Convenience, Continuity, Cooperation · CO-OP Shared Branching at a Glance December 31, 2013 •...

CO-OP SHARED BRANCHING:Convenience, Continuity, Cooperation

Sarah Canepa BangPresident, CSB/FSCCChief Strategy Officer, CSB

[email protected]/372-2669 x 1205

April 2014 – DCUC Overseas Conference

Why Shared Branching?

• The role of Convenienceand personal service in today’s retail financial services environment –bringing convenience to members

• Continuity of service through various challenges – natural disasters

• The credit union difference – you would not see banks doing this - Cooperation

CO-OP Shared Branching

The Opportunity- CO-OP Shared Branching in Today’s Economy

• Helps credit unions expand when other institutions are being forced to cut back

• Cost of building one branch can soar over $2 million

• Capital allocated for branch construction can be put to other use –improving checking account penetration, attracting new members, adding tech services

• For credit unions closing branches, shared branching helps them avoid losing the member base while still reducing expenses

• Credit unions opening branches and adding NextGen ATMs will generate additional revenue


What Kinds of Transactions are Possible?

• Access to all Accounts – not just checking or savings– Deposits – check and cash

– Withdrawals – check and cash

– Loan advances – check and cash

– Transfers – A2A, P2P

– Loan payments – check and cash

– And over 30 transaction sets are available


CO-OP Shared Branching at a GlanceDecember 31, 2013

• Locations in all 50 states, 5 Countries & 2 U.S. Territories

• 24 local networks • 7,204 total CSB locations

– 5,178 Outlets and Standalones– 81 NextGen ATMs/Fast Branch locations– 1,945 Vcom Units at selected 7-Eleven stores

• 1,787 Credit Unions– 47.9 million members represented– Represents $545.3 billion in credit union assets

100.2 million Transactions Acquired through CSB (Shared branching transactions only)

• Acquiring over $42.2 billion in approved transactions for credit union members at Outlet and Standalone branch locations

– Average deposit = $1,369; Withdrawal = $746; loan payment = $504; transfer = $1,393; Credit Advance = $1,071

• Acquiring over $279.2 million approved in transactions for credit union members through Self-Service kiosks - Vcom, NextGen ATM and Fast Branch

– Average Deposit = $644; Withdrawal = $269; loan payment = $416; transfer = $466; Credit Advance = $233


Benefits of CO-OP Shared Branching

• CO-OP Shared Branching ranks FIRST ahead of the banks in the number of states that have locations

• Provides credit unions the fourth largest branch network in the country

• Strongly positions credit unions to compete against banks

• Provides unprecedented convenience for credit union members – “Once a Member, Always a Member”


CO-OP SHARED BRANCHINGHow CSB ranks with the banks! December 31, 2013


CO-OP SHARED BRANCHING“How CSB Ranks with the Banks! December 31, 2013

6,3705,810 5,903

5,178

3,135 3,061

2,026

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Wells Fargo Bank

Bank of America

Chase Bank

CSB US Bank PNC

Branches

Vcom and Self Service ATMs


HIGHLIGHTS FROM THE RADDON FINANCIAL GROUP CO-OP SHARED BRANCH SURVEY - FALL 2013


The following study was fielded in the Fall of 2013 by Raddon Financial Group. A total of 25 Credit Unions participated, yielding nearly 20,000 responses. These 25 Credit Unions all offered the Shared Branch service.

The results that follow are all related to a full member survey sent to credit union members. This report segments the responses of this survey by how often the member indicated they use the Shared Branch service each month. The number of respondents per segment can be found below.

Segment Base Segment Base13,673 ‐‐3,181 ‐‐1,666 ‐‐1,496 ‐‐‐‐ ‐‐

Responses Per SegmentCO‐OP Financial Services

Not At All In Past 12 Months ‐‐Fewer Than 1 Time a MonthOne to Two Times per MonthMore Than 2 Times per Month‐‐

‐‐‐‐‐‐‐‐

Overview


18%

22%

25%

22%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Gen

Y

Ratio Traditional‐ Baby Gen GenSegment Percentile ists Boomers X Y

Ratio 19% 42% 21% 18%Percentile 87 70 32 22Ratio 11% 41% 26% 22%

Percentile 26 62 76 50Ratio 11% 37% 27% 25%


Percentile 9 48 96 50

CO‐OP Financial ServicesGenerational Segments

More Than 2 Times per Month

Not At All In Past 12 Months

Fewer Than 1 Time a Month

One to Two Times per Month

Ratio 16% 41% 23% 19%Percentile 69 67 55 31COOP‐‐Total

Generational SegmentsCompared to the typical Credit Union member, those that do not use shared branching at all, are much more likely to be a Traditionalist (19%, 87 pctl.*)

Although Gen Y may seem to “fall off” after 2+ transactions, this is due to this young group being compared to members that have been with their CU since before the Gen Y were born. The best evidence of this is the obvious adoption of CO-OP Services by the Gen X segment, 32% of 2+ Users are Gen X, 96pctl.

Key Takeaways:•19% of respondents were Gen Y, yet 25% of those using Shared Branching at least once per month are Gen Y.•23% of respondents were Gen X, yet 26% use Shared Branching less than once per month, 27% more than once per month, and 32% more than twice per month!

*Percentile Ranks the respondents to the base of 159 Credit Unions and their 100,000+ members.


Respondents were asked to indicate if their credit union is their primary financial institution.

PFI Status is a strong indicator of loyalty, and almost always leads to a greater share of wallet.

Key Takeaways:•Locational convenience leads to a higher PFI percentage• Members using Shared Branch tend to live further away from their credit union’s nearest branch•Despite the above, those “less convenient households” that use the Shared Branch the most, represent the higher % of PFI Households at 71%.•Those that don’t use a Shared Branch only have 57% PFI.

Primary Financial Institution Designation


Key Takeaways:•The most engaged credit union member, is the member that used the shared branch the most.•25% of the members using a shared branch more than twice per month are “Devoted.” This percentage falls to 21% for 1-2 times per month, and 18% for fewer than 1 or not at all. •51% of members that do NOT use shared branching are either devoted or fans. This number goes up to 55% for those that have used Shared Branching.

Membership Engagement

18% 18%

21%

25%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Percen

t Devoted

RatioSegment Percentile Devoted Fans Patrons Indifferent

Ratio 18% 33% 33% 16%Percentile 53 45 46 43Ratio 18% 37% 32% 14%



Percentile 92 31 93 38





CO‐OP Financial ServicesEngagement Segments


Key Takeaways:• The more a member uses Shared

Branching, the more likely they will be to bring All of their future deposit business to their credit union.

Deposit Loyalty


Key Takeaways:• Deposit Balance Control increases

significantly with increased Shared Branch Usage.

Deposit Balance Control


44%

48%

51%

53%

38.0%

40.0%

42.0%

44.0%

46.0%

48.0%

50.0%

52.0%

54.0%

Auto / Truck Loan

Produ

ct Usage

/

Ratio Auto/ Mortgage Home Equity Home Equity Overall Personal OtherSegment Percentile Truck Loan Loan Loan Line Credit card Line of Credit Loan

Ratio 44% 45% 14% 16% 75% 21% 17%Percentile 31 50 40 41 63 30 31Ratio 48% 45% 15% 15% 76% 24% 21%

Percentile 53 53 41 33 66 52 65Ratio 51% 44% 16% 16% 73% 25% 23%

Percentile 71 41 59 45 53 60 79Ratio 53% 43% 20% 18% 71% 30% 26%

Percentile 83 34 90 68 40 86 91

Loan Product Usage



CO‐OP Financial Services



Ratio 46% 45% 15% 16% 75% 22% 19%Percentile 43 47 48 41 61 43 46COOP‐‐Total

Key Takeaways:• Shared Branch Households are

much more likely to be Auto Loan Borrowers, Consumer Loan Borrowers, end Equity Loan/Line users.

• Given the above, it is extremely important for credit unions to devise ways to get loan dollars from these less accessible members.

Loan Product Usage


Members that use the Shared Branching the most, have the largest loan balances across all FI’s they do business with, $22,392. This makes this particular segment a more challenging target to acquire loan business because the competition is much greater. Generally, a small slice (balance control %) of this large pie ($22,392) results in more loan business than getting a large slice of a smaller pie from the other three segments.

Key Takeaways:•Members that do NOT use shared branching have lower overall loan balances ($6,364) than any of the other segments of shared branch users.

Loan Balance Control


Overall this report has shown key correlations between shared branch usage and an improved member relationship.

The chart below is a simple rank for each segment compared to the others for the key metric. A lower average score indicates a favorable rating. The chart clearly shows, as transactions increase, member relationship will improve.

Summary

No Transactions

Fewer than 1 Transaction

1‐2 Transactions

> 2 Transactions

% Indicating PFI 4 3 2 1% Devoted 4 4 2 1

% Will Bring All Dep. 4 3 2 1Dep Bal Control % 4 2 2 1

% Will Bring All Loans. 1 4 2 2Avg. CU Loan $/All HHs 4 1 2 3

Average Score 3.5 2.8 2.0 1.5


CO-OP Shared Branching Whitepapers

• Maximizing the Shared Branching Investment: How Credit Unions are Generating a Positive Impact on the Bottom Line by Creating a Culture of Convenience. Download at:

www.co-opfs.org/MaximizeSBInvestmentWhitePaper• Shared Branching Realities Revealed: Facts Every

Credit Union Executive Should Consider –Misconceptions of SB. Download at:

www.co-opfs.org/SharedBranchingRealities


Key CSB Initiatives 2014

• January 1, 2014 – Change in Patronage Dividends for CSB Credit Unions – moving from transactions to gross revenue calculation – consistency across all CO-OP FS

• July 1, 2014 – New CSB National Interchange Fee Pricing– Consistency in National interchange fees - $0.20 increase– Switch fees billed for issuer and acquirer transactions– Network access fees will be billed to credit unions– CSB Pricing Structure Changes

• State Networks may have separate pricing based on the network requirements

• Direct CSB credit unions will have separate pricing depending on contractual and business unit requirements



• August (Issuer to accept) and September (Acquirer to send and receive) 2014 – CO-OP Extended ISO 8583 specification mandates due for vendors to be certified– Key Changes

• One specification for the core processors to code – eliminate the old FSCC and NGN specifications – gone

• Member verification enhancements– Reverse look up – support book number, full DOB and last 4

digits of the SS number– Driver license field, Password field, memo tags, Call center

password– Extend name field to 60– Extend description to 30– Loans

» additional same day payoff amount» 10 day pay off amount



• August (Issuer to accept) and September (Acquirer to send and receive) 2014 – CO-OP Extended ISO 8583 specification mandates due for vendors to be certified – (continue)– Key Changes

• Deposit/Check payment support– Extend number of checks deposited at the teller window– Add payroll deposit indicator

• Enhance Statement Print/History– Transaction code and description data are usable– Search for check number– Support extended statement print

• Account qualifier enhancements


CO-OP CONNECT(Operating on two Switches with one CO-OP Extended ISO Specification)

FSCCCUS CUSW

Switch

Third Parties

NGN Switch

Third Parties

CUSC/SCCCUs

CO-OPCIMple Solutions

MPI

NGNMPI

Connection

Third Parties

Third Parties

SCCCUs

FSCCCUs

FiServ Switch


CO-OP CONNECT

CUSA Switch


• Moving Fast Branch credit unions to NextGen ATM before 2016 mandate

• Continue to focus on adding branches – 5,350 branches• Add 80 net new credit unions to CSB• Deploy and sell 100 NextGen ATMs• Assist State Networks on selling CSB• Transaction growth

– CSB transactions at branches – increase by 4%– CSB transactions at self-service (Vcom®, NextGen ATM) –

increase by 4%

• Utilizing one Mapping Software to be used by all of CO-OP CSB and EFT


Who do I contact for questions regarding CSB when we have CUSC, FSCC and SCC?

• Customer support issues, sales leads and other questions, please use the email below:

• [email protected] – connection to CSB

• Our team will make sure the right CSB person is contacted. It will make your job and our job easier in serving our credit unions.

• We appreciate what you do for us, thank you!!!


QUESTIONS?

Convenience, Continuity, Cooperation · CO-OP Shared Branching at a Glance December 31, 2013 •...

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