Branch Network Transformation: Staying Ahead of Shifting Priorities (Slides)


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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:

Published in: Economy & Finance, Business

Branch Network Transformation: Staying Ahead of Shifting Priorities (Slides)

  1. 1. NCR ConfidentialBranch Profitability TransformationStaying ahead of Changing Priorities
  2. 2. NCR ConfidentialBranch Profitability Transformation – The Inflection PointUnprecedented focus & urgency• Branch Transformation no longer seenas a choice – Unprecedented globalurgency for change• No longer solely about improving thecustomer experience - for‘differentiation’• Controlling Branch Revenue & CXmanagement thru people only –unsustainable & diminishing returns• Industry is failing to stem revenuelosses. Allowing 30% of NAMERbranches to underperform - becomeunprofitable – becoming dormant,untapped profit centers
  3. 3. NCR ConfidentialBranch Profitability Transformation – Driving ForcesBranch needs relevant identity within Omni channelBranch must be cost neutral link in the customer transacting pathwayFalse starts – Cool, superior CX not delivering basic branch functionSensible 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 tocustomer interaction.• Transform Tellers / PBs into Universal Bankers - no back office, futureproofed.• Change cost:revenue ratio of each FTE – to be clear revenue generators• Scalable, consistent management of mobile bankersPURCHASEFRIENDEVANGELIZETRUSTDECIDECOMPARERESEARCHSEARCHDISCOVERDECIDEGET HELP SHAREDISCOVER
  4. 4. NCR ConfidentialBranch Profitability Transformation – Statistical DriversMetrics driving the urgency & highlighting the profit opportunityFootfall 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 branchRevenue 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.
  5. 5. NCR ConfidentialConverging Strategies around the GlobeBranch as the Sales and Service destination
  6. 6. NCR Confidential• 4 or 5 branch formats now the norm• Customized to location & segment• Modular• Using the ATM as commoninteraction pointNetwork Scale & Branch Character TransformationConverging Strategies focus on creating, agile, flexible modular branch formats
  7. 7. NCR Confidential• 500 of 750 branches havecompleted transformationinitiative• ING has removed all tellercounters from the branches• All branch staff are now UniversalBankers• Profitability Results exceededgoals:Europe, ING BelgiumFocus on creating, agile, flexible modular branch formats
  8. 8. NCR ConfidentialMEA, Bank Audi, Lebanon & TurkeyCreating, agile, flexible modular branch formats for non traditional locations8• Self Service Centres, in retail partner locations• Customers access advanced kiosk self service,Intelligent deposit ATMs, Advisory room & video link• Modular Expansion – Kiosks also locatedindependently in retailers, Advisory offices locatedindependently in car sales showrooms
  9. 9. NCR Confidential9• Full service branch banking format delivered in 1,000sq. ft. or less of space• Customers interact with roving bankers, available toassist during business hours - branch converts afterhours to a 24 hour self-service zone.• The potential capital and operating costs of the branchare ~50% less than a traditional branch, whileoffering similar levels of sales, service, andtransaction capabilities.North America, Wells Fargo, Neighbourhood branch initiativeSmaller footprint, No back office, offering transactional banking with choice of staff interaction
  10. 10. NCR Confidential10• Expansion Policy• Increased Service• Increased Efficiency• Increased Productivity• Driving keener value in financialproducts for membersWright Patt CU, DaytonRevised footprint, Video Teller supported, focused on Sales & Service
  11. 11. NCR Confidential11• Created 4 new Branch formats• Deployed in Hospital – 3000 permanentcustomer base• & Retail Mall – 10million annual footfall• Innovating to deliver value back tocommunity & future proof staff rolesCanada, First Ontario CUSmaller footprint, expanding into new customer transaction highways
  12. 12. NCR ConfidentialPractical Considerations to implementing new strategiesA Relevant points of presence Ecosystem
  13. 13. NCR ConfidentialWEB COMPANYWEBSITEMOBILE BRANCH/STORECALLCENTERSOCIALPURCHASEFRIENDEVANGELIZETRUSTDECIDECOMPARERESEARCHSEARCHDISCOVERDECIDEGET HELP SHAREDISCOVERSeamless Transactionautomation ExcellenceConsumer ExperienceExcellenceRevenue Generation &profitable relationshipsMultiple, ConnectedPoints of presenceFollow the Consumer’s satisfaction & needs hierarchyTransaction excellence, Presence where needed, Customer experience, Sales – in that order.
  14. 14. NCR ConfidentialMake discovery easy, consolidate interest Secure Fulfilment & Gain Wallet ShareDrive Impulse across channels Make Engagement easyMultiple Points of PresenceInspire & Capture Impulseat inception, across multiple channelsManage DiscoveryFacilitate creation ofInterestSecure engagementConnect your customerto the advisory channelThe marketOpportunity•Average online adultholds 8.5 products•Average providerholds wallet share of2.1• Gen Y productholding will increase75% in next 5 yearsSource : Forrester 2011 Report, 2011 North AmericanTechnographics Benchmark surveyErnst & Young 2011 Global retail banking consumer surveyMobile BankingMicro Branchformats, multiplelocationsMulti function ATMTargeted messagingInteractive TellerInteractive TellerF2F InfluenceeverywhereOnline BankingFinancial KioskProduct management& discoverySelf SchedulingEmpower customersTo secure advisoryDiscussion on anychannelThe Target•Best In class providerowns 3.5+ productwallet shareThe Capacity GapGlobal average2.9 productsAccelerate Impulse to ActionBranch is your Sales and Service profit hub – Accelerate the customer from impulse to action
  15. 15. NCR ConfidentialRetain Transaction capabilityBranch is your Sales and Service profit hub – but its still banking, not just a retail store
  16. 16. NCR ConfidentialPoints of presence: 4 Points of presence: 9BranchATMIconic Branch (Hub)Express Branch (Spoke)Micro Branch (Spoke)Self-Service Branch (Spoke)ATM (Spoke)Today TomorrowTarget 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 synchronizationDeliver alternative distribution network - 30-50% of traditional branchnetwork operating costsSpecimen ModelA well thought out ecosystem, delivers profitabilityBe there for your customer, speak to your customer, deliver for your customer
  17. 17. NCR ConfidentialPractical Considerations to implementing new TechnologyA Best in class Management Ecosystem
  18. 18. NCR ConfidentialBest in Class Management – What new Technology should deliverTechnology must be designed to Realize Branch profit opportunity & Create Management consistencyCentralized Video Call Centre Management, should allowFlexible and immediate deployment of personnel equipped byremote driven, fully functional devices . Delivering operationalRigour & sales approach consistencyConsistentSalesApproachesReferral ratesof 40pm perTellerConsistentHandoffCorrectcompliancestatementsLivecomplianceobservationsLivecomplianceobservationsShorts in TillsmanagementUniversalresource, nocompetition
  19. 19. NCR ConfidentialBest in Class Management – What new Technology should deliverTechnology must be designed to Realize Branch profit opportunity & Create Management consistencyIn-branch solutions, should offer in branch device controlenabled by tablet technology , To maintain operationalRigour, free up engagement space & drive sales.Managementofenvironment inreal timeCompleteVisibility of allcustomertransactionsCustomer &Staff use ATMapplicationtogetherControlledchoreographyon the floorKYC andMoneylaunderingcontrolledControlledsalesapproachstagesStaff validatesshort termlending on thespotShorts in TillsmanagementOnly 5% ofcustomerspro-activelyupdaterecords
  20. 20. NCR ConfidentialA Profitable, Interactive EnvironmentRevolutionized Management of Daily operations, Staff & Revenue generation
  21. 21. NCR ConfidentialIconic - Self Service – Micro – ExpressBanking collaboration platforms, leveraging Kiosks, Tablet & remote device control, Video coms1800 Sq ft60% of traditionalbranch footprint201% of the operatingincome per sq ft.83% of the operatingcost per sq ft.56% of thestaff cost1000 Sq ft33% of traditionalbranch footprint195% of the operatingincome per sq ft.49% of the operatingcost per sq ft.40% of thestaff cost
  22. 22. NCR ConfidentialThe Available Technology ToolsDelivering Improved management of Rigour, Service, Compliance & Revenue
  23. 23. NCR Confidential 231 1 0.8 1Full Service0 1Self ServiceStaff Consumer1 3 1 3Assisted Service (In Person and Remote)3The Key – Assisted ServiceCombining Self Service, Full Service – at the customers’ choice – cost effectively
  24. 24. NCR Confidential2424APTRA Interactive TellerRemote Assisted service, supported bycentralized, instantly deployable resource•Teller remote controls all of the ATM modules, andfunctions•Card or cashless authentication•Signature capture & ID Imaging•Rich integrated, on screen flow, educates as youengage•Teller has full over ride capability for cash dispenseand credit functions•Video / Audio, Privacy and Text chat
  25. 25. NCR Confidential2525APTRA Interactive TellerDirect Impact on all 4 Operational metrics• Migration Catalyst• Service Expansion• Productivity• Sales RevenueWorldwide Adoption• 50+ Banks in NAMER deploying• Deploying across Middle East, Africa, CentralEurope, E. Europe, UK, South East Asia.
  26. 26. NCR Confidential2626Profitability – Coastal Federal CUCashless 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, purelySales & Service focused environments•60+ Units deployed, across 15+ branches•30+ Leads per month per teller on average
  27. 27. NCR ConfidentialUnique solution enabling removal of Teller &Personal Banker desks, empowering UniversalBankers to manage a dedicated sales & serviceenvironment, with transactional capability.Future In branch transacting modalities – 2014Using the ATM, to build a dedicated Sales & Service environment – whilst controlling transactions
  28. 28. NCR Confidential• 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 customersFuture branch environment control using tablet - 2014Tablet control, real time transacting insight, intervention, transaction control.
  29. 29. NCR ConfidentialWhat’s next? – Convergence.Universal Bankers, Tablet Control, Video enabled remote driven transacting – seamless.In personAssisted ServiceSelf Service RemoteAssisted Service
  30. 30. NCR ConfidentialThank YouHear Bob Tramontano, NCR SVP, present at theforthcoming NAFCU annual conference