On August 9, the FDIC published a financial institution letter titled “Classification of Interactive Teller Machines as Domestic Branches or Remote Service Units,” applicable to all FDIC-supervised state nonmember banks. FDI Act Section 18(d) requires state nonmember banks to obtain the FDIC’s consent before establishing a domestic branch, while Section 3(o) specifically excluded ATMs and remote service units from this definition. The FDIC stated that ITMs, which resemble ATMs but allow customers to interact with live tellers for various banking transactions, have raised questions about their classification. The FDIC noted that recently, Interactive Teller Machine (ITM) technology has become increasingly sophisticated, and state nonmember banks have sought guidance from the FDIC on whether using ITMs at locations other than established branch facilities would demand a domestic branch application or qualifies for the RSU exclusion.
The FDIC clarified that ITMs established by state nonmember banks will not be considered “domestic branches” requiring FDIC approval under specific conditions. These conditions include the ITM as an automated, unstaffed facility owned or operated by the bank, equipped to enable existing customers to initiate interactive sessions with remotely located bank personnel. Additionally, while bank personnel can assist customers remotely, customers must also be able to perform transactions independently and have the discretion to start and end interactive sessions with bank personnel. ITMs that do not meet these criteria may require a branch application.
