Leveraging Technology and Talent to Transform your Branches New Jersey Bankers Annual Meeting May 17 20, 2017

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1 Leveraging Technology and Talent to Transform your Branches RICHARD A. LEONE Chief Executive Officer COCC JERALD MURPHY Chief Executive Office 2017 New Jersey Bankers Annual Meeting May 17 20, 2017

2 CORPORATE OVERVIEW Formed by and owned by our clients since th largest provider of core processing services in U.S. Next generation, open, relational database core system Over $100 billion of assets serviced Over 4.5 million consumer and business accounts online Over 1.0 million Internet and mobile banking accounts serviced

3 OUR COMPANY Started in 2005 by Atlantic Community Bankers Bank to provide managed telecommunications services exclusively for community banks. Owned by community banks Board of Directors consist of community bank CEOs Established reputation community bank clients 800+ branch locations in 18 states 95% contract renewal ratio Complete platform of next generation telecommunication services, specifically developed to simplify banks technical, operational, and regulatory requirements. SOC 2 Compliant

4 DISCUSSION TOPICS How do your customers want to interact with you? Technology and Business Changes Impacting Branches If you are redesigning your branches, what are your goals? Should every branch be the same? Do you have the staffing talent to match your goals? Are you letting technology drive your design? How do you run your virtual branch? What the heck defines a branch? How should your marketing change? & COCC partner to help drive branch change

5 GOALS Lower the branch cost structure Reduce the incremental cost of geographical expansion Improve efficiencies Fund the expansion of digital banking Reinvent the branch experience (modernize) Increase customer satisfaction Focus on enhancing relationships (over transaction processing) Refresh the brand Attract and retain millennial customers Grow (increase sales)

6 DIMENSIONS OF BRANCH TRANSFORMATION Talent and workforce management Focus on advice and expertise (less transaction processing) Branding Unique and customer driven Design Balance space optimization with privacy and convenience Technology Purposed to improve experiences Virtual branch Better integrated and mutually supportive digital channels (omni channel strategy)

7 UNIVERSAL BANKER Multi faceted job responsibilities acting as both teller and platform service representative Less cash handling and transaction processing and more product advice, referrals and problem resolution In depth product knowledge and increased sales responsibilities Produce more qualified referrals to other lines of business Possess enhanced relationship building skills Create positions more appealing to those seeking career growth and opportunity See ABA Universal Banker Certificate

8 Industry change WHAT ARE THE MAIN DRIVERS AND HOW DOES IT AFFECT YOUR CUSTOMER SERVICE STRATEGY? Technology innovation is constant Transactional based banking keeps declining Customer demand changes along with technology Desire for self service, time efficiency, immediate response Increased demand for financial consulting and planning, plus cross/up selling turn key services (CPA etc.) Increased Regulatory Pressure Risk and security

9 2017 Business Environment Clients are changing their banking behavior Transactional based banking is increasingly going online (Mobile & Online) Resulting in lower branch traffic = Less opportunity for retaining face to face customer relationship, loyalty, and face to face up selling 9 Banks should change their sales/marketing strategies to focus on meeting nextgen customer behavior.

10 Less face to face time with customers MAINTAINING RELATIONSHIPS WITHOUT KNOWING CUSTOMERS BY FACE According to the FDIC, the number of bank branches peaked in 2009 at 99,550 and had dropped to 97,337 by SNL says that the U.S. banking sector finished 2016 with 92,997 branches. In 5 or 10 years, it seems pretty likely that branch networks will start to become significantly smaller, people who like to bank in person will need to either switch to a bank that has prioritized keeping physical branches in their area, or just bank online like everyone else. Greg McBride, Chief Financial Analyst with Bankrate.

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12 THE MODERN BRANCH New offices will likely have a smaller footprint Reduce capital investment, occupancy costs and headcount Crowded during peak hours Diminished privacy Updated design of existing offices should be one optimized to achieve clearly defined goals

13 BRANCH DESIGN Open floor design Concierge style, better facilitating personal interaction Pods for Universal Bankers Reflect your brand, mission and values Private offices and conference rooms as needed

14 BRANCH DESIGN Make the customer experience more comfortable Lounge type environment Charging stations and Wi Fi Purpose driven innovation LCD screens with more image driven messages that can easily be changed

15 BRANCH DESIGN Archetype Typical Size Technology Staffing Utilization Self Service 500 to 1,000 sq. ft. Full self service Advanced function ATM Video teller Not staffed May have video teller for live support Urban core Express 1,000 to 2,000 sq. feet Full self service or assisted self service Concierge (1 to 2 FTEs) No dedicated tellers Urban core Rural replacement to substitute for closing branch Neighborhood 2,000 to 3,000 sq. ft. Assisted self service or cash recycler pods Video conferencing access to business line partners (mortgage, business banking, investments, etc.) 3 to 4 Universal bankers No dedicated tellers Urban core Suburban strip mall Rural replacement to substitute for closing branch Traditional 4,000 or more sq. ft. Cash recyclers to supplement traditional teller lines Assisted self service in high volume locations 6 to 8 FTEs Universal bankers as a component of branch staffing Hub branch Center of expertise staffed with business partners Source: Peak Performance Consulting Group s March 2015 Digital Banking Report

16 USAA case study HOW TO DEVELOP AND MAINTAIN EXCELLENT CUSTOMER SUPPORT WITHOUT FACE TO FACE INTERACTIONS CONSUMER REPORT 2016 SURVEY

17 USAA case study HOW TO DEVELOP AND MAINTAIN EXCELLENT CUSTOMER SUPPORT WITHOUT FACE TO FACE INTERACTIONS CONSUMER REPORT 2016 SURVEY

18 USAA case study HOW TO DEVELOP AND MAINTAIN EXCELLENT CUSTOMER SUPPORT WITHOUT FACE TO FACE INTERACTIONS Non Bank Competition Low operating cost as they don t have branches Providing stellar customer service through technology Ability through economies of scale

19 USAA case study Forrester Research: The Customer Experience Index. Top ranked in Bank, Credit Card and Insurance Categories Among All Brands Surveyed (2013 to 2016) Staffers get time to do their jobs, too. Employees aren't rushed through calls with customers or evaluated on how fast they handle the inquiries. "Member satisfaction trumps every single metric," says Forrester's Temkin. Other call centers "may relax things like average handle time, but they still measure it, and still you get in trouble if you're out of bounds. Reps are also armed with software that lets them view a history of the online screens a particular customer has viewed on USAA's Web site, letting them know what policies or business lines the customer was perusing and may be ready to buy.

20 LARGE TOUCH SCREENS AND DIGITAL SIGNAGE Pros: Self serve with personal support Modern look to replace pamphlets Multi dimensional sound and video Cons: Information is not grab and go Requires new marketing skills

21 TABLET KIOSKS Pros: Self serve with personal support Modern look to replace pamphlets Multi dimensional sound and video Cons: Information is not grab and go Requires new marketing skills

22 POP UP/ MOBILE BRANCHES Position the brand as forwardthinking, adventurous, innovative and responsive Flexible and low cost, allowing for the testing of new concepts and products Gather feedback and watch consumer behavior, reactions and preferences

23 Expert Customer Support Is Becoming Increasingly Important 23

24 Contact center & Integration WHAT ARE THE MAIN DRIVERS FOR CHANGE? Contact Center and CRM becomes significantly more important when serving customers over the phone Connect customers with Sales Staff faster (Agents/supervisors with skills based routing) Customer support software integration/automation Business analytics and reporting capabilities Staffing and training Don t make silo decisions, the cost of technology integration and automation becomes cost prohibitive for smaller financial institutions who don t have leverage.

25 Contact center & Integration

26 Contact center & Integration

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28 Contact center & Integration

29 Contact center & Integration Hosted/Managed Hosted/Managed VoIP/Contact Center CRM/Core

30 CUSTOMER IDENTIFICATION Debit card Swipe debit/atm card and enter PIN Biometrics Fingerprint reader Retina scanner Fujitsu PalmSecure o Contactless (hygienic) o False rejection rate of only 0.01%

31 TABLETS Pros: Full transaction support outside of bank In branch mobility Video conferencing E sign Training

32 NCR INTERACTIVE TELLER MACHINE (ITM) Remote assisted service Transactions processed by remote staff Cash recycling Not an ATM: ATMs remain for foreign customers and as the best option for quick cash withdrawals United Bank (Georgia) credited for being the only bank to open during a few days of unusual ice storms

33 & COCC Voip partnership

34 & COCC Voip partnership

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44 Bits & cocc voip partnership BENEFITS SUMMARY No need to reinvent the wheel (no need to buy phone system or licenses) & COCC core integration with bank agent desktop and contact center COCC call center call overflow Highly certified voice engineers supporting voice and call center systems Extended geographic diversity for phone system Remove bottlenecks no more capped incoming/outgoing call volume Simplify regulatory compliance Avoid finger pointing

45 SMARTPHONE ENABLED ATMS Set up the transaction on the smartphone Go to any of the FI s ATMs Enter one time use PIN, QR code or use NFC to complete the transaction Prevents skimming Reduces wait time Cards and PINs may become undesirable as compared to NFC and biometrics

46 SCHEDULING Online appointment scheduling through any channel Website Online/mobile banking campaign Social media Systematically match customer needs to appropriate service representatives Maximize engagements from a pool of resources at varying locations and with varying specialties and skills

47 Branch Solutions Matrix Attract New Customers/ customers Retain Customers/ customers Enhance Image/ Branding Reduce Footprint Increase Efficiency Add Customer Convenience Reduce Expenses Expand Hours Centralize Expertise Expand Geographical Reach Branch Design/Redesign Pop Up/Mobile Branches Cash Recyclers Interactive Teller Machines (Remote Assisted) Next Generation ATMs Contactless ATMs Self Service Kiosks Tablet Banking Video Conferencing Digital Signage Informational Kiosks Account Holder Verification System Workforce Optimization Universal Bankers CRM Assisted Service Professionals Paperless Banking Instant Card Issuance ibeacons Online/Mobile Banking Attract a New Segment/ Demographic

48 VIRTUAL BRANCH (MOBILE AND WEB) Lowest cost per transaction Largest adoption Always available Easiest training Broad functionality Easy to leverage targeted marketing capabilities Dynamic content, in session messaging, chat and video chat can reduce the loss of personal connection

49 VIRTUAL BRANCH Create a consistent look across channels while balancing the need to simplify the experience as screens get smaller Chat and video chat Social media integration Marketing analytics Site analytics Geolocation and device details Traffic sources Page statistics

50 VIRTUAL BRANCH Full debit card management Location Transaction type Merchant type Spending thresholds Fraud alerts Suspicious activity alerts

51 BUILD A COMPREHENSIVE BRANCH TRANSFORMATION PLAN People Budget Process Technology Branch Transformation Brand Virtual Branch Design

52 Summary Changing Client Demographics are increasing the need for new ways to enhance customer service New VOIP technology allows better integration of networking, data center, and call center technology Branches need to adapt new technology to increase customer intimacy and optimize efficiency and effectiveness and COCC are working together to ensure banking apps and customer service can work together seamlessly

53 QUESTIONS