There is an unprecedented focus today around the future of retail branch networks. Credit union executives are seeking new ways to economically alter the scale, reach, and character of their branch assets to drive growth and enable expansion in profitable new territories and non-traditional locations. While the channel is universally acknowledged as best for both member acquisition and sales, the economics must change in order for this way of member-centric financial services to thrive and realize its potential in the new, consumer-driven, omnichannel environment. For more info: www.nafcu.org/ncr
2. NCR Confidential
Branch Profitability Transformation – The Inflection Point
Unprecedented focus & urgency
• Branch Transformation no longer seen
as a choice – Unprecedented global
urgency for change
• No longer solely about improving the
customer experience - for
‘differentiation’
• Controlling Branch Revenue & CX
management thru people only –
unsustainable & diminishing returns
• Industry is failing to stem revenue
losses. Allowing 30% of NAMER
branches to underperform - become
unprofitable – becoming dormant,
untapped profit centers
3. NCR Confidential
Branch Profitability Transformation – Driving Forces
Branch needs relevant identity within Omni channel
Branch must be cost neutral link in the customer transacting pathway
False starts – Cool, superior CX not delivering basic branch function
Sensible strategies now seen, converging & explored for the long term
• Expansion into new markets - funded by rationalizing legacy estate
• New, lean, agile distribution formats - 90% of floor space devoted to
customer interaction.
• Transform Tellers / PBs into Universal Bankers - no back office, future
proofed.
• Change cost:revenue ratio of each FTE – to be clear revenue generators
• Scalable, consistent management of mobile bankers
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4. NCR Confidential
Branch Profitability Transformation – Statistical Drivers
Metrics driving the urgency & highlighting the profit opportunity
Footfall Traffic & Cost Burdens
• Teller FTE drop of 20% in next 2 years.
• Footfall has dropped 35%+ in 10 years, now predicted to accelerate further by 14% in next 2 years.
• Global Capital regulation & NAMER Consumer regulation reduced retail banking ROE by 20% in past 3 years.
• Typical retail banking provider cost base devotes 45% to distribution, heavily biased towards branch
Revenue Opportunity
• NAMER revenue per FTE down 50% in 5 yrs - Eurozone revenue per FTE has held stable at $300k pa.
• Gen Y to increase products 75% in next 4 yrs. Average bank holds only 20-30% of current Gen X opportunity.
• Branch still concludes 4 of 5 product sales, despite commencing in alternative channels
• Expanded Profitability Jaws - New Branch formats can potentially deliver 120% of Op.Income for 80% of the cost.
6. NCR Confidential
• 4 or 5 branch formats now the norm
• Customized to location & segment
• Modular
• Using the ATM as common
interaction point
Network Scale & Branch Character Transformation
Converging Strategies focus on creating, agile, flexible modular branch formats
7. NCR Confidential
• 500 of 750 branches have
completed transformation
initiative
• ING has removed all teller
counters from the branches
• All branch staff are now Universal
Bankers
• Profitability Results exceeded
goals:
Europe, ING Belgium
Focus on creating, agile, flexible modular branch formats
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MEA, Bank Audi, Lebanon & Turkey
Creating, agile, flexible modular branch formats for non traditional locations
8
• Self Service Centres, in retail partner locations
• Customers access advanced kiosk self service,
Intelligent deposit ATMs, Advisory room & video link
• Modular Expansion – Kiosks also located
independently in retailers, Advisory offices located
independently in car sales showrooms
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• Full service branch banking format delivered in 1,000
sq. ft. or less of space
• Customers interact with roving bankers, available to
assist during business hours - branch converts after
hours to a 24 hour self-service zone.
• The potential capital and operating costs of the branch
are ~50% less than a traditional branch, while
offering similar levels of sales, service, and
transaction capabilities.
North America, Wells Fargo, Neighbourhood branch initiative
Smaller footprint, No back office, offering transactional banking with choice of staff interaction
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• Expansion Policy
• Increased Service
• Increased Efficiency
• Increased Productivity
• Driving keener value in financial
products for members
Wright Patt CU, Dayton
Revised footprint, Video Teller supported, focused on Sales & Service
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• Created 4 new Branch formats
• Deployed in Hospital – 3000 permanent
customer base
• & Retail Mall – 10million annual footfall
• Innovating to deliver value back to
community & future proof staff roles
Canada, First Ontario CU
Smaller footprint, expanding into new customer transaction highways
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WEB COMPANY
WEBSITE
MOBILE BRANCH
/STORE
CALL
CENTER
SOCIAL
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FRIEND
EVANGELIZE
TRUST
DECIDE
COMPARE
RESEARCH
SEARCH
DISCOVER
DECIDE
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Seamless Transaction
automation Excellence
Consumer Experience
Excellence
Revenue Generation &
profitable relationships
Multiple, Connected
Points of presence
Follow the Consumer’s satisfaction & needs hierarchy
Transaction excellence, Presence where needed, Customer experience, Sales – in that order.
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Make discovery easy, consolidate interest Secure Fulfilment & Gain Wallet ShareDrive Impulse across channels Make Engagement easy
Multiple Points of Presence
Inspire & Capture Impulse
at inception, across multiple channels
Manage Discovery
Facilitate creation of
Interest
Secure engagement
Connect your customer
to the advisory channel
The market
Opportunity
•Average online adult
holds 8.5 products
•Average provider
holds wallet share of
2.1
• Gen Y product
holding will increase
75% in next 5 years
Source : Forrester 2011 Report, 2011 North AmericanTechnographics Benchmark survey
Ernst & Young 2011 Global retail banking consumer survey
Mobile Banking
Micro Branch
formats, multiple
locations
Multi function ATM
Targeted messaging
Interactive Teller
Interactive Teller
F2F Influence
everywhere
Online Banking
Financial Kiosk
Product management
& discovery
Self Scheduling
Empower customers
To secure advisory
Discussion on any
channel
The Target
•Best In class provider
owns 3.5+ product
wallet share
The Capacity Gap
Global average
2.9 products
Accelerate Impulse to Action
Branch is your Sales and Service profit hub – Accelerate the customer from impulse to action
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Points of presence: 4 Points of presence: 9
Branch
ATM
Iconic Branch (Hub)
Express Branch (Spoke)
Micro Branch (Spoke)
Self-Service Branch (Spoke)
ATM (Spoke)
Today Tomorrow
Target segment/
micro market
• New branch assets annual operating costs down 51% compared to traditional branch
• Annual sales up 76% through expanded hours, enhanced staffing models (i.e., Universal Bankers vs.
Tellers), and channel synchronization
Deliver alternative distribution network - 30-50% of traditional branch
network operating costs
Specimen Model
A well thought out ecosystem, delivers profitability
Be there for your customer, speak to your customer, deliver for your customer
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Best in Class Management – What new Technology should deliver
Technology must be designed to Realize Branch profit opportunity & Create Management consistency
Centralized Video Call Centre Management, should allow
Flexible and immediate deployment of personnel equipped by
remote driven, fully functional devices . Delivering operational
Rigour & sales approach consistency
Consistent
Sales
Approaches
Referral rates
of 40pm per
Teller
Consistent
Handoff
Correct
compliance
statements
Live
compliance
observations
Live
compliance
observations
Shorts in Tills
management
Universal
resource, no
competition
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Best in Class Management – What new Technology should deliver
Technology must be designed to Realize Branch profit opportunity & Create Management consistency
In-branch solutions, should offer in branch device control
enabled by tablet technology , To maintain operational
Rigour, free up engagement space & drive sales.
Management
of
environment in
real time
Complete
Visibility of all
customer
transactions
Customer &
Staff use ATM
application
together
Controlled
choreography
on the floor
KYC and
Money
laundering
controlled
Controlled
sales
approach
stages
Staff validates
short term
lending on the
spot
Shorts in Tills
management
Only 5% of
customers
pro-actively
update
records
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A Profitable, Interactive Environment
Revolutionized Management of Daily operations, Staff & Revenue generation
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Iconic - Self Service – Micro – Express
Banking collaboration platforms, leveraging Kiosks, Tablet & remote device control, Video coms
1800 Sq ft
60% of traditional
branch footprint
201% of the operating
income per sq ft.
83% of the operating
cost per sq ft.
56% of the
staff cost
1000 Sq ft
33% of traditional
branch footprint
195% of the operating
income per sq ft.
49% of the operating
cost per sq ft.
40% of the
staff cost
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1 1 0.8 1
Full Service
0 1
Self Service
Staff Consumer
1 3 1 3
Assisted Service (In Person and Remote)
3
The Key – Assisted Service
Combining Self Service, Full Service – at the customers’ choice – cost effectively
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APTRA Interactive Teller
Remote Assisted service, supported by
centralized, instantly deployable resource
•Teller remote controls all of the ATM modules, and
functions
•Card or cashless authentication
•Signature capture & ID Imaging
•Rich integrated, on screen flow, educates as you
engage
•Teller has full over ride capability for cash dispense
and credit functions
•Video / Audio, Privacy and Text chat
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APTRA Interactive Teller
Direct Impact on all 4 Operational metrics
• Migration Catalyst
• Service Expansion
• Productivity
• Sales Revenue
Worldwide Adoption
• 50+ Banks in NAMER deploying
• Deploying across Middle East, Africa, Central
Europe, E. Europe, UK, South East Asia.
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Profitability – Coastal Federal CU
Cashless Branch network,
High Performance returns
•100% Customer migration across all demographics &
Income bands, 1m transactions p.a.
•86% Extension in opening hours, at customer request
•41% reduction in Teller workforce salary costs pa
•84% Rise in Branch based sales, within new, purely
Sales & Service focused environments
•60+ Units deployed, across 15+ branches
•30+ Leads per month per teller on average
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Unique solution enabling removal of Teller &
Personal Banker desks, empowering Universal
Bankers to manage a dedicated sales & service
environment, with transactional capability.
Future In branch transacting modalities – 2014
Using the ATM, to build a dedicated Sales & Service environment – whilst controlling transactions
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• Monitor customers and transactions in real time
• Be instantly alerted to customers that need attention
• Intervene and override transactions when appropriate
• Pursue valuable sales opportunities to selected customers
Future branch environment control using tablet - 2014
Tablet control, real time transacting insight, intervention, transaction control.
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What’s next? – Convergence.
Universal Bankers, Tablet Control, Video enabled remote driven transacting – seamless.
In person
Assisted Service
Self Service Remote
Assisted Service