Monday April 26, 2010 Follow me on Twitter at

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1 Monday April 26, 2010 Follow me on Twitter at

2 Making the Case for Kiosks Cost Convenience Capability Frontline, Shared Branching and Retail Issues to Consider

3 Consumers are taking matters into their own hands Spending at kiosks $438 billion in 2006 $525 billion in 2007 $775 billion in 2009 $1.3 trillion by 2011 Self Checkout Ticketing Check in Food ordering Postal Financial Services* IHL Consulting Group,

4 Self Service Spending According to VDC Research, investment in self-service is expected to grow 15% annually through 2013 $2.8 billion was spent in 2008 VDC points to reducing costs and enhancing the customer experience as drivers

5 Factors Fueling Growth Increased Customer Acceptance 77% New and Robust Applications 71% Technological Advancements with Hardware 59% 9 th Annual Kiosk Benchmark Study, VSR and Gartner 12/9/09

6 Customer Encouragement Prominent Location 84% Active Staff Promotion 80% On Screen graphics 69% In-store Signage 64% Advertising 47% Exclusive Services 42% 9 th Annual Kiosk Benchmark Study, VSR and Gartner 12/9/09

7 Bank of America ATM/Kiosks 129 machines in 2006 and 2007 in Charlotte April 2008, deployed 5,800 envelope free machines through out the country By end of 2010, 13,000 of B of A s 18,000 machines will be full function ATM/kiosks Why? during their pilot, the number of deposits made at these ATMs increased by 50% (these were already deposit taking locations)

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9 Attitudes Have Changed 47% of consumers report they will Always or Usually use self-service when given the choice between a person and a self-serve option. 60% for consumers <35 82% say Usually or Sometimes. 92% for consumers < 35 Just 2% report Never Self-Service Consumer Survey Networld Alliance LLC

10 Why Use Kiosk/SS Device? Self serve is faster 70% More convenient 45% I like SS technology 35% Control the process 27% No full service option available 23% SS is more private 14% SS is more trouble-free 13% 2009 Self-Service Consumer Survey Networld Alliance LLC

11 Will Consumers Use Kiosks? The preference for Millennials (anyone under 29 includes Gen Y) is the less human interaction the better. Millennials are more comfortable with non-human interaction. April 2009, Cam Marsden, Marsden Communications

12 How Kiosks are Improving Operational Efficiencies in Credit Unions Consistent requirements Consistent and fast due diligence Consistent treatment Used for Members and guest members Frees up tellers for problem resolution and sales 7-Elevens are 24/7 with good parking and beer.

13 How are Kiosks decreasing expenses and improve efficiencies in Credit Unions Augmenting or replacing the teller line Kiosks can replace traveling branches and are expanding the service offering beyond ATMs Can serve members with multiple credit union memberships. BFO - Kiosks and apps on kiosks are cheaper than brick and mortar

14 Lucky for Us Eleven Vcoms in the five states hit hardest by recent economic downturn Average Deposit $566 Average Payment $362 Average Transfer $500 Average Withdrawal $205 Average Advance $ % growth in transactions week over week since 01/09

15 Kiosk Transaction Mix and Averages Kiosk Transaction Mix and Averages 12/2009 Advances avg. $249 Withdrawals avg. $205 Transfers avg. $500 Payments avg. $362 Deposits avg. $566 Advances avg. $249 Deposits avg. $566 Payments avg. $362 Transfers avg. $500 Withdrawals avg. $205

16 Shared Branching Overall Shared Branching Transactions in Dollars 12/2009 Advances, $12,493,276 Withdrawals, $1,969,604,627 Other Services, $8,862,283 Transfers, $188,458,667 Payments, $317,209,125 Deposits, $4,865,338,269 Advances Deposits Payments Transfers Other Services Withdrawals

17 How CUs are Optimizing communication and reducing operational expenses using kiosks The interface is the same in California as it is in Florida Disclosures are consistent Did I mention a $2 million credit union in California can have a full service automated branch in Florida using Vcom? (actually 500).

18 The BFOs of Kiosks Kiosks do what you tell them to do Kiosks don t call in sick on Mondays Kiosks are cheaper than buildings Kiosks won t give in to abusive members Kiosks always think your outfit is smashing. (OK, I made that one up.) Do humans always give better service?

19 Let s Think Outside the Branch 7-Eleven Ford Motor Company And then the convergence Amtrak We at 3Gsignage believe in a combined push and pull strategy where the smartphone could be the pull instrument (download of your companies application - no push sms) and the digital screen a push instrument at the business location. We have tremendous result combining those two instruments.

20 Why is this all so important? Demographics CUs need to grow CUs need younger members What people tell us Search.twitter.com

21 Member Demographics One in three U.S. adults is a member More likely to be in peak borrowing ages of 25-44, employed full time, college educated, married and homeowners Need young adults and youth for future success

22 % of Adults Who Are CU Members by Age and Gender 40% 36% 37% 30% 31% 26% 31% 26% 30% 31% 20% 10% 0% All U.S. adults Male Female Source: CUNA s National Member Survey

23 CU Member Vs. Non-member Profile Average Age Member % Non- Member 45 33% Married 63% 48% College or more 36% 23% Employed FT 61% 45% Own Home 84% 71% Source: CUNA s National Member Survey

24 The Holy Grail of Youth are among the least likely to be using CUs. Just 25% of them are members lead all groups in acknowledging eligibility to join (84%). 20 million non-member consumers under 18 currently reside in CU Member households. Two thirds of members who have children have not signed them up. Source: CUNA s National Member Survey

25 Attracting Young Adults Young adults year olds ARI May 2008 Gen Y Study Impatient and put off by slow online or offline experience Advertising should be entertaining and crafted directly to them Online bill payment and account management are the cost of entry Believe CUs are for savings, banks are for transactions & cards Over drafting is not their fault Very Cynical trust themselves, parents, family and friends Stop me from Spending Know they have a problem with spending Parents are the primary source of financial education Tellers are NOT seen as credible. Knowledgeable to sell or recommend financial services

26 Members Suggested CU Improvements Higher savings rates 43% Lower loan rates 27% More ATM locations 22% More convenient location(s) 18% Lower service charges/fees More remote-banking services Rewards w/ multiple services 11% 14% 14% More savings products More loan products More investment products Improve service Other 8% 8% 7% 7% 6% 0% 10% 20% 30% 40% 50% Number 1 improvement requested by year olds More convenient locations. Source: CUNA s National Member Survey

27 Levels of Strong Agreement with Statements Members With a Credit Union PFI and Members With a Bank PFI They provide me good overall value 35% 52% They are committed to resolving problems 44% 61% I trust them to have my best interests at heart I feel like they truly appreciate my business 26% 32% 46% 48% The quality of service provided is excellent 47% 60% They are involved with community events/charitable causes 20% 34% Their offices are conveniently located 43% 64% Source: CUNA s National Member Survey 0% 20% 40% 60% 80% 100% Members; CU is PFI Members; Bank is PFI

28 What?! 5,000 (out of 7,900) U.S. credit unions participate in CUs for Kids. Third largest contributor to Children s Miracle Network 100% of funds raised go to 170 local hospitals 6,400 shared branches in 50 states, 6 countries and 2 territories are 24/7.

29 CUs are MORE Convenient States Branches Wells Fargo 39 11,000 Bank of America 31+ 6,100 JP Morgan/Chase 23+ 5,400

30 Members Use of Delivery Channels In person, inside lobby 92% ATM withdrawals Credit card purchases Drive-up window Check card purchases 76% 74% 70% 69% Online banking* 62% Online bill pay/presentment* Phone w/ person 50% 47% ATM deposits Audio response 40% 38% 0% 20% 40% 60% 80% 100% * 2009 Data

31 Frequency of Using Various Delivery Channels* Online bill pay Online banking Check card purchases Drive-up window ATM deposits ATM withdrawals Credit card purchases Touch-tone phone Inside lobby Phone w/ live person 6% 8% 10% 13% 15% 17% 17% 21% 21% 24% 24% 24% 28% 30% 33% 33% 61% 59% 46% More frequently Less frequently Percentages based only on members who currently use each particular delivery channel. 46% 0% 10% 20% 30% 40% 50% 60% 70%

32 Branches 92% of members use branches, but less than 10% of members report using branches more frequently Shared branch outlet model works well in this environment Branch Automation and Kiosks continue to grow in use at credit unions

33 What Can We Expect? Strong growth for online banking, internet/ bill payment, debit card transactions Moderate growth in ATM and audio response Drop in in-lobby transactions

34 Websites Rule Websites generated the greatest increase in marketing effectiveness s are effective once a member has gathered information and is closer to a purchase decision Source 2008 Corporate Executive Board and Neilsen/NetRatings

35 Three ways to reduce the stress of kiosk deployments Manage expectations Do your research Join SSKA (now the Digital Screen Media Association). Know your users

36 Monday April 26, 2010 Follow me on Twitter at