Imagine walking into your bank one day. Customer service representatives stand ready to serve you but you avoid them and head for the kiosk in the corner.

There, you put on a pair of headphones, clear your throat into the microphone, and watch the screen fill with the smiling face of a customer service representative - sitting miles away in another part of Hong Kong.

The picture quality is a little choppy and the audio has a slight echo, not unlike an international phone call. But all in all, you are ready to bank.

Introducing video-conferencing to retail banks is the vision of video- conferencing system maker PictureTel.

Already, two banks - one in Korea, the other in Japan - are using PictureTel technology to put video kiosks into their branches to improve customer service.

Video kiosks could cut staffing costs and improve customer service by centralising certain customer service staff, rather than spreading them around various branches, Peter Woo, managing director of PictureTel in Asia, said.

The kiosk would cost about HK$160,000 to set up, and would include a monitor, video camera, computer, and network and telephone connections.

By creating new applications like video banking, PictureTel is aggressively seeking to expand use of video-conferencing.

It is no small task. Despite the allure of being able to speak face- to-face to people halfway round the world, customers have been relatively slow to respond.

Besides corporate meetings, only a few other uses, like tele- medicine, in which a doctor diagnoses patients via live video pictures, and distance learning, which lets students attend lectures by watching their computer monitor, have emerged. There is a distinct lack of a "killer application" for video-conferencing.

Despite holding more than half the video-conferencing market, PictureTel, while still profitable, has seen its revenues and profits slump this year.

Despite this, Mr Woo is not scaling back revenue predictions in Asia, which contributed 17 per cent - about US$82 million - of PictureTel's overall revenue of US$482.5 million last year.

That was fast growth, considering that just five years ago PictureTel had a single Asian sales representative, said Abby Fechtman, who was PictureTel's second regional employee.

She now oversees channel marketing in the region - a busy job, since nearly all PictureTel sales are through system integrators and resellers. In Hong Kong, they include firms such as Hongkong Telecom CSL and JOS Telecom, and Wafer and Hai Shing in the mainland.

That reliance on channel partners is partially due to PictureTel's traditionally lean operations in Asia. It now has 27 employees spread around six offices in the region.

The other reason was that unlike Intel, which specialises in desktop video-conferencing systems for individual users, PictureTel's strength was in higher-end "group" video-conferencing systems.

Typically costing almost HK$300,000 to set up, group video- conferencing systems use powerful hardware connected to complicated data networks.

"We've got less expertise in providing those solutions," Ms Fechtman said.

About 80 per cent of PictureTel's users connect via a 128 kilobits per second ISDN connection, a special digital telephone service.

At 128 kbps, the rate that Mr Woo recommends for the video banking kiosk, full-motion video would arrive at the rate of 13 to 15 frames per second.

It is slightly jerky, Mr Woo concedes, but adequate for this "virtual" face-to-face interaction.

To achieve smooth video of 30 frames per second, users would need to use at least two ISDN lines totalling 256 kbps, he said, adding that tele-medicine applications tended to require at least 384 kbps.

Lack of bandwidth is not necessarily a problem in the mainland, where PictureTel began to woo customers only a year ago. Ms Fechtman discovered some companies and institutions had "bandwidth to burn".

With more than 100,000 video-conferencing systems installed worldwide, PictureTel is also expanding into providing desktop-based video-conferencing systems running over local area networks. There, it is butting heads with Intel, whose ProShare line dominates with about 42 per cent of the market, according to the firm.

Intel's Business Video Conferencing kit costs only US$1,199 - much cheaper than PictureTel systems, which start at about US$8,000.

But PictureTel will continue to avoid selling Internet-based products, pronouncing the current quality too poor for its core business customers.

Popular packages like CU-SeeMe from White Pine Software, VideoPhone from Intel, and NetMeeting from Microsoft, are either free for download from the Internet or cost less than HK$1,000 to set up, which includes extra hardware like video camera and microphone.

But the compromise for the low cost? Jerky pictures combined with audio that sounds like it was spoken underwater. The Internet itself is the problem. Data travels through the Internet in the form of packets, which move independently and can arrive at the destination out of order, where they are reassembled to provide a clear picture or speech.

These packets are sensitive to disruption if, for example, Internet traffic suddenly flares up.

Internet-based video-conferencing "is the future, but it isn't now", Mr Woo said.

PictureTel is constantly seeking to improve the picture and audio quality of its video-conferencing systems. Ms Fechtman said it had recently developed a new compression scheme which used a "fraction" of the bandwidth formerly needed for audio. This left more bandwidth for a better video picture, and also to transfer data files, for instance.

It is also trying to figure out how to protect LAN video-conferencing from the same sort of disruptions as the Internet. "That way, if someone drops a 20-megabyte file into the network, the systems doesn't crash," Ms Fechtman said.