Whats Next For The Branch Network

What’s Next for the Branch Network – Rationalize or Revisit?
David Kerstein
Peak Performance Consulting Group®
November 5, 2009

ActionCase study Take-away Now!
Financial institutions need to more accurately target opportunities for de-novo growth and to optimize performance of existing branch networks
“Best practice” banks are making more sophisticated use of segmentation data to target specific growth markets
Innovative use of technology can improve service and distribution reach, while significantly reducing cost
Peak Performance Consulting Group -- Page 2

Bank Branches: Do We Have Too Many?
Banks have been building branches faster than population has been growing
21% of branches have been open less than 10 years
Source: FDIC, US Census, Peak Performance analysis

Branches Losing Role as Transaction Point
Fewer checks
Deposit activity shifting to direct deposit and remote capture
Greater use of online payment and debit point of sale
Online bill payment projected to grow at CAGR of 19% through 2012

Branches remain critical driver of deposit growth
41% of all deposit growth comes from 8% of branches open less than 2 years
Need physical branch locations to continue to grow consumer and small business relationships
Aggressive growth in branches due to competition for depositsbr />Peak Performance Consulting Group -- Page 5

Too Many Branches or Still Room to Grow?
Differences in branch density driven by:
Self service channel usage
Cultural preferences for face-to-face
Branch formats: smaller, more community oriented vs. hub locations
Competitive environment
Source: Bank for International Settlements, Peak Performance analysis

Industry Best Practices Drive Significant Improvement in Result
Pick the right spots: improved market and location analysis
Better local market knowledge and relationship management
Leveraging new distribution models
Source: Peak Performance client data

Revitalization or Reinvention? We Need Both
Tremendous opportunity to improve revenue growth and cost effectiveness of existing branch network
Refine mix of branches: size, type, segments served
Improve local market segmentation and sales management
Continued growth requires distribution expansion, but picking the right channels, markets, sites will be increasingly complex
Economics will drive shift to smaller, more cost efficient facilities that need to be managed differently
Greater use of technology for transaction processing and remote delivery of service
Different staff skills: more utilization of universal staff with fewer specialists
Tighter integration with hub branches or call centers to provide specialized expertise
Greater emphasis on micro-market knowledge and outside sales calling to improve market penetration

Recipes for Success: the “Secret Sauce”
John Zugschwert
Senior Vice President, Distribution Analysis
Citizens Bank
john.p.zugschwert@citizensbank.com
Alex Calicchia
EVP and Chief Marketing Officer
MidSouth Bank
acalicchia@midsouthbank.com
Chuck Purvis
Chief Operating Officer
Coastal Federal Credit Union
cpurvis@coastalfcu.org
Page 9

Thank you!
David Kerstein
President
Peak Performance Consulting Group
512-607-6332
dkerstein@ppcgroup.com
www.peakconsultinggroup.com

Identifying Strategic Opportunities in Branch Distribution
BAI Retail Delivery
John Zugschwert
SVP, Distribution Strategy
November 5, 2009

12
RBS: Market Leading Customer Franchises
UK
US
#1 Small business banking
#1 Corporate and commercial
#1 Cash management
#1 Private banking
#2 Personal checking
#1 Auto insurance
#2 Household insurance
#1 branches in New Hampshire and Rhode Island
#2 branches in Pennsylvania
#2 deposits in New England
#3 deposits in Pennsylvania
12

13
Twelve State Franchise
Strong franchise in New England and Pennsylvania with good branch distribution in the Mid-West
492 Branches
644 Branches
372 Branches
12 States
76 Metropolitan Areas
13

14
Our Challenges
New England: well situated in terms of deposits and branch share
Mid Atlantic: well situated in terms of branch share but lag in deposit share
Mid-West: Sub-scale player with low branch share, but markets generally over-branched
14

15
Strategic Market Development
Citizens Bank has a very large geographic footprint. The creation of specific strategies for each metropolitan market is critical to overall success.
Strategic Market Prioritization and Strategy
Which MSA Level Markets have the highest potential?
Growth
Value
Economic Outlook
What is the strategy for each market relative to position?
Overall convenience or niche opportunities?
How can Alternative Delivery Support Growth?
- ATM Network Partnerships
- Co-Branding Opportunities

16
Organizational Growth – De-Novo Branching
Once overall market strategies have been developed tactical plans can be executed. Given the competitive environment, prioritizing submarkets within metropolitan markets for growth and creating strategies is key to success.
Tactical Sub-Market Prioritization
Where are the highest potential sub-markets within each metro market?
Can we create critical mass in the sub-markets?
Trade Area Opportunity Assessment
What is the long term potential for each individual branch decision?
Combination of advanced modeling and market experiential knowledge

17
Staff
Customer Satisfaction
Relationship Building
Execution
Engagement
Branch Characteristics
Suitability
Accessibility
Visibility
Type
Hours
Market Opportunity
Competitive Environment
Deposit Growth
Average Branch Size
Proximity to other CFG Branches
Brand Equity
Branch Performance Hierarchy
Branch Performance can be explained with the following factors
Each factor builds from the lower factors in the pyramid.
The staffing of the branch is critical to its ultimate success. Poor performing staff can undermine the branch’s performance.
However staff performance alone cannot compensate for weak market conditions or poor branch design.
Features of the branch directly effect the performance of the location.
In-Stores typically generate 33% of traditional free standing branch deposits and In-lines generate 70%. There is a trade off between expense and performance.
Statistically 65% to 70% of the variability in branch performance can be attributed to the geographic market in which the branch is located.
Primary attributes are competitive strength of the market and proximity of other CFG locations.

18
Organizational Growth - Existing Network Optimization
Maintaining the value of the Existing Citizens branch network has significant upside potential given the size of the overall network. Key focus areas include:
Branch and Customer Segmentation – Focus on best opportunity
Branch segmentation will lead to strategy development and prioritization of investment
Customer segmentation will lead to effective opportunity development at customer and branch level
Technology – Focus on High Quality Service Efficiency
CRM
Customer Level and Market Level
Transaction Automation
Branch Characteristics – Focus on the optimal branch features
Layout
Visual Appeal
Features – Drive-Thru/ATM/etc.
Branch Placement – Are we in the right locations?
Trade area potential
Visibility
Accessibility

19
Segment 1
Large Branches
With
Additional Opportunity
Segment 2
Large Branches
Currently Exceeding Their
Market Opportunity
Opportunities for impact:
Goal Setting
Marketing/ Merchandising
HR Allocations
Partner Support
Sales Activities/ Campaigns
Strategy
Service & Sales
Strategy
Service
Branch Size
Segment 3
Smaller Branches
With
Additional Opportunity
Segment 4
Smaller Branches
Currently Exceeding Their
Market Opportunity
Strategy
Performance
Maximization
Strategy
Sales
Additional Market Opportunity
Segmenting the Branch Network
Create 4 distinct branch segments with specific short and long term tactics for each

20
Recap
Strong franchise
Different strategic advantages in different markets
Refocusing resources to capitalize on opportunities
20

Cranking Up the Offense: Building Deeper Customer Relationships
__________________________________________________________________________________________________________
BAI Retail Delivery
November 5, 2009
Alexander Calicchia
Executive Vice President & Chief Marketing Officer

MidSouth Bank Profile
WHO WE ARE
Headquartered in Lafayette, Louisiana
Total Assets: $938 Million
GROWTH-ORIENTED
1985 – Chartered as a National Bank
1987 – Acquired Breaux Bridge Bank & Trust (LA)
1989 – Acquired Commerce & Energy Bank (LA)
1993 – Listed on AMEX: MSL
1995 – Acquired Sugarland State Bank (LA)
2004 – Acquired Lamar Bank (Beaumont, TX)
2008 – Merged MidSouth Bank Texas into MidSouth Bank, N.A.
BUSINESS FUNDAMENTALS
Small business focus supported by retail and commercial funding
Experienced leadership
Entrepreneurial management style
Organic growth
Quality relationships and dedication to customer service
22

Market Footprint
49
Strategically Located along I-10, I-49
and Hwy 90 Corridors
35 locations
170+ ATMs
23

Strategic Vision
8
24

“Staying True to Our Tradition”- Rusty Cloutier, CEO & President, MidSouth Bank
We are going to place even greater emphasis to develop deeper more personal relationships with our commercial and retail customers to better meet their needs.
Provide a greater emphasis on:
decentralized decision-making,
employee empowerment
increased knowledge about our customer,
improved processes
25

Success Strategies
Our challenge
Thin distribution over a large footprint
Shift from acquisitions to organic growth
How we’ll succeed:
Better tools: Oracle On-Demand CRM
Better products: market and customer segmentation
Clarity of Focus: better support infrastructure
Changing the game on distribution
26

Better Tools: CRM On-Demand
27

We Understand Our Customers
Consumer and small business segmentation in each market
Product usage, preferences, and potential
Sales & marketing strategies
Product development & pricing
Example: High Level Consumer Segmentation in MidSouth Markets
$
Lifestage
28

Improve Effectiveness
Integrated brand communication: Web, Point of Sale, Newspaper
Intranet for employee communication and training
Video conferencing for remote training and management coordination
29

Cranking Up the Offense
Town Hall meetings: Lending in the New Economy
Integrated marketing
Aggressive PR
30
Rusty Cloutier Has Money to Spare
JIM RENDON
Rusty Cloutier wants to lend money. If you live in Lafayette, La., you already know this. In large black letters hovering above a pile of bundled green bills, billboards all over town announce, “We have $200 million to lend.”

Let’s Wrap It Up!
Questions & AnswerContact Info:Alex Calicchiaacalicchia@midsouthbank.com(337)593-3008or find me on:www.linkedin.com
31

Express Tellers: A New Model for Improving Distribution Effectiveness
Chuck Purvis
Chief Operations Officer
Coastal Federal Credit Union
Raleigh, NC

About Coastal
Headquartered in Raleigh, NC
Chartered in 1967 to serve employees of IBM
Today we serve 1,200+ employers & associations
201,000 members
$2.2 billion in assets
33

Community FocusNational Access
19 branches in the Raleigh-Durham and Charlotte markets
Access to 3,797 shared branches nationwide
Access to 55,000 surcharge-free ATM’s nationwide
CO-OP Network
Allpoint Network
Coastal24.com Online Banking
34

Our Challenge
Provide convenient branch access in two metro markets while controlling branch network costs
On-campus locations ideal for members from large employers, but economics do not support free standing branch
Need solutions that allow physical expansion at low cost to serve
35

Express Teller Technology
The Vision . . .
“To deliver first class member service right to theteller line . . . remotely!”
It is:
A full-service, face-to-face member experience that uses the power of video to improve efficiency by reducing headcount while enabling cost-effective branch expansion.
It is NOT:
The drive-up inside. There aren’t any pneumatic tubes loudly shuttling transactions to and from a teller room hidden in the back of the branch.
36

Benefits of Express Teller
Provides superior service than a traditional teller line or remote teller system.
Leads to expense reduction – FTE may be reduced by as much as 50%*.
Enables the ability to offer extended teller hours.
Reduces the required footprint of the branch itself while at the same time facilitating branch expansion.
Fosters sales by freeing the Branch Manager and platform staff from day-to-day operational teller tasks.
* Results based on a full conversion of a branch network of at least 10 locations.
37

Two-Year Plan
38

Express Branch
Converted branch on IBM campus in 2009
Installed standalone unit at Lenovo campus in July
Lenovo is converting thru-wall ATM space into office space
Member service associate will start 4th Q
4,000 Lenovo employees work on campus
Operates as a spoke of a larger branch
Very Cost-effective: Express Branch model will allow us to open with as little as 1 Express Teller machine and 1 associate.
39

Functionality
Cash and check deposits
Cash and coin withdrawal
Official check withdrawal
Account inquiries and transfers
Signature pad
ID verification
Receipt printed
Check 21 enabled
On-screen account # entry
Handset/hands free
40

Express Teller Service Center
“We are replacing 110 branch tellers and supervisors with 48 Express Tellers and 3 supervisors to service our 19 location branch network.”
41

A Success Out of the Gate!
During a Winter storm Coastal was able to open two branches with a single Express Teller from our headquarters that otherwise would have been closed.
Our Express Teller Machines , equipped with battery back-up power, kept member service up and running during a power outage.
Our extended hours transactions are spiking, 2,500 sessions in October.( 7:00-8:30 a.m. and 5:30-7:00 p.m.)
42

Better Ability to Serve Extended Hours
40,000 Express Teller sessions in October
Express Teller session comprise 65% of total branch transactions in October
6% of Express Teller sessions done during extended teller hours in October
43

Members Migrating to Express
Total Branch Sessions
44

Serve More Members Without Increasing Wait Time
Time
Sessions
45

In Summary
Lower costs = more
locations
Fewer employees
Extended hours
Better service
Member acceptance
47

Questions?
?
?
?
?
?
?
?

http://thefinancialbrand.com	322
http://ppcgroup.com	106
http://www.ppcgroup.com	20
http://www.slideshare.net	18
http://translate.googleusercontent.com	2
http://static.slidesharecdn.com	1

Whats Next For The Branch Network

by David Kerstein on Nov 11, 2009

Accessibility

Categories

Tags

Upload Details

Usage Rights

6 Embeds 469

Statistics

Whats Next For The Branch Network — Presentation Transcript