to be simple — they want it to be convenient," Crowley said, adding: "They want to have the same features and same consistent experience regardless of the channel they're interacting with us in."

Chase has already deployed 5,000 "eATMs," which first debuted in 2012 and feature tablet-like screens and cardless access, in branches across the country.

The company is also testing a "micro-ATM," which is similar to the eATM in functionality but is smaller yet. It hasn't been released in retail branches yet.

At Bank of America, both teller and ATM transactions are declining as mobile banking spreads, though teller interactions are falling more rapidly, according to Charles Liu, who runs branch and ATM innovation for the firm and is leading an overhaul of its entire retail presence.

Bank of America, which has a network of 4,600 branches and 15,900 ATMs, is starting to deploy a new-wave ATM of its own that it's calling an "XTM," or "Extreme ATM."

What makes it extreme? Besides the teller-killing advancements on the software side, the most distinguishing feature is a 32-inch, portrait-style monitor — nearly double the size of traditional ATM screens — that, like Chase's, will mimic a tablet-like digital experience.

How much an extremely large monitor will benefit the customer is unclear. Only the bottom third of the screen will hold users' personal information, for security purposes. The rest will display advertisements, targeted offers (travel credit cards, for instance), video tutorials (so people can learn how to deposit their checks with the mobile app), and a live video feed in a box in the corner showing what's going on directly behind you (also for security purposes).

Bank of America will have 100 of its XTMs up and running this year, with 1,000 more set to roll out over the next couple of years, according to Liu.

Another new feature that both companies are working on is letting customers "pre-stage" ATM transactions. This would enable customers to start a cash withdrawal from their smartphone and then head to any of the bank's ATMs over the next 24 hours to collect the cash.

Bank of America has been testing the feature on employees and plans to roll it out to the public in August. Chase said it was still testing the feature and hadn't announced a release date.

The bank branch isn't going anywhere just yet. But your friendly neighborhood teller might be replaced by a sleek, digitally connected ATM in the not-too-distant future.

Watch: THE KRISTIN LEMKAU INTERVIEW: JPMorgan Chase's CMO explains how she deals with disruption on two fronts at once, why she's moving some ad dollars back to TV, and why it matters what your credit card feels like

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