BRANCH TRANSFORMATION IMPACT ON NEW RETAIL … · BRANCH TRANSFORMATION IMPACT ON NEW RETAIL & ... Mobile with a Kiosk ... distribution disadvantages at the local level

BRANCH TRANSFORMATION IMPACT ON NEW RETAIL & BUSINESS BANKING SPACEFuture of Branches, Technology and People

October 5, 2017

Tim Quinn

Branch Transformation Specialist

1

NCR’s 2016 Financial Performance Strong

2 Source: NCR 2016 Earnings Release – February 9, 2017

Strength Of Strategy Carrying Into 2017 Performance2Q 2017 Earnings Highlights

Source: NCR Investor Relations, July 21 2017

5

NCR is in the Connections business

Every day made easierMore than 600 million transactions every single day, around the world

ATM software, install base, shipments

+12M online & +6M mobile users

FINANCIAL

No. 1

Retail Self Checkout

A leader in Forrester Point-of-service Wave

RETAIL

65%

Restaurant POS solutions

HOSPITALITY

No. 1

Global airlines, for passenger enablement

TRAVEL

4 ofTop 6

NFL, MLB, NBA & NHL arenas and stadiums

STADIUMS

+40%

Theater circuits (US)

Fandango (US)

Ticketmaster (Europe)

THEATERS

6 ofTop 10

The consumer is becoming the point-of-service

Our consumer

experiences throughout

the day…

…are shaping expectations for how we want to be

banked.Tablet Banker

Local Assisted Service

Mobile Cash Withdrawal

Mobile with a Kiosk

Video Teller

Remote Assisted Service

How we’re served in other industries matters

Branch Transformation Industry Guidance Unlimited !

Three Strategies To Transform Bank BranchesBy: Jon Voorhees, Peak Performance , August 2016

What's Killing Branches Can Make Them StrongerBy: Tanaya Micheel , American Banker, September 16 2016

The Role of Workforce Optimization In Bank Branch TransformationOvum White Paper, April 2015

Community Bank Competitive Advantage DisappearsBy: JD Powers & Associates, February 24, 2016

It’s Too Early To Say Goodbye To Established Banking ChannelsBy: Paul Schaus, CCG Catalyst Pro Group, January 22, 2016

http://cdn.americanbanker.com/media/newspics/AB091916BRANCHES.jpg

http://cdn.americanbanker.com/media/newspics/AB091916BRANCHES.jpg

Branch Transformation Challenge

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1. Reposition the role of the branch to focus on relationship, advisory and sales.

2. Create new branch designs to more effectively and efficiently match purpose and cost-to-serve.

3. Deliver a relevant, differentiated experience, complementing the FI’s omni channel service strategy.

Establish A Better Customer Engagement Platform !

Changing consumerDemands, behaviors, expectations, demographics

Regulatory pressureImpact cost, revenue, innovation, competition

Technology disruption

Social-Mobile-Analytics-Cloud disrupts business models

Economic recoveryUneven and slowed recovery leads

to shifting of powers

9

Objectives For Your FI Leadership Team

Grow revenue

Customer experience

Reduce cost

Manage risk

Industry News – 2Q ‘17

Community Bank Performance – Highlights5,338 Community banks (2Q ‘17)

2Q ‘17 Highlights …..• Net income in Q2 $5.7B, up 9% over 2016• Net interest income up 9% on slightly higher

NIM of 3.61%• Non interest income flat• Non interest expense up 4.3%, led by higher

salary and benefit expenses (5.7%)• Loan growth at Community Banks 2.7%,

significantly higher than non-community banks (1.5%)

• Non interest expense 65% of net-operating revenue

• Efficiency ratio gains

require more balanced

approach going forward

– revenue growth &

expense saves

• Deepen client

relationships

• Drive execution

excellence

13 NCR Confidential - Internal Use Only

Have continued to improve efficiency ratio

Revenue growth focus across the company

Leveraging ongoing investments in technology to more efficiently deploy human capital

Have adopted a “Mobile-Centric” strategy

Simplify client experience, reduce cost to serve

Meet clients where they want to do business – really all channels ….

Branch Transformation A Wallet Share Game

Transformation provides better environment to engage with customers and understand their needs – focus on revenue opportunities

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Banking Is A Relationship Based Business !


Differentiate value proposition based on service and convenience

The “human” bank

Grow and deepen customer relationships

Branch Remains Important To Clients

Optimizing channels …

Transaction shifts continue but BRANCH remains important to clients

#1 sales generator

Branch decisions aligned with changing client behavior and market dynamics

Acquisition Adds Scale, Does Not Change Strategy


Balanced multi-channel presence

Adopt universal banker model to best deliver advice and expertise

‾ + 63% sales roles (over last 4.5 years)

‾ (20%) non-sales roles

Increase use of online & mobile

10% growth YoY new checking account engagement

Growth of Mobile Banking

• 53% of consumers with smartphone and bank accounts use mobile banking – up 1% YoY.

• There is still a significant proportion of consumers who have no desire to use mobile banking or make mobile payments in the near future.

• Reasons include:

Satisfied with current way of banking

Do not feel mobile channels secure

Millenials Use All Channels

• “Physical distribution

remains the source for

85% of Community

Banking’s new sales or

referrals” • “Everybody assumes that millennials don’t want to use the

stores. We see where millennials go. We have the data. We

know they use our stores. 63% of deposit customers ages

18-34 use our stores. 71% use the ATM.”

Source: Well’s Fargo 2016 Investor Day Presentation

“CRM Needs To Be In Your 2018 Tech Budget”Source: Paul Abdool, DOXIM 9/27/17


Over last 5 year 54% of bank marketers have reported that cross selling and growing share of wallet is their number one priority, according to the Digital Banking Report.

However:

‾ 32% struggle with delivering personalized, targeted messages

‾ 28% struggle with audience segmentation

‾ 30% struggle with understanding customer needs

Community bank marketers are being held back by a lack of actionable customer data and insights

CRM solutions offer substantial benefits from executives down to front line staff, and most importantly, for valued customers.

Customer Experience Critical Success Measure


Wells Fargo bouncing back from 2016 account opening “black eye”.

Measure satisfaction with most recent visit on rolling 7 day schedule.

Customer loyalty tracks very closely with visit satisfaction.

Loyalty lagging bounce to pre-settlement timeline.

Loyalty Drives Increased Revenue


Better Business Outcomes!

4% higher HH retention.

7% higher HH relationship balance growth.

9% higher HH revenue growth.

Digital Branch Provide Seamless Customer & Team Member Experiences


Wells Fargo is further along the branch transformation path than most others.

Leveraging technology to save time, resources and operating expense.

Provide customer the option of personal assistance from bankers – assisted self-service.

Customer Centricity More Typical Approach

24 NCR Confidential - Internal Use Only Source: Barclays Investor Day, Sept 13 2017

Moving from product focused to customer- centric

Customer at center of strategy

Leverage technology and innovation to drive growth & efficiency

Relentless focus on optimization

Shareholders Will Benefit From A Well Executed Strategy


Walt Disney

Starbucks

Johnson & Johnson

And a bank ??

Where Is The Industry Going In Terms Of Network Size?


Branch reported deposits up 77% over last 10 years.

June 2017 branch counts down 8% from 2007.

‾ Down 10% from 2009 peak

Majority of closures from larger national and regional banks.


In 2009 the bank had branches in 725 U.S. Counties, both urban and rural

By 2017 Bank of America had exited 253 of these counties through branch consolidation or divestiture

Of the counties exited, 95% were outside metro areas with 1 million people or more

The remaining 4,542 branches still cover 80% of the U.S. population

New Jersey Competition


New Jersey is a major metro area with attractive demographics.

National banks have significant branch presence and leading deposit share positions.

Differentiating your bank’s value proposition necessary to overcome distribution disadvantages at the local level.

Source: FDIC.gov

NCR’s Transformative Solutions

Self Serve ATMs Interactive Teller

Interactive Banker Interactive Expert Digital Insight

SelfServ 81 SelfServ 82 SelfServ 84 TTW and Drive-Up

NCR is evolving again…..80 Series branch solutions.

NCR – Confidential - Use and Disclose Solely Pursuant to Company Instructions32

SelfServ 88 DU

Interactive Teller Interactive Banker

Flush IMCRW with SPS and

Contactless card reader

NCR SelfServ 80 Series

19” Multi touch

Touchscreen

S2 Dispenser

(5high)SDM2 Check/Cash Deposit

Encrypting Pin pad (EPP3)

Receipt PrinterInfinity Display

Beam Forming Mic and improved

speakersEstoril Intel Core• i5

• 8GB RAM,

• 240GB SSD

Multi-Color MEIs (LED)

Cash Camera

Security camera

Portrait camera (PnP)

Ergonomic

Handset

Coin

ID Scanner

Barcode

Scanner

Larger privacy mirror

Interactive TellerOne : Many Staffing ratio. Full remote control & 24 hour video engagement

Remote Transaction Management

• Cash withdrawal & Deposit, receipt print• Check Print• Check deposit (Account split), encashment, Coin dispense• Scan ID & Validate electronic signature

Account Management

• Pay new, or pre-loaded bills• Inter account transfers• Instant 3rd party Transfers• Address changes, Regular payment changes• Order statements, order new cards

Customer Access

• No card required – touch screen engagement• Service customers & members and off-us as desired• Release loan funds via cash, check, pay into account, 3rd

party transfers

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SelfServ 81 SelfServ 82 SelfServ 84 TTW and Drive-Up



SelfServ 88 DU

Interactive Banker

• Remote view, track and analyse customer self service interactions in your Branch

• Identify bank and non-bank customers and be prepared for interactions

• Respond seamlessly to customer help requests

Phase 2:

• IB ‘CRM & Sales’• European Customer

project

• One view portal for all disparate applications• Identify & offer personalized service based on their data • Minimal integration with maximum CRM value • As per ‘Lite’ plus access to details in customer database:

- Customer profile e.g. VIP- Sales Offers

• View and control up to 6 Self Service devices at once• Transaction Override capabilities• Supports withdrawal overrides and over limit• Future new transaction capabilities e.g. Bill Payment

Control

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3

NCR Interactive Banker. Changing the Banker ModelOne to Many Staffing ratio. No compromise on full branch control

Sales

One View




eMarketing

• Interactive, Targeted Marketing

• Event-based marketing• CRM and analytics• Intelligent follow-up• Multi-channel integration• A Conversation !

Taking advantage of EVERY member interaction

Over 100 New North America Interactive Teller Clients In 2016

NCR Snapshot - Global Leader in Interactive Services

~400 Interactive Services Customers

> 4,000 ITMs Deployed20+ Global

Enterprise Accounts

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NCR Interactive ExpertChannel Holistic engagement across expanded hours, locations, devices

In-Branch Video Room or Kiosk

Video allows Branches to instantly augment staff with Product & Service

Experts

Anywhere Integration

Remote Video enables Financial Institutions to Offer

Expertise from any channel as a Stand-along app or

embedded in existing applications

Share

Screen

Share

Screen

Customer’s own device

Multi-channel solution available as a service to

all digital platform Customers; combined

routing with NCR Interactive Teller


Eastern Bank Interactive Teller Example

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Business results delivered

50 NCR Confidential

NCR enabling clients to deliver financial results that exceed expectations.

Capitalizing on opportunity to focus staff at branch on revenue generating activities.

Building branches that are smaller, lower cost to build and operate.

Differentiating competitive value proposition to attract more customers.

Revenue growth and expense savings

+ 35%Increase in member acquisition a result of extended

hours and more focused staff (Rivermark Community CU)

+ 60%Annual increase same store sales at locations with

Interactive Teller technology (Suntrust Bank)

- 50%Decrease in branch operational costs (Wells Fargo)

56 NCR Confidential

THANK YOU

Documents

BRANCH TRANSFORMATION IMPACT ON NEW RETAIL … · BRANCH TRANSFORMATION IMPACT ON NEW RETAIL & ... Mobile with a Kiosk ... distribution disadvantages at the local level