NCR Confidential

Branch Profitability Transformation Staying ahead of Changing Priorities

NCR Confidential

Branch Profitability Transformation – The Inflection Point Unprecedented focus & urgency

• Branch Transformation no longer seen as a choice – Unprecedented global urgency for change

• No longer solely about improving the customer experience - for ‘differentiation’

• Controlling Branch Revenue & CX management thru people only – unsustainable & diminishing returns

• Industry is failing to stem revenue losses. Allowing 30% of NAMER branches to underperform - become unprofitable – becoming dormant, untapped profit centers

NCR Confidential

Branch Profitability Transformation – Driving Forces Branch needs relevant identity within Omni channel

Branch must be cost neutral link in the customer transacting pathway False starts – Cool, superior CX not delivering basic branch function Sensible 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 to

customer interaction.

• Transform Tellers / PBs into Universal Bankers - no back office, future proofed.

• Change cost:revenue ratio of each FTE – to be clear revenue generators

• Scalable, consistent management of mobile bankers

PURCHASE

FRIEND

EVANGELIZE

TRUST

DECIDE

COMPARE

RESEARCH

SEARCH

DISCOVER

DECIDE

GET HELP SHARE

DISCOVER

NCR Confidential

Branch Profitability Transformation – Statistical Drivers Metrics driving the urgency & highlighting the profit opportunity

Footfall 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 branch

Revenue 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.

NCR Confidential

Converging Strategies around the Globe Branch as the Sales and Service destination

NCR Confidential

• 4 or 5 branch formats now the norm

• Customized to location & segment

• Modular

• Using the ATM as common interaction point

Network Scale & Branch Character Transformation Converging Strategies focus on creating, agile, flexible modular branch formats

NCR Confidential

• 500 of 750 branches have completed transformation initiative

• ING has removed all teller counters from the branches

• All branch staff are now Universal Bankers

• Profitability Results exceeded goals:

Europe, ING Belgium Focus on creating, agile, flexible modular branch formats

NCR Confidential

MEA, Bank Audi, Lebanon & Turkey Creating, agile, flexible modular branch formats for non traditional locations

8

• Self Service Centres, in retail partner locations

• Customers access advanced kiosk self service, Intelligent deposit ATMs, Advisory room & video link

• Modular Expansion – Kiosks also located independently in retailers, Advisory offices located independently in car sales showrooms

NCR Confidential 9

• Full service branch banking format delivered in 1,000 sq. ft. or less of space

• Customers interact with roving bankers, available to assist during business hours - branch converts after hours to a 24 hour self-service zone.

• The potential capital and operating costs of the branch

are ~50% less than a traditional branch, while offering similar levels of sales, service, and transaction capabilities.

North America, Wells Fargo, Neighbourhood branch initiative Smaller footprint, No back office, offering transactional banking with choice of staff interaction

NCR Confidential 10

• Expansion Policy • Increased Service • Increased Efficiency • Increased Productivity

• Driving keener value in financial

products for members

Wright Patt CU, Dayton Revised footprint, Video Teller supported, focused on Sales & Service

NCR Confidential 11

• Created 4 new Branch formats

• Deployed in Hospital – 3000 permanent customer base

• & Retail Mall – 10million annual footfall

• Innovating to deliver value back to community & future proof staff roles

Canada, First Ontario CU Smaller footprint, expanding into new customer transaction highways

NCR Confidential

Practical Considerations to implementing new strategies A Relevant points of presence Ecosystem

NCR Confidential WEB COMPANY

WEBSITE MOBILE BRANCH

/STORE CALL

CENTER SOCIAL

PURCHASE

FRIEND

EVANGELIZE

TRUST

DECIDE

COMPARE

RESEARCH

SEARCH

DISCOVER

DECIDE

GET HELP SHARE

DISCOVER

Seamless Transaction automation Excellence

Consumer Experience Excellence

Revenue Generation & profitable relationships

Multiple, Connected Points of presence

Follow the Consumer’s satisfaction & needs hierarchy Transaction excellence, Presence where needed, Customer experience, Sales – in that order.

NCR Confidential

Make discovery easy, consolidate interest Secure Fulfilment & Gain Wallet Share Drive Impulse across channels Make Engagement easy

Multiple Points of Presence Inspire & Capture Impulse

at inception, across multiple channels

Manage Discovery Facilitate creation of

Interest

Secure engagement Connect your customer to the advisory channel

The market Opportunity

•Average online adult

holds 8.5 products

•Average provider holds wallet share of

2.1

• Gen Y product holding will increase 75% in next 5 years

Source : Forrester 2011 Report, 2011 North American Technographics Benchmark survey Ernst & Young 2011 Global retail banking consumer survey

Mobile Banking

Micro Branch formats, multiple

locations

Multi function ATM Targeted messaging

Interactive Teller

Interactive Teller F2F Influence everywhere

Online Banking

Financial Kiosk Product management

& discovery

Self Scheduling Empower customers To secure advisory Discussion on any

channel

The Target

•Best In class provider owns 3.5+ product

wallet share

The Capacity Gap

Global average 2.9 products

Accelerate Impulse to Action Branch is your Sales and Service profit hub – Accelerate the customer from impulse to action

NCR Confidential

Retain Transaction capability Branch is your Sales and Service profit hub – but its still banking, not just a retail store

NCR Confidential

Points of presence: 4 Points of presence: 9

Branch

ATM

Iconic Branch (Hub)

Express Branch (Spoke)

Micro Branch (Spoke)

Self-Service Branch (Spoke)

ATM (Spoke)

Today Tomorrow Target 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 synchronization

Deliver alternative distribution network - 30-50% of traditional branch network operating costs

Specimen Model

A well thought out ecosystem, delivers profitability Be there for your customer, speak to your customer, deliver for your customer

NCR Confidential

Practical Considerations to implementing new Technology A Best in class Management Ecosystem

NCR Confidential

Best in Class Management – What new Technology should deliver Technology must be designed to Realize Branch profit opportunity & Create Management consistency

Centralized Video Call Centre Management, should allow Flexible and immediate deployment of personnel equipped by remote driven, fully functional devices . Delivering operational Rigour & sales approach consistency

Consistent Sales

Approaches

Referral rates of 40pm per

Teller

Consistent Handoff

Correct compliance statements

Live compliance

observations

Live compliance

observations

Shorts in Tills management

Universal resource, no competition

NCR Confidential

Best in Class Management – What new Technology should deliver Technology must be designed to Realize Branch profit opportunity & Create Management consistency

In-branch solutions, should offer in branch device control enabled by tablet technology , To maintain operational Rigour, free up engagement space & drive sales.

Management of

environment in real time

Complete Visibility of all

customer transactions

Customer & Staff use ATM

application together

Controlled choreography on the floor

KYC and Money

laundering controlled

Controlled sales

approach stages

Staff validates short term

lending on the spot

Shorts in Tills management

Only 5% of customers pro-actively

update records

NCR Confidential

A Profitable, Interactive Environment Revolutionized Management of Daily operations, Staff & Revenue generation

NCR Confidential

Iconic - Self Service – Micro – Express Banking collaboration platforms, leveraging Kiosks, Tablet & remote device control, Video coms

1800 Sq ft

60% of traditional branch footprint

201% of the operating income per sq ft.

83% of the operating cost per sq ft.

56% of the staff cost

1000 Sq ft

33% of traditional branch footprint

195% of the operating income per sq ft.

49% of the operating cost per sq ft.

40% of the staff cost

NCR Confidential

The Available Technology Tools Delivering Improved management of Rigour, Service, Compliance & Revenue

NCR Confidential 23

1 1 0.8 1

Full Service

0 1

Self Service

Staff Consumer

1 3 1 3

Assisted Service (In Person and Remote)

3

The Key – Assisted Service Combining Self Service, Full Service – at the customers’ choice – cost effectively

NCR Confidential 24 24

APTRA Interactive Teller Remote Assisted service, supported by centralized, instantly deployable resource •Teller remote controls all of the ATM modules, and functions

•Card or cashless authentication

•Signature capture & ID Imaging

•Rich integrated, on screen flow, educates as you engage

•Teller has full over ride capability for cash dispense and credit functions

•Video / Audio, Privacy and Text chat

NCR Confidential 25 25

APTRA Interactive Teller Direct Impact on all 4 Operational metrics • Migration Catalyst

• Service Expansion

• Productivity

• Sales Revenue

Worldwide Adoption

• 50+ Banks in NAMER deploying

• Deploying across Middle East, Africa, Central

Europe, E. Europe, UK, South East Asia.

NCR Confidential 26 26

Profitability – Coastal Federal CU Cashless 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, purely Sales & Service focused environments

•60+ Units deployed, across 15+ branches

•30+ Leads per month per teller on average

NCR Confidential

Unique solution enabling removal of Teller & Personal Banker desks, empowering Universal Bankers to manage a dedicated sales & service environment, with transactional capability.

Future In branch transacting modalities – 2014 Using the ATM, to build a dedicated Sales & Service environment – whilst controlling transactions

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 customers

Future branch environment control using tablet - 2014 Tablet control, real time transacting insight, intervention, transaction control.

NCR Confidential

What’s next? – Convergence. Universal Bankers, Tablet Control, Video enabled remote driven transacting – seamless.

In person Assisted Service

Self Service Remote Assisted Service

NCR Confidential

Thank You

Hear Bob Tramontano, NCR SVP, present at the forthcoming NAFCU annual conference