Gray-based Appalachian Community Federal Credit Union is investing $2 million in virtual teller machines in three Southeast Kentucky locations.
The $2 million grant was awarded Aug. 17 through the Wells Fargo NEXT Award.
“The vision is that someone can come into one of these machines, sit down, pull up one of our employees and literally get anything and everything done that they could get done at a branch,” said Ron Scott, CEO of the community credit union.
“The VTMs seem to be getting used by financial institutions to augment branch services, and in turn reduce staffing. But we’re trying to leverage the technology to reach underserved areas where banks and credit unions won’t go normally because its not cost effective.”
Scott said ACFCU plans to offer 24-hour VTMs to customers in rural parts of the service area, which includes parts of Northeast Tennessee and Southwest Virginia.
ACFCU is designated by the U.S. Department of Treasury as a community development financial institution. CDFIs are financial institutions tailored to generating economic growth and opportunity in poor communities.
In 2015, Communications Manager Jamie Jackson said ACFCU disbursed $62.9 million in loans, with 95 percent of that going to underserved individuals.
“We’re not your average credit union,” Scott said. “We’re very specifically focused to helping the underserved. Our greatest competitors are payday lenders.”
The three Kentucky virtual teller machine locations will be in Owlsey County, Jackson County and Whitesburg.
Scott said Owlsey County is one of the poorest counties in the state, while Jackson County has a 34.2 percent poverty rate.
VTMs will cost approximately $150,000 for the first one and $100,000 for subsequent ones, not counting costs for support and maintenance, Scott said.
The $2 million grant was awarded based on ACFCU’s strategy to expand services in Central Appalachia.
“We do see bringing them into the Tri-Cities with our drive-throughs,” Scott said. “We’ve got areas in the Tri-Cities that we serve but don’t have a physical presence ... These are rural areas that you just can’t cost-justify a full-service branch, but they desperately need services.”
Scott said Bluff City, Mountain City and Roan Mountain are potential Northeast Tennessee locations for a virtual teller.
ACFCU has branch locations in Kingsport, Johnson City and Rogersville, Tennessee, Norton, Virginia, and Berea and McKee, Kentucky.
A virtual teller machine offers the same services as a brick-and-mortar bank through the use of a microphone and video cameras. Along with withdrawing and depositing funds, customers will also be able to open accounts, submit loan applications and potentially even sign loans.
“There is actually an employee at the other end that is controlling the machine,” Scott said.
If the VTMs are successful, Scott said it would be the middle or near the end of 2017 before the credit union would begin expanding the service to the Tri-Cities.
Email Zach Vance at [email protected] Follow Zach Vance on Twitter @ZachVanceJCP. Like him on Facebook.com/ZachVanceJCP