1. Branch Transformation: Strategies to Enhance
Profitability and the Customer Experience
Chris Gill
Senior Director, Diebold Consulting

2.  Key Trends That Are Impacting
Retail Financial Services
 Future Role of the Branch and
Opportunities to Improve Efficiency and
the Customer Experience
 Branch Transformation Framework
2
Today’s Discussion

3. Key Trends Impacting Retail
Financial Services
3

4. Changing Channel Mix
4
Source: CEB TowerGroup 2011, 2012
0
5
10
15
20
25
30
35
2010 2011 2012E 2013E 2014E 2015E
Transactions(B)
RetailFinancialServicesTransactions
by Channel(2010– 2015E)
Online Teller ATM Mobile

5. Evolution of the “Experience Economy”
5
 Customer expectations are evolving
rapidly and being shaped by
innovation in other industries
 Smartphones and tablets
increasingly used to interact with
retailers
 Use of physical retail outlets to
reinforce brand and capture
member attention
 Use of data analytics to improve the
customer experience through
preference identification
ONLINE
SHOPPING
TRAVEL SERVICES
RETAIL

6. Increasing Consumer Power
6
ONLINE CONSUMER
RATINGS
NON-TRADITIONAL
COMPETITORS
ELECTRONIC
PAYMENTS
MOBILE BANKING SOCIAL MEDIA RAPID INFORMATION
DISSEMINATION
 Social media amplifies the voice
of the consumer in significant
ways
 The leading players in mobile
payments are not Fis
 Merchants are influencing
consumer purchase method
selection
 Older consumers are rapidly
adopting online, mobile and
social media

7. Rise of Gen Y and the Millennials
7
• Will make up 75 percent of the global
workforce in 2025
• Expected Gen Y & Millennials
inheritance is $17.8 trillion
• $300 Billion in annual spending power
• Will conduct 40 percent of total
transactions in five years
• Will have the greatest spending
power of all generations by 2017
8%
15%
29%
33%
Use Mobile
Remote Deposit
Deposit a Check
at an ATM
Try New
Payment
Methods
Use Mobile
Banking
As compared to the Boomer generation,
Millennials are _% More Likely to…

8. The “New Normal” in Retail Financial Services
8
Source: Morgan Stanley, SNL Financial, 2012
55% 55%
53%
56%
58%
60% 61%
$0
$100
$200
$300
$400
$500
$600
$700
2005 2006 2007 2008 2009 2010 2011
Retail Financial Services Revenue and Efficiency
Ratio Performance (2005-2011)
Revenue ($B) Industry Average Efficiency Ratio
 Significant decline in non-interest
revenue due to regulatory
constraints
 Higher operating costs due to
increasing labor costs and greater
compliance requirements
 Typically, branches account for
50% of a retail banking
institution’s operating cost and
personnel accounts for 54%

9. Future Role of the Branch
9

10. 10
Branches Remain a Key Delivery Channel
Source: Forrester/Diebold research, Fall 2011
2% 3%
27%
6%
20%
23%
14%
67%
73%
67%
53%
21%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Make
a deposit
Open a
deposit account
Apply for a loan Resolve
a problem
Call center Web/Online banking Branch ATM
Consumer Channel Preference for Select Interactions

11. 11
Branches Important in FI Selection
23.8%
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 offering
Local ownership/decision making
ATM locations
Products offered
Branch locations
Web banking offering
Brand reputation
Attractive rates and fees
Importance in choosing a Financial Institution (Important or Very Important)
Source: Forrester/Diebold research, Fall 2011

12. 12
Branches Need to Change
• One-size-fits-all branch designs
• Little in-branch technology
enabling self-service
• Rigid staff roles based on
transactions, service and sales
Today
• Multiple formats based on
demographics and volume
• More self-service and
assisted-service options
• Universal staffing models to
increase efficiency and
effectiveness
Tomorrow

13. 13
Branch Role in a Multi-channel StrategyFREQUENCYOFINTERACTION
RICHNESS OF EXPERIENCE
THE NEW ROLE OF THE BRANCH
• Financial planning and advising
• One-to-one marketing and sales
• Customer service and issue
resolution
• Complex transaction handling
• Local community branch
presence

14. 14
Multiple Branch Formats
FLAGSHIP SPOKEHUB IN-STORE/MICRO
• 4,000-5,000 square
feet
• High visibility/traffic
location
• Full service with full
range of product
specialists on site
• Showcase for
technology
• 2,500-3,500 square
feet
• Full service with some
product specialists on
site
• Located in a high
traffic area
• 1,000-1,500 square
feet
• Limited service
• Greater use of self-
service automation
• Supports hub
branches in market
• 300-500 square feet
• Limited service
• Highly automated
• Specialty/high volume
locations (e.g.
hospitals,
supermarkets, malls,
urban locations)

15. 15
Hub Branch
In-Lobby
Transaction Kiosks
Cash Recycler
Deposit
Automation
ATMs
Concierge DeskTechnology BarDigital Signage
Community Space
Video Conferencing
For Sales & Service
Staffing levels consist of 5-6 tellers/platform staff and product specialists providing most
services to customers. Commercial and small business services are offered in the branch
through video conference technology.
2,500-3,500 square feet

16. 16
Spoke Branch
Staffing levels at 4-5 tellers/platform staff. Investment, mortgage and small business product
specialists available via video conferencing. High emphasis on technology and self-service
training and education.
In-Lobby
Transaction Kiosks
Cash Recyclers
Deposit
Automation
ATMs
Technology Bar
Digital Signage
Video Conferencing For Sales &
Service
1,000-1,500 square feet

17. 17
A New Branch Approach
Management Guidelines and Objectives – Branch Expansion
• Branch associates need to spend more time interacting with members and less
time 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 branches
located with 3-5 miles of new branch locations
• New branches cannot meet every single customer need
Limited number of transaction types cannot be conducted at the branch
and would require a trip to a traditional branch
UNIVERSITY FEDERAL CREDIT UNION (AUSTIN, TX)

18. 18
Increased Focus on Customer Relationships
• Move from transactional to relationship activity
• Change staffing model – use of universal associates (Personal
Financial Representatives) – 4 PFRs per branch along with a
manager
• Reduce staff turnover and training expenses creating
structure for a more defined career path
• Train consumers in self-service usage
• Greatly increase amount of time associates interact with
customers rather than conducting transactions
• Seasoned PFRs to assist consumers with life events
• Structure allows an opportunity to explain this service model
NEW BRANCH MODEL

19. 19
Implementing an ‘Assisted Service’ Model
WHAT DOES IT DO?
• Delivering a self-service or partially assisted service
capability directly at the teller line, next to a teller pod, or
as a stand-alone unit within the lobby.
WHAT VALUE DOES IT PROVIDE?
• Terminal to migrate additional transactions not currently
addressed by the ATM
• Facilitate consumer education through
partially assisted transactions in the branch,
resulting in increased adoption
• Express lane alternative for consumers
wanting quicker service
• Increased approachability due to location
and proximity of staff
IN-LINE TRANSACTION KIOSK

20. 20
Issues to AddressDimension
Operations
 Defining the target customer
experience
 Changing policies and procedures
 Integrating with existing systems
Employee
Preparation
 Communications
 Training
Execution is Critical
Customer Adoption
Measurement /
Tracking
 Education / Communications
 Incentives
 Customer behavior
 Return on investment

21. Branch Transformation Framework
21

22. 22
Drive
Efficiencies
Improve
Customer
Experience
Mitigate
Risks
Improve
Sales
Effectiveness
For most, the primary
objective. Consider re-
thinking your processes and
opportunities to automate
Rethink how you address
fraud, electronic security and
physical intrusion. Minimize
internal theft or errors
without burdensome
processes
Should be considered from
the start when
contemplating branch design,
process improvement, and
self-service automation
Capitalize on efficiency
savings by re-purposing
branch staff to sell more
effectively. Deliver the tools
and support needed
Branch Transformation Objectives May Vary

23. 23
Adopt a Comprehensive Branch Transformation
Approach
• What is the role
of each delivery
channel in our
retail banking
strategy?
• What is the
optimal number
of branches and
ATMs we need to
serve our
markets?
• What is the
target consumer
experience in
each channel?
• How can we
operate our
branches more
efficiently in
order to reduce
costs while
providing a high-
quality
consumer
experience?
• How profitable
are our branches
and ATMs?
• How can we
better mitigate
operational
risks?
• Which branch
transformation
solutions are
going to have
the greatest
impact on our
business?
• How do we
prioritize various
channel
investments over
the next three
years?
• What is the most
appropriate
branch layout
given our retail
strategy?
• How do we
ensure we
maximize the
value of
investments in
branch
transformation
solutions?
• How do we
ensure
consumers adopt
new solutions?
• How do we
engage
employees to
support new
solutions?
• Did we achieve
the ROI
associated with
the investments
required?
• What impact did
the new
solutions have
on transaction
migration and
consumer
experience?
• What steps need
to be taken to
improve
performance if
expectations are
not being met?

24. 24
Assess Branch Activities

25. 25
Identify Efficiency Improvement Opportunities
47%
70%
79%
85%
90% 92% 93% 95% 95%
0%
25%
50%
75%
100%
Seller Service Activity Volumes
Annual Transactions Cumulative %47%
70%
79%
85%
90% 92% 93% 95% 95%
0%
25%
50%
75%
100%
Teller Non-Customer Facing Transaction Volumes
Annual Transactions Cumulative %47%
70%
79%
85%
90% 92% 93% 95% 95%
0%
25%
50%
75%
100%
Teller Customer Facing Transaction Volumes
Annual Transactions Cumulative %
Activity Levels of Branch Processes
Average Annual Teller Transaction
Volume & Costs:
Note: assumes 4 Teller FTEs with S&B of $31K
1) Account maintenance, cash advance, and transfers
Source: Diebold Consulting Analysis
Other1
Trans. Detail / Bal. Inquiry
Payments
Cash Withdrawals
Check Cashing
Deposits
(Cash and Check)
120K $71K

26. 26
Opportunities 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
For more information, e-mail:
chris.gill@diebold.com
Questions?

28. 28
Diebold Consulting
• Distribution
network
optimization,
including
planning for de
novo branches
• ATM network
optimization
• Market / site
analysis
• Channel profiling
• Branch
operational
assessments
• Branch / ATM
physical security
risk assessment
• Branch / ATM
physical security
standards and
procedures
• Fraud risk
assessments
• Deployment
strategy and
business case
development
• Deployment
strategy and
business case
development for
specific branch
transformation
solutions
• Branch design
services and
customer
experience
planning
• In branch self
service solutions
‘test and learn’
• Deposit
automation
implementation
• Teller
automation
implementation
• Implementation
of new branch
formats
• Performance
measurement
and evaluation