Bank world conference diebold branch transformation presentation_011813


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Bank world conference diebold branch transformation presentation_011813

  1. 1. Branch Transformation: Strategies to EnhanceProfitability and the Customer ExperienceChris GillSenior Director, Diebold Consulting
  2. 2.  Key Trends That Are ImpactingRetail Financial Services Future Role of the Branch andOpportunities to Improve Efficiency andthe Customer Experience Branch Transformation Framework2Today’s Discussion
  3. 3. Key Trends Impacting RetailFinancial Services3
  4. 4. Changing Channel Mix4Source: CEB TowerGroup 2011, 2012051015202530352010 2011 2012E 2013E 2014E 2015ETransactions(B)RetailFinancialServicesTransactionsby Channel(2010– 2015E)Online Teller ATM Mobile
  5. 5. Evolution of the “Experience Economy”5 Customer expectations are evolvingrapidly and being shaped byinnovation in other industries Smartphones and tabletsincreasingly used to interact withretailers Use of physical retail outlets toreinforce brand and capturemember attention Use of data analytics to improve thecustomer experience throughpreference identificationONLINESHOPPINGTRAVEL SERVICESRETAIL
  6. 6. Increasing Consumer Power6ONLINE CONSUMERRATINGSNON-TRADITIONALCOMPETITORSELECTRONICPAYMENTSMOBILE BANKING SOCIAL MEDIA RAPID INFORMATIONDISSEMINATION Social media amplifies the voiceof the consumer in significantways The leading players in mobilepayments are not Fis Merchants are influencingconsumer purchase methodselection Older consumers are rapidlyadopting online, mobile andsocial media
  7. 7. Rise of Gen Y and the Millennials7• Will make up 75 percent of the globalworkforce in 2025• Expected Gen Y & Millennialsinheritance is $17.8 trillion• $300 Billion in annual spending power• Will conduct 40 percent of totaltransactions in five years• Will have the greatest spendingpower of all generations by 20178%15%29%33%Use MobileRemote DepositDeposit a Checkat an ATMTry NewPaymentMethodsUse MobileBankingAs compared to the Boomer generation,Millennials are _% More Likely to…
  8. 8. The “New Normal” in Retail Financial Services8Source: Morgan Stanley, SNL Financial, 201255% 55%53%56%58%60% 61%$0$100$200$300$400$500$600$7002005 2006 2007 2008 2009 2010 2011Retail Financial Services Revenue and EfficiencyRatio Performance (2005-2011)Revenue ($B) Industry Average Efficiency Ratio Significant decline in non-interestrevenue due to regulatoryconstraints Higher operating costs due toincreasing labor costs and greatercompliance requirements Typically, branches account for50% of a retail bankinginstitution’s operating cost andpersonnel accounts for 54%
  9. 9. Future Role of the Branch9
  10. 10. 10Branches Remain a Key Delivery ChannelSource: Forrester/Diebold research, Fall 20112% 3%27%6%20%23%14%67%73%67%53%21%0%10%20%30%40%50%60%70%80%Makea depositOpen adeposit accountApply for a loan Resolvea problemCall center Web/Online banking Branch ATMConsumer Channel Preference for Select Interactions
  11. 11. 11Branches Important in FI Selection23.8%44.5%55.1%55.6%56.9%63.5%70.1%83.9%0% 10% 20% 30% 40% 50% 60% 70% 80% 90%Mobile banking offeringLocal ownership/decision makingATM locationsProducts offeredBranch locationsWeb banking offeringBrand reputationAttractive rates and feesImportance in choosing a Financial Institution (Important or Very Important)Source: Forrester/Diebold research, Fall 2011
  12. 12. 12Branches Need to Change• One-size-fits-all branch designs• Little in-branch technologyenabling self-service• Rigid staff roles based ontransactions, service and salesToday• Multiple formats based ondemographics and volume• More self-service andassisted-service options• Universal staffing models toincrease efficiency andeffectivenessTomorrow
  13. 13. 13Branch Role in a Multi-channel StrategyFREQUENCYOFINTERACTIONRICHNESS OF EXPERIENCETHE NEW ROLE OF THE BRANCH• Financial planning and advising• One-to-one marketing and sales• Customer service and issueresolution• Complex transaction handling• Local community branchpresence
  14. 14. 14Multiple Branch FormatsFLAGSHIP SPOKEHUB IN-STORE/MICRO• 4,000-5,000 squarefeet• High visibility/trafficlocation• Full service with fullrange of productspecialists on site• Showcase fortechnology• 2,500-3,500 squarefeet• Full service with someproduct specialists onsite• Located in a hightraffic area• 1,000-1,500 squarefeet• Limited service• Greater use of self-service automation• Supports hubbranches in market• 300-500 square feet• Limited service• Highly automated• Specialty/high volumelocations (e.g.hospitals,supermarkets, malls,urban locations)
  15. 15. 15Hub BranchIn-LobbyTransaction KiosksCash RecyclerDepositAutomationATMsConcierge DeskTechnology BarDigital SignageCommunity SpaceVideo ConferencingFor Sales & ServiceStaffing levels consist of 5-6 tellers/platform staff and product specialists providing mostservices to customers. Commercial and small business services are offered in the branchthrough video conference technology.2,500-3,500 square feet
  16. 16. 16Spoke BranchStaffing levels at 4-5 tellers/platform staff. Investment, mortgage and small business productspecialists available via video conferencing. High emphasis on technology and self-servicetraining and education.In-LobbyTransaction KiosksCash RecyclersDepositAutomationATMsTechnology BarDigital SignageVideo Conferencing For Sales &Service1,000-1,500 square feet
  17. 17. 17A New Branch ApproachManagement Guidelines and Objectives – Branch Expansion• Branch associates need to spend more time interacting with members and lesstime conducting transactions• Leverage self-service technology for transactions• Engage new members and get them to use their accounts more quickly• New branches as part of a hub and spoke footprint – existing UFCU brancheslocated with 3-5 miles of new branch locations• New branches cannot meet every single customer needLimited number of transaction types cannot be conducted at the branchand would require a trip to a traditional branchUNIVERSITY FEDERAL CREDIT UNION (AUSTIN, TX)
  18. 18. 18Increased Focus on Customer Relationships• Move from transactional to relationship activity• Change staffing model – use of universal associates (PersonalFinancial Representatives) – 4 PFRs per branch along with amanager• Reduce staff turnover and training expenses creatingstructure for a more defined career path• Train consumers in self-service usage• Greatly increase amount of time associates interact withcustomers rather than conducting transactions• Seasoned PFRs to assist consumers with life events• Structure allows an opportunity to explain this service modelNEW BRANCH MODEL
  19. 19. 19Implementing an ‘Assisted Service’ ModelWHAT DOES IT DO?• Delivering a self-service or partially assisted servicecapability directly at the teller line, next to a teller pod, oras a stand-alone unit within the lobby.WHAT VALUE DOES IT PROVIDE?• Terminal to migrate additional transactions not currentlyaddressed by the ATM• Facilitate consumer education throughpartially assisted transactions in the branch,resulting in increased adoption• Express lane alternative for consumerswanting quicker service• Increased approachability due to locationand proximity of staffIN-LINE TRANSACTION KIOSK
  20. 20. 20Issues to AddressDimensionOperations Defining the target customerexperience Changing policies and procedures Integrating with existing systemsEmployeePreparation Communications TrainingExecution is CriticalCustomer AdoptionMeasurement /Tracking Education / Communications Incentives Customer behavior Return on investment
  21. 21. Branch Transformation Framework21
  22. 22. 22DriveEfficienciesImproveCustomerExperienceMitigateRisksImproveSalesEffectivenessFor most, the primaryobjective. Consider re-thinking your processes andopportunities to automateRethink how you addressfraud, electronic security andphysical intrusion. Minimizeinternal theft or errorswithout burdensomeprocessesShould be considered fromthe start whencontemplating branch design,process improvement, andself-service automationCapitalize on efficiencysavings by re-purposingbranch staff to sell moreeffectively. Deliver the toolsand support neededBranch Transformation Objectives May Vary
  23. 23. 23Adopt a Comprehensive Branch TransformationApproach• What is the roleof each deliverychannel in ourretail bankingstrategy?• What is theoptimal numberof branches andATMs we need toserve ourmarkets?• What is thetarget consumerexperience ineach channel?• How can weoperate ourbranches moreefficiently inorder to reducecosts whileproviding a high-qualityconsumerexperience?• How profitableare our branchesand ATMs?• How can webetter mitigateoperationalrisks?• Which branchtransformationsolutions aregoing to havethe greatestimpact on ourbusiness?• How do weprioritize variouschannelinvestments overthe next threeyears?• What is the mostappropriatebranch layoutgiven our retailstrategy?• How do weensure wemaximize thevalue ofinvestments inbranchtransformationsolutions?• How do weensureconsumers adoptnew solutions?• How do weengageemployees tosupport newsolutions?• Did we achievethe ROIassociated withthe investmentsrequired?• What impact didthe newsolutions haveon transactionmigration andconsumerexperience?• What steps needto be taken toimproveperformance ifexpectations arenot being met?
  24. 24. 24Assess Branch Activities
  25. 25. 25Identify Efficiency Improvement Opportunities47%70%79%85%90% 92% 93% 95% 95%0%25%50%75%100%Seller Service Activity VolumesAnnual Transactions Cumulative %47%70%79%85%90% 92% 93% 95% 95%0%25%50%75%100%Teller Non-Customer Facing Transaction VolumesAnnual Transactions Cumulative %47%70%79%85%90% 92% 93% 95% 95%0%25%50%75%100%Teller Customer Facing Transaction VolumesAnnual Transactions Cumulative %Activity Levels of Branch ProcessesAverage Annual Teller TransactionVolume & Costs:Note: assumes 4 Teller FTEs with S&B of $31K1) Account maintenance, cash advance, and transfersSource: Diebold Consulting AnalysisOther1Trans. Detail / Bal. InquiryPaymentsCash WithdrawalsCheck CashingDeposits(Cash and Check)120K $71K
  26. 26. 26Opportunities to Consider• Network optimization planning• Branch efficiency assessment and customer experience diagnostic• ‘Test and learn’ for branch automation solutions• Branch transformation roadmap development• Implementation planning for new branch technology
  27. 27. 27For more information, e-mail:chris.gill@diebold.comQuestions?
  28. 28. 28Diebold Consulting• Distributionnetworkoptimization,includingplanning for denovo branches• ATM networkoptimization• Market / siteanalysis• Channel profiling• Branchoperationalassessments• Branch / ATMphysical securityrisk assessment• Branch / ATMphysical securitystandards andprocedures• Fraud riskassessments• Deploymentstrategy andbusiness casedevelopment• Deploymentstrategy andbusiness casedevelopment forspecific branchtransformationsolutions• Branch designservices andcustomerexperienceplanning• In branch selfservice solutions‘test and learn’• Depositautomationimplementation• Tellerautomationimplementation• Implementationof new branchformats• Performancemeasurementand evaluation