Self-Service...Enhance, Retain and Attract! Jan Estep President, Elan ATM/Debit Services

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1 Self-Service..Enhance, Retain and Attract! Jan Estep President, Elan ATM/Debit Services 1

2 National, diversified EFT processing company Offers comprehensive ATM, debit, kiosk, transaction management and card processing solutions Provides single-source solutions with in-house systems and programs More than 35 years experience and expertise in transaction management Processing, plus fully managed services for Financial Institutions and other business establishments Owner of the MoneyPass surcharge-free network 2

3 Why Self-Service for Financial Institutions? ATMs Automated Teller Machines Did they ever replace the teller? Killer application: Cash withdrawal is King!..for forty years.. 3

4 Impact of the ATM - Originally Original Intent Reduce lines Extend branch hours Provide ready cash to consumers Reduce expenses Shared ATM networks Extend reach Deposit sharing 1967 Replace the teller 4

5 ATM Today - Beyond Cash.. Towards convenience Deposits Balance Inquiries Money Transfer Stamps Phone Minutes Prepaid Wireless Minutes Local Event Tickets Bill Pay Gift Card Purchase 1:1 Marketing/Personalization Additional Financial Products and Services Imaging of Deposited Checks Delivery of Bank Notifications and Alerts 5

6 Impact of the ATM - Today Another Channel Branch ATM Online banking 2005 $$$ from surcharging Best customers utilize all channels Younger customers are migrating quickly to technology 6

7 Self Service Today Beyond reducing costs and extending reach for the financial institutions, technology today provides convenience for the consumer Focus on self-service devices for delivery and distribution Customize what you deliver to meet your specific goals and audience Convenience can translate into the Acquisition of clients Retention of clients 7

8 Self Service Today What is Different? Technology is much more flexible Hardware / software solutions are more cost-effective New solutions Kiosk enablement of new applications Check imaging Software delivery Marketing campaigns 8

9 Multifunction and Payment Kiosks 9

10 Why Kiosks? It has been tried..successful? What is different today? Why think about Kiosk vs. traditional ATMs? 10

11 Why Kiosks? Customer Acquisition Tool Emerging Unbanked and Underbanked Segments Estimated 48,000,000 in U.S.A. Cash based customers have shown high propensity for kiosk applications Utility and cell phone bill payment centers Money Orders Money Transfers Gift Cards Check Cashing Demographics encourage more use of self-service technology 11

12 As Off-Premise ATM deployment is slowing, Kiosks... are forecasted to grow at 20% annually through 2009 and then 57,000 self-service kiosks will be deployed 69% will be equipped for Bill-Pay As More Kiosks Go Live... Most Go Into Stores 80,000 60,000 80% 60% 67% 40,000 20, % 20% 0% 30% 3% Number of Kiosks Billers Retailers Banks Source: Aite Group, published in digitaltransactions July

13 Potential Applications for Kiosks 13

14 Kiosk Product: Basic Payment Device 14

15 Kiosk Product: Value added functions are modular 15

16 Who Can Best Utilize Kiosks? For client acquisition and for client retention - to offer the value of convenience Financial Institutions Government and Utility Bill Payment Independent Sales Organizations Retail Locations 16

17 Financial Institutions Placement Opportunities In branch self service option Offsite branded bank in a box Complimentary to ATM placements Remote deposit with check image FI client locations Features, Advantages, Benefits New revenue streams Operational cost reduction Expanded customer service Increased footprint 17

18 Government Locations and Utilities Placement Opportunities Utility company customer service locations Government service centers Department of motor vehicle service centers Social service agencies Real Estate tax collection points Features, Advantages, Benefits Operational cost reduction Alleviate lines at customer service centers Customer service center personal safety (No cash handling) Convenient method for payments, 24/7 Real time credit to account, avoiding late fees and shut off 18

19 Independent Sales Organizations Placement Opportunities C-Stores Grocery Stores Malls Travel Plazas Most locations where ATMs are placed Features, Advantages, Benefits New revenue stream Operational cost reduction, self service versus associate assist Increase traffic 19

20 Retail Establishments Placement Opportunities Convenience, grocery Malls Airports / Transit stations High traffic venues Features, Advantages, Benefits New revenue streams Expanded customer services Reduced operational costs Larger footprint New branding opportunities More customer touchpoints 20

21 Advanced Technology Applications for ATMs & Kiosks 21

22 Do customers use the ATM for check deposits? Is it convenient? Unlike cash withdrawals, ATM deposits have not been readily accepted by consumers 21% want proof the item was deposited 52% more likely to use if a copy of the check was provided Willingness to use ATM for Deposit when Provided with Copy of Check Image No more likely 48% A lot more likely 14% Source: ATM & Debit News More likely 38% Source: Synergistics Research - ATM Users 22

23 40% of full-function ATMs will be image-enabled by 2010 * The detailed receipt enhances the customer experience. * Source: Tower Group 23

24 Potential Future ATM Transaction Mix 100% 80% 60% 40% 20% 0% Average Transaction Mix at Financial Institution ATMs* 77% 11% 9% 2% 1% Withdrawals Inquiries Deposits Transfers Other ATMs handle 15% of retail check deposits today ATM deposit adoption rates may allow for strategic deployment of off-premise deposit acceptors Source:Dove Consulting, Boston Future Mix of ATM Transactions Graph isolates deposit affect and leaves existing transactions at their current levels 50% 40% 30% 20% 10% 0% 46% 46% 7% 1% 1% Withdrawals Inquiries Deposits Transfers Other * Source: Celent Communications 24

25 The benefits only start with image capture of checks Eliminate the collection and manual processing costs of paper checks Reduced transportation, fraud, float, & deposit processing costs Removing paper from the deposit stream also provides further benefits via technology to transfer the items to where they can be balanced and cleared via Check 21 enablement Reduced teller expenses Extend remote deposit collection solutions 25

26 Significant variable cost savings can be derived from image enabled deposits at an ATM or kiosk Cost Per ATM Deposit - Typical FI Towergroup estimates envelope deposit cost between $1.70 to $2.00. Variable Costs/Deposit Envelop Deposit Image Deposit Variance Transportation Cost* $ $ - $ (1.00) Empty Envelop Fraud $ $ - $ (0.07) Float $ $ - $ (0.06) Deposit Processing $ $ 0.53 $ (0.17) Supplies - Envelopes $ $ - $ (0.01) Check Clearing - IRD/Image Exchng $ - $ 0.07 $ 0.07 Total Variable deposit Cost $ $ 0.60 $ (1.24) * Towergroup indicates typical FI spends $.85 to $1.00 for transportation 26

27 How does it impact an FI? Additional benefits can be derived from supporting customers with nontraditional branch deployments by extending remote deposit collection solutions. Kennebec Savings Bank s new high-tech Electronic Banking Centers provides 24-hour access for Kennebec customers, including state-ofthe-art technology in a teller-less branch facility with the latest driveup and interior ATM technology. Thanks to this technology, we are now able to serve our existing customers better through shorter lines at our traditional branches, while also enabling a cost-effective bricks-and-mortar option of new locations in high-traffic areas that are the most convenient to new and existing customers. * * Source: Kennebec Savings and NCR Press Release Sept 06 27

28 Customer acquisition - ATM Software Distribution Capture the user s attention while at your channel Utilize ATMs as true distribution and marketing channel with constant access and personalized messages to cardholders Ability to push software to ATMs, avoiding sneaker-net and vendor trips to the ATM Change audio, video and graphics at individual ATMs as often as you wish 28

29 ATM Advertising ATM Advertising via software distribution allows for easy to maintain marketing campaigns Quick updates to multiple locations Cost effective distribution Ability to print coupons Distribution Server Campaign Package 29

30 ATM Marketing Campaigns with Personalization Develop Graphics Marketing & Branding Create Campaigns Marketing campaigns can be based on: Card Number, BIN range, On-us vs. Foreign, or targeted to specific ATMs. Display can be prioritized and rotated. Generally once accepted, the ad is no longer displayed. Server will log display and response activity by card number as appropriate. Modify Marketing Parameters or criteria Prototype, View, Validate, Test 30

31 Self-Service..Enhance, Retain and Attract! Jan Estep President, Elan ATM/Debit Services 31