Credit Unions A National Treasure Making Connections with Members

Thursday, June 24, 2010 9:00 a.m. - 10:15 a.m. Friday, June 25, 2010 10:30 a.m. - 11:30 a.m.

Scott Post, Sr. Vice President Strategy & Delivery Hanscom Federal Credit Union Sarah Canepa Bang, CEO Financial Service Centers Cooperative, Inc. (FSCC)

2010 Massachusetts Credit Union League Annual Convention Gaylord National Resort & Convention Center June 23 - 26, 2010

Making Connections with Potential  New Members Scott L Post Scott L. Post SVP Strategy and Delivery Hanscom FCU

Consumers are looking for alternatives • • • • •

Over 10 Million results on Google for “Hate Banks” H ffi t P t d M Y M Huffington Post and MoveYourMoney.info i f Suze Orman MSN Money Credit Card Connection

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Consumers want comparable services • • • • •

Online banking Bill Bill payment t Plenty of no‐fee ATMs 24/7 human assistance Convenient branches

Meeting consumer expectations • • • •

Enhance online offering I Increase fee‐free ATMs f f ATM Offer enlarged branch network Expand call center capabilities

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Enhance online offering • Offer new membership/account opening online – – – –

Cash Edge, uMonitor, MeridianLink, Andera C h Ed M it M idi Li k A d 24/7 opening, verification and funding Dedicate staff to follow‐up Hanscom stats • 33% of new members join online • Represent 44% of loan production for all new members (those  joining through branch and online)

Enhance online offering • Add inter‐institution transfers to online banking – – – –

Cash Edge, Yodlee, Cavion C h Ed Y dl C i Offered by B of A, ING Direct, Wells Fargo, CitiBank, etc. Makes your credit union the hub of money management Hanscom stats • 15% of online users have enrolled • 14% net funds inflow YTD 2010

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Enhance online offering • Add remote deposit capture to online banking – DeposZip (Vertifi), myDeposit (Intuit FS, CO‐OP) D Zi (V tifi) D it (I t it FS CO OP) – Turns any computer with scanner into a branch – Hanscom stats (RDC vs. Online Banking Only) • • • •

Deposit balances are 19% higher Loan balances are 56% higher Number of deposit accounts are 15% higher Number of loan accounts are 33% higher

Increase fee‐free ATMs • Add your own through outsourcing – – – – –

Elan, Access to Money, Cardtronics El A t M C dt i Expenses are up to 50% less than owning Your brand will appear on outsource terminals Earn interchange and surcharge income Your BINs are exempt from surcharges

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Increase fee‐free ATMs • Join surcharge free programs

5,000 ATMs

37,000 ATMs

18,000 ATMs

25,000 ATMs

New England surcharge‐free ATMs 1,400 1,200 1,000 800 600 400 200 0 MA

CT Allpoint

RI SUM

CO‐OP

NH

ME

VT

MoneyPass/CU24

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Offer enlarged branch network • Join a shared branching program – Full service delivery channel F ll i d li h l – Important part of DR/BR planning – Puts your institution on level playing field with big banks

• Current stats—Over 6,300 locations – Over 4,100 branch outlets in 50 states + 7 countries – Over 2,200 self‐service kiosks at select 7‐Elevens Over 2 200 self service kiosks at select 7 Elevens

• Hanscom stats – $2.30 deposited for every $1.00 withdrawn

New England Shared Branches 140 120 100 80 60 40 20 0 MA

CT

RI

NH

ME

VT

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The coming bank challenge • Deposit automation coming to bank ATMs – Chase, Wells Fargo, B of A, CitiBank Ch W ll F B f A CitiB k – Turning ATMs into deposit acquisition outposts – B of A cited an increase of about 50% in deposits per ATM

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Expand call center capabilities • Consumers want access to 24/7 call centers – – – –

General information G li f ti Transactions Loan applications Problem resolution

• Challenges in managing your own call center – Call volume leveling Call volume leveling – Staff availability and turnover – Back‐up in event of unforeseen events (DR/BR)

Consider partial outsourcing • Use a third party for overflow and after hours – PSCU Total Member Care, LSI PSCU Total Member Care LSI – Specialized routing for lost/stolen cards, etc.

• Need access to host data – PSCU can use data via shared branching switch – Direct connection

• Generic or custom application – Scripting – Escalation procedures – Special authorizations (online banking unlocks, etc.)

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Summary • Credit Unions have more delivery option resources  than banks than banks • More cost effect to buy vs. build solutions • Co‐operative organizations like FSCC offer ability to  pick and choose delivery endpoints based on your  organizations unique needs

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Massachusetts Credit Union League Annual Convention Thursday, June 24, 2010 and Friday, June 25, 2010 [email protected] Follow me on Twitter at http://twitter.com/sarahbang

Cooperation - Collaboration  Cooperation is getting something back for

what you put in.

 Collaboration takes cooperation one step

further. Collaboration creates new value together – something bigger than the sum of its parts. Collaboration is transformational

 Collaborative Innovation Model (CIMple)

What is Shared Branching? This isn’t a shared branching presentation, just background! Technology

that allows members of one credit union to use the branches of another credit union and vice versa to perform transactions, online and real time.  The Network provides the switch/interface, settlement

and independent automated adjustment processing.  Transactions include deposits, withdrawals, payments, loan advances, transfers, history statements, balance inquiries and more.

[email protected]

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Growth of Shared Branching Ju n e 2001

May 2010

CUs

540

1,600

Branches

528

6,352

US States

27

50

Countries

1

5+2

[email protected]

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Take Another Look In

the US, Shared Branch technology takes the core systems of 1,600 CUs and makes them one. This provides speed to

market and breathing room, while leveraging existing back office systems. Of

the 86 million CU members in the US today, 40 million belong to participating credit unions. This provides leverage. [email protected]

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The Collaborative Innovation Model (CIMple in Action

For shared branch CUs - The back-end software is already there

Products and Services that connect through the FSCC Switch to our FSCC Issuer Credit Unions

Piggy Banc

L o c a to r Services

FSCC Network [email protected]

FSCC Issuer Software Interface

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 

The Holy Grail of Youth 18-34 are among the least likely to be using CUs. Just 25% of them are members.  18-34 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 n o t s ig n e d th e m u p . 

Source: CUNA’s 2009-2010 National Member Survey

CUs are MORE Convenient States Wells Fargo  Bank of America  JP Morgan/Chase 

39 31+ 23+

Branches 11,000 6,100 5,400

Members’ Use of Delivery Channels In person, inside lobby

92%

ATM withdrawals

76%

Credit card purchases

74% 70%

Drive-up window

69%

Check card purchases Online banking*

62%

Online bill pay/presentment*

50% 47%

Phone w/ person 40%

ATM deposits

38%

Audio response 0% * 2009 Data

20%

40%

60%

80%

100%

Frequency of Using Various Delivery Channels* Online bill pay

61%

15%

Online banking

59%

13%

Check card purchases

46%

10% 24% 24% 24% 28%

Drive-up window ATM deposits

More frequently

21% 21%

ATM withdrawals

17%

Credit card purchases

Less frequently 30%

17%

Touch-tone phone

on members who currently

33%

8%

I nside lobby

•Percentages based only use each particular delivery channel.

33%

6%

Phone w/ live person 0%

10%

46% 20%

30%

40%

50%

60%

70%

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 

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

Consumers are taking matters into their own hands 

Spending at kiosks    

     

$438 bi l l i on i n 2006 $525 bi l l i on i n 2007 $775 bi l l i on i n 2009 $1.3 trillion by 2011

Self Checkout Ticketing Check in Food ordering Postal Financial Services*

IHL Consulting Group, 01-17-10

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

Factors Fueling Growth Increased Customer Acceptance 77%  New and Robust Applications 71%  Technological Advancements with Hardware 59% 

9th Annual Kiosk Benchmark Study, VSR and Gartner 12/9/09

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) 

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