Top 5 Ways to Verify Teller Labor Costs are Under Control

With Special Guest From Arizona Federal Credit Union

• Welcome and introductions

• What has changed in the last couple of years?

• Review twenty-year trend charts from 2011 FMSI Teller Line Study

• A closer look — Arizona Federal Credit Union

• What do we learn from these numbers?

• Next steps

• Open discussion including Q&A session

• Gordon A. Williams IV, FMSI SVP

• Kathie Sironen, Arizona Federal Credit Union Sr. Director of

Operations

• W. Michael Scott, FMSI President/CEO

• Chad Davis, FMSI Marketing Manager

The combined financial impact of both the Durbin Amendment and Regulation E Section 205, is forcing banks and credit unions to turn-over every rock in an effort to do more with less.

• An often overlooked area to decrease overall

expenses is the reduction of processing levels

on the teller-line.

FMSI’s annual teller line study indicates that many technological changes have led to a 31.3% decrease in teller transaction volumes over the past 10 years. • A recent Celent (www.celent.com) survey suggests that FIs

expect approximately 25% of branch transactions to migrate to self-directed technologies over the next five years.

• 82% of general retail banking consumers are willing

to use the Interactive Teller system for some transactions

• Current VTM users have a 90% satisfaction rate

• There was a 40% reduction of labor costs while increasing teller pay (went from 58 to 27 tellers) and increasing available teller service hours by 44%

• Above metrics based on uGenius Case Study, where 58 VTMs were utilized in the same time period – over two years

Video Teller Machine

Allows for customers to deposit checks (with smart phones) without having to step a foot in a branch or use an ATM. • Chase, PNC, US Bank, and USAA currently offer this service,

along with other major financial institutions like Bank of America that have this feature in development.

Smart Phone

Automates low value cash transactions and drives efficiencies at the teller line.

NCR Cash Recycler

60% Decrease since 1970

9,340

5,865 4,908

4,347 3,684

1970 1980 1990 2000 2009

Ratio of Population to Branches

Source: US Bureau of Census, FDIC (Celent)

41.9% Decrease

Figure 3.1

15.2% Decrease

Figure 3.4

76.7% Increase

Figure 3.2

107% Increase

Figure 3.3

• Where do you think your productivity is today?

– Above 25 transactions per hour (per teller)

– 20-25 transactions per hour (per teller)

– 15-20 transactions per hour (per teller)

– 10-15 transactions per hour (per teller)

– Less than 10 transactions per hour (per teller)

The top 10 clients on FMSI’s Peer-to-Peer Ranking Report

have achieved great results, while not sacrificing service.

IMAGE OF TOP 10 Ranking – Marketing Image

Fictitious Institution Names Used for Display Purpose

Productivity + Efficiency = Cost Savings

Arizona Federal Credit Union Case Study Kathie Sironen, Sr. Director of Operations

15 branches, $1,300,000,000 in assets, located in: Arizona Implemented FMSI Staff Scheduling Software in 2003 Utilize Teller Management Online Scheduler and Reports: •Productivity: Forecasted Schedules, Individual and Branch Transaction Goals, & Monthly Reports

Productivity + Efficiency = Cost Savings

•Efficiency –Staffing Level Decisions and Cross Functional Positions –Alignment of Branch Hours –Upload Schedules from OLS to Time and Attendance System

Productivity + Efficiency = Cost Savings

Benchmark Comparison *Based off of June 2011 data

Productivity (TPH)

Cost Per Trans

Pay Rate Average Transaction

Volume per Site

Arizona Federal Credit Union

25.2 $0.64 $16.01 17,951

TMS 2011 Teller Industry Study

15.6 $1.00 $15.64 6,837

FMSI Top Ten (Prod)

22.9 $0.72 $16.52 12,883

Productivity + Efficiency = Cost Savings

Arizona Federal Comparison *Based off of June 2011 data

Productivity (TPH)

Cost Per

Trans

Pay Rate Transaction Volume

Arizona Federal Credit Union

June 2008

23.2 $0.63 $14.73 426,559

Arizona Federal Credit Union

June 2011

25.2 $0.64 $16.01 269,260

• Financial institutions that use a Scheduling and Performance Management Information System achieve greater workforce optimization results.

– TMS Top 10 Averages:

• 22.8 TPH

• $0.70 cost per transaction

• In the recent past, community banks and credit unions have

had the benefit of high margins to mask operating inefficiencies.

• With today’s reduced revenue environment, these organizations require a methodical tool to balance service and labor needs.

• Make more informed personnel, scheduling, and

branch hours of operation decisions.

• Effectively manage towards better service level needs

of members/customers.

Image of good service (ladies on image of FMSI video cover)

• It is now more important than ever for bank and credit union management to pay closer attention to their staffing levels.

• Labor cost savings associated with a focused and dedicated workforce optimization program for teller-lines has become too great to ignore.

Top 5 Ways to Verify Teller Labor Costs are Under Control 1. Set/track teller transaction productivity goals (monthly) 2. Understand your day of week environment, and recruit a

workforce that mirrors this environment 3. Know your unit labor cost, and what this cost should be based on

your unique volumes 4. Ensure your hours of operation are appropriate based on your

transaction environment 5. Compare teller productivity with FMSI industry peer-to-peer

ranking (monthly)

Financial institutions that implement an initiative that

helps them validate and manage teller labor costs – will achieve great indefinite cost savings.

FMSI has assisted over 600 financial institutions nationwide in optimizing their branch networks through applying Actionable

business intelligence from the analysis of transaction data.

– Learn more at www.fmsi.com, or call 770.619.3443