On June 7, 2013 the Commonwealth of Massachusetts Division of Banks (the “Division”) issued an opinion, Selected Opinion 013-002, (the “Opinion”) regarding the application process for the installation of Interactive Teller Machines (each, an “ITM”) at locations that are not authorized bank branches. Responding to correspondence from Lowell Co-operative Bank (now known as Sage Bank, the “Bank”), the Division concluded that ITMs should be considered electronic branches, governed by Massachusetts General Laws (“MGL”) chapter 167B rather than branches governed by MGL chapter 167C. Consequently, the application process for operation of an ITM will follow the same procedures for the establishment of an ATM, specifically the requirement to submit a notice to the Division within 30 days after opening the ATM or ITM location.
In reaching this conclusion, the Division analyzed the types of transactions offered by ITMs, asking whether these services bring ITMs within the prohibition on “manned” electronic branches under MGL chapter 167B. According to the letter submitted by the Bank, ITMs provide services similar to ATMs, except that ITMs also feature a video functionality that permits a bank to provide services typically routed through a customer service call center directly to the customer via a more interactive video process. The ITMs at issue in the request by the Bank offer eight transaction services not available through ATMs. Three of these services, stop on debit card, verification of account history, and check orders, can be processed directly through an ITM’s connection to a customer assistance center. The following five remaining transaction services require a signature form submitted independently by the customer: stop payments, debit card reissue, report loss of money order, report loss of treasurer’s check, and change of address. Given that each of these transactions is initiated by the customer, and that five of the eight transactions require a customer to submit forms independently, the Division concluded that ITMs are not “manned” electronic branches as addressed in chapter 167B, but instead are more closely akin to a type of ATM through which customers may interact with a bank’s customer service center for selected transactions. Accordingly, the Division concluded that the Bank’s ITMs can be licensed through the same process as ATMs. The Division also stated that consumer protections in effect for ATM operations would apply with equal effect to ITM-initiated transactions.
Although the Opinion authorizes the Bank to operate an ITM, the Division emphasized that the Opinion should not be construed as a blanket authorization of all ITM operations in Massachusetts. Federal banking precedents are not binding on the Division, but the Division noted that OCC guidance on the operation of remote service units (“RSUs”) provides that an RSU is not a “branch” under the National Bank Act even when “equipped with a telephone or televideo device that allows contact with bank personnel.