TCF s Digital Transformation

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1 D3banking.com TCF s Digital Transformation Allowed the Bank to Go From Catch Up to Catch Us!

2 Facing the Realities of the Digital Age Too often, the definition of digital is limited to devices, such as laptops, smartphones, or tablets. Digital is not a single type of interaction confined to a particular device, but rather an overall experience. Approaching digital in this way requires that every financial services organization evaluate their customer-facing services with the understanding that digital is now how we live rather than a single part of our lives. This means that getting digital right means more than just upgrading a legacy online banking system or an aging mobile offering. TCF has always prided itself on having excellent service. Through an open, twoway dialogue with customers, key executives at TCF realized that their organization had to undergo a transformation that reached beyond just technology and into the organizations processes and culture. According to Mark Troske, Senior Vice President of Digital at TCF, To make the customer think of their favorite device as an extension of our bank meant we had to change the way we thought internally about digital and the future of the bank as a whole. Actions Speak Loudest It was clear TCF needed to invest in a technology upgrade in its online banking, mobile banking, online bill pay, and identity management areas; but that alone would not be enough. The bank had to complete a shift in culture and mindset. In addition, time was of the essence given the high expectations and limited patience that are characteristics of consumers in the digital age. The leadership at the bank knew that success could not be achieved without making changes in its organization. The changes made by TCF included deploying a new co-located, open-concept iterative workplace environment to enable direct communication across employees. The bank also aligned nearly 20 different operational departments into a singular digital team to encourage wider collaboration and to more quickly deliver market value to its customers. Previously, there were only four people across the entire company dedicated to digital banking; with these changes, that number of people focused on digital banking increased more than tenfold. With the proper internal structures and processes in place, TCF began the search for a partner that shared its views and had the necessary technology to help the bank reach its goal. After completing an extensive RFP process, TCF selected D3 Banking Technology as the platform for its digital transformation. During the evaluation period, D3 had features right out of the box that moved them to the front of the line, said Troske. For example, D3 is built on a single platform. Everything is the same whether using a laptop, smartphone or tablet. We loved the flexibility that was part of the D3 platform. It will let us change out themes based on customer segments and allow for a multi-site hierarchy where we can treat our lending customers with a slightly different experience and configuration than 01

3 with our deposit customers. We liked the modern technology stack that powered their platform. During the evaluation stage, the value of that stack and the D3 architecture was tangibly demonstrated as they repeatedly introduced new features during that time that others didn t have. Getting To Know You TCF recognized the need for a scalable, flexible technology platform that would allow them to take new innovations to market faster and more often. The bank also realized that in the digital age consumers have grown to expect personalized experiences. In other words, it wasn t enough to use the API-driven architecture of D3 s platform in order to offer new features and functions. TCF would have to understand their customers better in order to personalize those features and functions along with their products and services to fit the specific needs of its clients. That s where we saw a hidden gem in the D3 offering, Troske said. At the core of the platform is a powerful categorization engine that analyzes all the transactions of our digital customers. Having access to that information, we are in a position to understand our customers needs at a personal level and then be able to tailor our products, services and advice to their particular situation. D3 gives us the ability to take all that data we have about our customers and turn it into a value-add for the people we serve. The Rise Of The Omni-Digital Banking Consumer Across all users from 2012 to 2017 Omni-digital Online dominant, digital hybrid and mobile dominant grows quickly from 27% to 46% 57 % 46 % 45 % Omni-channel Both digital and human interactions shrink from 57% to 45% Human-Interaction channels Call centers, texts and branches shrink from 15% to 10% 27 % 15 % % Source: PwC June 2017 The Finacial Brand We knew from the beginning that the journey we were taking had to answer the challenge of being able to understand what our customers are doing through the data that digital engagement provides so we can personalize the relationship to meet their needs. Our competition is not just other financial institutions. Our competition 02

4 includes Amazon, Apple, Google and other companies that have created the consumers expectations that their experiences will be personalized, not as part of a large demographic slice, but rather as Jane Doe living in St. Paul who is a surgeon during the week and a rock climber on the weekends. Competing Upstream In 2016, J.D. Powers published their 11th 2016 U.S. Retail Banking Satisfaction Study. This particular edition of the report indicated that the largest financial institutions in the United States had a higher customer satisfaction rating than regional banks. This was a first and therefore a reason for concern, said Mark Vipond, CEO of D3 Banking Technology. Around that same time, we began to see gradual but visible movement in the regional banking market we serve. The momentum has been building as more regionals such as TCF have decided they want to compete upstream. We are seeing more fast followers in the regional bank segment that are escaping the downdraft of aging digital banking solutions, said Jacob Jegher, SVP of Banking and Head of Strategy at Javelin Strategy & Research. These FIs are increasingly moving to solutions that mitigate the limitations of older, disparate systems. By embracing this strategy, theseinstitutions are transforming their organizations by equipping themselves to compete with the largest of banks, who capitalize upon large budgets and resources Mobile Banking Exceeds Branch Banking Mobile Banking Branch Banking June 2015 GA Javelin LLC For TCF, the battle was on two fronts new entrants with new types of services and the larger financial institutions at the top of the market. We have to compete with the new entrants and with the big players, said Troske. Interestingly, the partner we selected was a new entrant in its space. Their technology was superior and their approach to 03

5 the relationship gave us the confidence that we could really join together at the hip and push both companies forward. With D3, we got a partner that continues to prove its commitment to helping us compete with institutions of any asset size. If you want to keep up and compete, you have to invest. We are investing like never before. We see all these investments from technology to human resources as a growth driver. In addition, the manner in which those investments are made has allowed us to be more responsive to the market and our customers. There is no way we can compete with the largest banks in terms of their resources. They spend more on research than we budget. So, we have to be smarter and to be smarter you have to change how you do everything. The Bottom Line While few in the banking industry would argue against investing in digital initiatives, determining how to prioritize and evaluate these initiatives is a challenge for many financial institutions. Many banking executives struggle with understanding the optimal allocation of digital investments, and the measurement of business results, due to the multitude of product/segment silos and the complexity of channel delivery and usage combinations. The executives at TCF, however, were able to avoid this struggle. They Are Embracing Mobile Banking Services Devices commonly used by respondents for banking 57 % Phone Only 32 % Do Not Use mbanking Services 14 % Phone & Tablet 9 % Tablet Only They Regularly Use A Variety Of Banking Services 40 % Paying Bills 26 % Domestic Transfers 17 % Do Not Use 9 % View balance and statements 4 % Apply For Credit And Loans The fact that we saw digital not as channels e.g., online, mobile, tablet, whatever but as a whole gave us a perspective that made measuring the impact of our transformation easier, said Troske. The statistics we are tracking reflect this point of view. Our annual transactional savings could be in excess of $4 million. We will reduce our payment processing cost by $1.3 million. We have seen a 400% increase in peak volume use. There has been a 46% increase in e-bill subscribers, a 220% increase in e-bills received and a 250% increase in the number of accounts opened digitally by existing customers. 04

6 It is no longer enough for financial institutions to simply consolidate their disparate, legacy online, mobile products and services to decrease costs and operational complexity, Vipond added. Institutions such as TCF Bank understand this and have responded by adopting a digital banking platform strategy that not only addresses this immediate requirement but also provides the foundation required to quickly deploy the innovative services and capabilities required to be at the head of the class long-term. You Want Results? TCF realized the following benefits from their digital transformation: $4 million of annual transactional cost savings $1.3 million in reduced payment processing 400% increase in peak volume usage 46% increase in e-bill subscribers 220% increase in e-bills received 250% increase in accounts opened digitally by existing customers 05