Wondering how you can win in the boardroom and secure budget for branch optimization projects in 2017? Curious to see how your peers are doing in their efforts? Want research-based advice on what strategies, designs, and technologies best align to where the branch is headed? Whether you’re already testing concepts or just starting to gather information for developing a game plan, this is a must-watch webinar for anyone who has branch transformation plans for 2017. Featuring Bob Meara, a senior analyst with Celent’s Branch Transformation research team, and John W. Smith, CEO of DBSI, you’ll hear the latest industry research on branch optimization strategies.

1. BUDGETS, BOARDROOMS,
& BRANCH OPTIMIZATION
Backed-By-Science Strategies for Conquering All 3 in 2017
JOHN W. SMITH
CEO, DBSI
BOB MEARA
SENIOR ANALYST, CELENT

2. JOHN W. SMITH
CEO | DBSI
jwsmith@dbsi-inc.com
BOB MEARA
Senior Analyst | Celent
bmeara@celent.com

3. HOUSEKEEPING ITEMS
A COPY OF THE SLIDES AND TODAY’S RECORDING
WILL BE EMAILED SHORTLY AFTER THE WEBINAR
PLEASE COMPLETE THE SURVEY AT THE END
USE THE CHAT WINDOW TO SEND US ANY QUESTIONS

4. WIN THE
BOARDROOM
Benchmark data
of where your peers
stand today
WIN BRANCH
OPTIMIZATION
Research-Based
technologies and designs
aligned to strategy
WIN
THE BUDGET
What to plan
for and why
1 32
THE THREE KEY TAKEAWAYS

5. CURRENT
STATE
DESIRED
STATE
COMPREHENSIVE SERVICES
DESIGN/
BUILD
TECH/
EQUIPMENT
SOFTWARE
DEV
PROCESS PEOPLE &
PRODUCTION
ON-TIMEON-BUDGETON-STRATEGY ON-SATISFACTION
DBSI: REDEFINE BANKING
HOW
SUCCESS

6. 55© CELENT
About Celent
We are…
…the industry’s premier provider of…
• Business and IT strategy research
• Ongoing research & advisory services
• Vertically-oriented consulting
• Global, domain specific events and
leadership forums
…an experienced presence in financial
services
• Staffed by financial services industry experts
with over 500 years of combined experience
• 50+ full time analysts devoted to financial
services
• Clients include 50 of global top 100 financial
institutions
• Centres of excellence across Capital
Markets, Finance & Risk, Wealth
Management, Banking and Insurance
…focused on cross practice themes
…a division of Oliver Wyman
• Global financial services consultancy
• 1,400 consultants, offices in 40 countries
• Domain experts throughout financial services,
mirroring Celent’s coverage almost perfectly
…a global firm
• Offices in North America, Europe and Asia
• Reports in English, French, Japanese and
Mandarin
• Coverage that spans many geographies
Digital Legacy &
Ecosystem
Transformation
Innovation &
Emerging
Technology

7. WHERE YOUR PEERS STAND TODAY
INDUSTRY BENCHMARKS

8. Understanding Branch Banking in
an Omnichannel World
1

9. 8© Oliver Wyman 8
Why now for an omnichannel strategy?
US Financial Institutions face an imperative to evolve their consumer and
small business banking business models
1
New economic realities
Fee regulation, persistently low interest rates,
and a sluggish economic recovery have mired
banks in a "no growth zone"
2
Evolving consumer behavior, preferences,
and expectations
The way that consumers want to shop, buy, and
use financial services is changing
3
Increased competition
Competition among traditional banks is
intensifying, and new-form competitors are
emerging leveraging digital strategies and data
4
New strategic focus
Increased focus on the most attractive customer
segments, deepening wallet share and retention
to drive organic growth without de novo activity
Market dynamics Omnichannel imperatives
Deliver a high-quality, hassle-free client
experience that supports more / longer / deeper
relationships, while lowering the cost-to-serve
Drive more personalized marketing, sales,
advice, and service experiences leveraging a
single view of customer data
Manifest the FI’s brand proposition effectively
across all customer touchponts
Empower more differentiated segment service
propositions to attract high-priority customer
segments

10. 99© CELENT
The branch is plagued by at least three challenges
And the trend lines aren’t favorable…
1. Cost control
• Rising operating costs
• Rising labor costs
• Declining transaction volume
2. Declining foot traffic
• Growth in self-service channel usage
• Declining check writing (and depositing)
3. Eroding relevance
• Expanding self-service functionality
• Prodigious growth in mobile device usage
• Mainstream video usage (e.g., Skype, Face
Time)
1. Source: FMSI 2013 Teller Line Study
Branch teller cost dynamics1
• The branch channel isn’t dead – just different
• FIs are rethinking what role the branch plays, and how to redesign accordingly
0
20
40
60
80
100
120
0
2
4
6
8
10
12
2005 2006 2007 2008 2009 2010 2011 2012 2013 CostperXA(cents)
TellerXasperMonth(000)
Avg Monthly Teller Transactions (000)
Per Transaction Labor Cost (cents)

11. 1010© CELENT
Here’s why the branch channel remains so important
19%
24%
28%
53%
76%
0% 20% 40% 60% 80%
Fraud/risk management
Regulatory compliance
Cost reduction
Improving customer relationships
Improving sales results
% rating #1 or #2 priority
Top Retail Banking Priorities
Source: Celent survey of NA financial institutions, October 2014 (n=156)
Q: “What are your institution's top retail banking priorities? Please indicate up to
five in order of priority.”
Mobile
2%
Contact
Center
8%
Online
11%
Branch
79%
Sales mix for non-mortgage consumer
lending
Mobile
2%
Online
7% Contact
Center
8%
Branch
83%
Sales mix for DDA and Savings
accounts
Source: Celent survey of NA financial institutions, March 2016, n=31
Q: “Indicate your channel mix for new and existing customer DDA or savings accounts.”
Q: “Indicate your channel mix for new non-mortgage lending applications.”

12. State of Branch Transformation2

13. 12© CELENT 12
An area that Celent pays close attention to
• Created two managed research panels in
2015 to take a deep dive into topics of
enduring importance:
– Branch transformation
– Digital & omnichannel banking
• Our fifth branch transformation survey is
currently in the field
• This section draws from the first survey
(June 2015, n=43)

14. 1313© CELENT
We’ll try to answer three questions
1
What does branch
transformation
mean to US
financial
institutions?
2
Where are banks in
this journey, and
how long will it
take?
3 What is the likely
end game?

15. 14© CELENT 14
Most now agree that branch channel transformation is imperative
But there’s no consensus of what “transformation” means
• After years of talk with little action, US FIs
are now serious about improving branch
channel efficiency and effectiveness.
• But, attitudes vary considerably about what
to do.
– Some see radical changes needed
– Some not so much
Source: Celent NA FI survey, June 2015, n=43
Q. How does your institution view the need for branch transformation
Q. In your view, “branch transformation” means
14%
27%
57%
0% 20% 40% 60% 80%
Refinements and/or modernization of
tried and true design concepts (e.g.,
incremental improvements /
maintenance / updating in individual…
Modest changes to the branch
operating model
Radical changes to the branch
operating model
0%
0%
8%
11%
81%
0% 20% 40% 60% 80% 100%
Unnecessary
No position
No consensus
Optional
Imperative
Resp, (%)
Importance of branch channel transformation
Meaning of “branch transformation”

16. 15© CELENT 15
Just 1 in 10 US FIs have a clear vision of the future branch
Lots of learning will take place in the next few years
• Institutions know what they need to
accomplish, but they don’t know how to do
so.
• Getting there won’t be fast or easy. Pilot
branches need to be designed, built and
tested.
• Over time, variations of standard
archetypes will likely emerge, making things
modestly faster for lagging FIs. 3%
41%
46%
11%
0%
20%
40%
60%
Lacking (we do
not have a
vision)
Unclear (we
have begun, but
much work
remains)
Developing (we
are narrowing
options; making
decisions)
Crystal clear (we
are executing on
a clear vision
and strategy)
Resp.(%)
Source: Celent NA FI survey, June 2015, n=43
Q. How clear is your institution’s vision for what your branch network will look like 5 years from now?
Clarity (or not) of vision

17. 16© CELENT 16
Most institutions have just begun their journey
But 70% are actively pursuing
• Now is a good time to be engaging US FIs
about branch automation.
• Roughly two-thirds of banks and credit
unions will not have made key technology
decisions. Fewer will have implemented.
• Most implementations are pilots – so there
may be time to influence direction.
Source: Celent NA FI survey, June 2015, n=43
Q. Which option best describes where your institution is in developing a branch transformation strategy?
30%
35%
19%
16%
0%
10%
20%
30%
40%
50%
Developing
(researching,
debating…)
Testing (one or
more pilots are
operational)
Refining
(evolving pilot
concepts prior to
roll out)
Executing
(strategy and
design are in-
place)
Resp.(%)
Low ------------------------- Maturity Level --------------------------
High
Branch channel transformation development maturity

18. 17© CELENT 17
Competing priorities and high cost/complexity hamper progress
• Even though branch transformation is
“imperative”, not all FIs are able to fund
rapid progress.
• Multiple priorities are competing for funding.
• As a result, it will take several years to
make required progress.
Source: Celent NA FI survey, June 2015, n=43
Q. What are your biggest challenges to transforming your branch network? (choose up to three)
3%
24%
24%
38%
46%
51%
62%
0% 20% 40% 60% 80%
Lack of executive sponsorship
Lack of a compelling business
case/ ROI
Unclear vision
Culture
Legacy systems
Cost/ complexity
Competing priorities within the
bank / lack of budget
Resp. (%)
Branch network transformation challenges
“Baby steps” will be a pragmatic necessary for most FIs, given the cost and
complexity of branch transformation

19. 18© CELENT 18
Several technologies will be commonplace
With rich variety in how they are implemented
• Cash recycling is among the most likely
technology investment in the near-term
• Along with tablet usage for front line staff
• The hard part will be integrating these new
technologies with legacy systems and
processes
Source: Celent NA FI survey, June 2015, n=43
Q. Based on what you know now, how likely will your future (1-5 years) branch designs include the following technologies in one or more branch designs?
27%
32%
46%
51%
62%
69%
78%
78%
78%
81%
89%
92%
0% 50% 100%
iBeacon or other geo-location technology
Some form of biometric customer
authentication (e.g., fingerprint, voice,…
Video teller machines
Interactive walls or surfaces
Video conferencing for customer contact
with remote SMEs
Assisted self-service devices not
involving video tellers
Paperless loan origination
Paperless deposit account origination
Wi-Fi for customers
Digital signage
Cash recycling (either within other
devices or as separate devices)
Tablet based applications for front line
staff
Top 2-box likelihood (%)
Likelihood of technology usage in future branch designs

20. 19© CELENT 19
Pronounced physical design changes are in the works
• Exactly how new branch designs will evolve
is uncertain.
• However, traditional designs will be in the
minority.
Source: Celent NA FI survey, June 2015, n=43
Q. Based on what you know now, how likely will your future branch designs involve the following physical design elements in one or more branch designs?
22%
27%
28%
30%
46%
49%
59%
73%
73%
76%
78%
0% 20% 40% 60% 80% 100%
Traditional teller stations
Safety deposit boxes
Mixed use space (e.g., coffee shop)
Cash vaults
Meeting rooms for businesses or
outside groups to use
Concierge desk
Drive-thru tellers
Micro-branches (very small footprint,
minimal staff)
Lounge/waiting areas
Digital areas where customers can
interact with digital channels
Drive-thru ATMs
Top 2-Box Likelihood (%)
Likelihood of physical design elements in future branch
designs

21. 20© CELENT 20
But, getting there will take some time
Most institutions are piloting new designs as a first step
• A single pilot can take more than a year to
design and implement
• Once operational, most institutions take
another 6 months or more to read results
13%
39% 37%
11%
0%
20%
40%
60%
80%
Less than 6
months
Between 6
months and one
year
1-2 years 2-3 years
Resp.(%)
Pilot duration: time to results
68%
12%
16%
62%
15%
23%
0%
20%
40%
60%
80%
1-2 years 2-3 years 3-5 years
Resp.(%)
Pilot implementation timeframe
< $10 billion > $10 billion
Source: Celent NA FI survey, October 2015, n=39
Q. Based on what you know now, Over what time frame will you be implementing pilots?
Q: How long did/will it take to design and construct a pilot and read results?

22. 21© CELENT 21
Compelling near-term objectives will force change ahead of those new
designs
• Banks are focused on a triumvirate of near-
term priorities:
– Maximizing sales and service
effectiveness of front line staff
– Favorably influencing adoption of digital
channel capabilities
– Reducing channel costs
• None of these can wait for new branch
designs to be built, tested and
operationalized
Source: Celent NA FI survey, August 2015, n=39
Q. For each of the objectives listed below, indicate the importance of each based on your institutions’ near-term branch channel priorities?
3.2
3.6
3.9
4.0
4.2
4.6
3.5
3.9
3.8
4.4
4.2
4.5
1 2 3 4 5
Improve staff adherence to
policy and procedure
Improve branch staff visibility of
customer interactions in other
channels
Implement business process
improvements
Reduce channel costs
Favorably influence customer
adoption of digital channel
capabilities
Maximize the sales & service
effectiveness of front-line staff
Low ------ Avg. Importance ----- high
> $10
billon
< $10
billion
What is important in the near-term

23. BRIEF RECAP
81% FIND IT IMPERATIVE TO TRANSFORM THE BRANCH
BUT, ONLY 10% HAVE A CLEAR VISION OF HOW
IN FACT, MANY KNOW WHAT THEY WANT
IT’S HARD!
(you are focused to your day job and it’s complex)

24. TAKE THE COMPLEX & MAKE IT SIMPLE:
BEST PROCESSAND
PRACTICES TO MOVE FORWARD

25. WIN
THE BOARDROOM

26. ANSWER THE QUESTIONS
WHAT ARE WE GOING TO DO?
WHY ARE THESE SPECIFIC ACTIONS SELECTED?
WHERE & WHEN DO WE PLAN TO START?
WIN THE BOARD
WHAT PROBLEMS ARE WE SOLVING?

27. BUILD A
GAME PLAN
Ask the right questions, of the right people in your organization
Identify what works, what doesn’t, your uniqueness,
the barriers getting in your way, and the desired state
Establish what success looks like to you
Create a summary playbook to ensure you are all on the same page

28. DISCOVERY QUESTIONNAIRE
 What is BranchTransformation?
 What makes you different or unique?
 What is the client experience?
 What gets in the way?
 Who gets it right?
 Objectives
 Project Scope
 Key Elements
of the Program
 Client Experience
 Budget
 Success Metrics
DISCOVER
27
DEVELOPYOUR STRATEGICINTENT

29. EXECUTIVE SUMMARY
All your challenges, desires and research-in-
between are summarized in an Executive Summary
to ensure executive alignment is obtained, and we
are all on the same page.
 Objectives
 Project Scope
 Key Elements
of the Program
 Client Experience
 Budget
 Success Metrics
DISCOVER
28
DEFINE
A PATH TO SUPPORT EXECUTIVE & BOARD ALIGNMENT

30. WIN
THE BUDGET

31. “WHAT ALL GOES INTO A
BRANCH
TRANSFORMATION?”

32. IT’S A LOT MORE THAN YOU THINK! YOU HAVE TO INCLUDE:
DESIGN,
ARCHITECTURE,
INTERIOR DESIGN,
ENGINEERING
DEMOLITION
(IF NEEDED)
BANKING
EQUIPMENT,
TECHNOLOGY,
FURNITURE,
SIGNAGE
BRANDING
DIGITAL SIGNAGE,
MERCHANDISING
CONSTRUCTION
VARIES GREATLY
ON CURRENT SITE
CONDITION
OWNER
PROVIDED ITEMS,
I.T., OFFICE
SUPPLIES
CONTINGENCY
FOR UNFORSEEN
CONDITIONS
+ + + + + +

33. SO, HOW CAN I GET MY ALL-IN COST?
DBSI’s proprietary SMART BUDGET TOOL considers every part of your
Branch Transformation to calculate an accurate estimate of your all-in cost.
That way, there’s no surprises.

34. SMARTKIT™ FOR NEXTFI
NEXT TECH
EXPERT NEARBY
SELF-SERVICE
EDUCATION STATION
SIGNATURE ITEM
TCRs & ATMs
FURNITURE PKG
RE-DESIGN
DIGITAL
LIGHTING
CARPET & PAINT
ADA
Remote
Expertise
All Flagship
Elements
LOW 1 LOW 2 LOW 3 MED 1 MED 2 MED 3 HIGH 1 HIGH 2 HIGH 3
Brand
Refresh
Sell with
Digital
Retail Design
Pkg
Open Plan
Design
Efficiency
Drivers
Transformation
Educate
DESIGN/BRANCHELEMENTS
BRANCH TYPE
INVESTMENT & BUDGET OUTLINE
$60,000
$100,000
$200,000
$500,000
$700,000
$900,000
$1.1M
$1.3M
$1.5M
HOW WILL I APPLY THIS?
Distinct SMARTKIT™ of parts by branch segment for easy implementation
across your network giving you the best return for your investment.

35. CREATE AN
ACCURATE BUDGET
CREATE AN
EXECUTIVE SUMMARY
WHY TAKE ACTION, WHAT THE
ACTIONS ARE, AND BY WHEN
WIN
THE BOARDROOM & THE BUDGET

36. WIN
BRANCH OPTIMIZATION

37. CHALLENGES
 Design a branch
that defies
banking traditions
 Invite the community in
 Appeal to the Agrifinance
community without losing the
Rabobank identity
IMPACT
“In my 20 years in banking I’ve
never heard clients express this
much excitement when coming
into a bank.”
SCOTT CISNEROS
Vice President
Community Banking Manager
DBSI X-FACTOR
Having to only work with
one company (DBSI) for everything
from design, to tech,
to build, to the integration of it all
helped Rabobank discover the
perfect blend of design and
technology – and ultimately deliver a
WOW experience.
RABOBANK
BRANCH TRANSFORMATION | 3,600 sf

38. RABOBANK
BRANCH TRANSFORMATION | 3,600 sf

39. CHALLENGES
 Develop an inviting, hyperlocal
design to align to the brand &
Colorado lifestyle
 Create the roadmap to determine
how many branches, where, and
why
 Remove all barriers to service
 Ensure no one asks again “do you
offer Mortgages?”
IMPACT
ALL success metrics by the
Executive Team and Board
have been achieved!
DBSI X-FACTOR
This was a complicated project.
A building housing not only a branch
but significant back office operations,
3 levels, very old building and it with
2 previous major additions in it’s a
past.
WOW was end game, but the
planning to keep all of that running
while DBSI fully transformed the
location was a challenge that was
overcome to rave results.
COORS CU
BRANCH & CALL CENTER TRANSFORMATION | 11,000 sf

40. 39
COORS CU
BEFORE

41. COORS CU
AFTER

42. CHALLENGES
 Create a new global, go-to market
branch strategy
 Drive efficiency in a high transaction
environment
 Enable staff to drive adoption to
alternate channels
IMPACT
“You’re an extraordinarily
professional team that really takes
the time to listen.
We thoroughly value your
recommendations!”
STEVE ROMANO
EVP
DBSI X-FACTOR
With a proven 6D process to guide,
DBSI was able to breakthrough lack
of executive alignment define their
current state to desired in just 3-
months with a full go-to market
strategy.
NAVY FEDERAL CU
BRANCH CHANNEL EVOLUTION | LESS THAN 3 MONTHS

43. NAVY FEDERAL CU
BRANCH CHANNEL EVOLUTION | LESS THAN 3 MONTHS

44. TOP SHORT & MEDIUM-TERM STRATEGIES UNCOVERED
BY CELENT RESEARCH
Maximizing sales and service effectiveness of front line staff
Favorably influencing adoption of digital channel capabilities
Reducing channel costs

45. Attract leads.
Drive engagement.
Match your products
and services with
your clients’ interests.
STRATEGY:
DRIVE ADVISORY BRANCH TRAFFIC

46. Individuals can self-assess key indicators of their
financial fitness in just 90 seconds, and see how
their results stack up against their peers both locally
and nationally.

47. STRATEGY:
DRIVE ADVISORY BRANCH TRAFFIC

48. Break the chains of your
hardware and open your
cash automation
machines up to all
associates—from
anywhere in
the branch.
STRATEGY: FREE STAFF TO UNIVERSAL
REMOTE
TRANSACTION
ASSIST

49. STRATEGY: FREE STAFF TO UNIVERSAL

50.  Transactions started anywhere,
fulfilled anywhere
 All associates (FSR, Teller, or the
Branch Manager) can now complete
ALL transaction needs
STRATEGY: FREE STAFF TO UNIVERSAL

51. Help clients
understand what
you offer, successes
you’ve delivered to
others and how to
obtain those solutions
easily.
STRATEGY: HELP CLIENTS
DISCOVER & ADOPT TO PRODUCTS
INTERACTIVE
DIGITAL
SIGNAGE

52.  Clients can ENGAGE to learn about
“why you,” a simplified view of your
products, successes you’ve provided
to others, your community
contributions and even the people
doing all of this.
 INTERACT to learn mobile check
deposit, bill pay, who they may want
to bank with—and actually get
started.
 35+ apps to engage clients
to help them DISCOVER how
you can assist.
STRATEGY: HELP CLIENTS
DISCOVER & ADOPT TO PRODUCTS

53. Introducing the
first core-integrated,
all-in-one service
branch channel
TM
P O W E R E D B Y C F M
STRATEGY: IMPLEMENT SELF-SERVICE
TO REDUCE CHANNEL COSTS

54. $
ONE SOLUTION.
ALL OF THIS:
THREE DIFFERENT
APPLICATIONS IN
ONE DEVICE
NEXT fulfills the need for
self-service, assisted-service,
and full-service by opening up
your cash recyclers to clients
and tellers.
FULL TRANSACTION
SET CAPABILITIES
A full integration with your core
platform makes NEXT more
than just an ATM. It brings
teller functionality— without the
ATM cost.
LOWER COST
AND INVESTMENT
Repurpose your existing
cash recyclers and
dispensers to the new
assisted-service model.
SMARTER RETAIL
ENVIRONMENT
Simple transactions are
completed by the client to
drive your costs down, while
allowing staff to handle
consultative-type tasks that
drive up sales.
STRATEGY: IMPLEMENT SELF-SERVICE
TO REDUCE CHANNEL COSTS

55. STRATEGY: IMPLEMENT SELF-SERVICE
TO REDUCE CHANNEL COSTS
TELLER LINE+NEXT
POWER TOWER/
TELLER TOWER+NEXT
STANDALONE

56. STRATEGY: IMPLEMENT SELF-SERVICE
TO REDUCE CHANNEL COSTS

57. SUMMARY
SHORT TERM ACTIONS
 Drive branch traffic: FINANCIAL HEALTHCHECK
 Help client discover products: DIGITAL SIGNAGE
 Free staff and create Universal Bankers: RTA
 Migrate to self-service: NEXT
LONG TERM ACTIONS
 Discovery for redesigns and go-to-market strategies
 Board on-board & budgets
81% FIND IT IMPERATIVE TO TRANSFORM THE BRANCH
ONLY 10% HAVE A CLEAR VISION OF HOW TO DO SO
NEED TO ACHIEVE SHORT TERM OBJECTIVES
IN PARALLEL TO MEDIUM-TERM TRANFORMATION EFFORTS

58. GROWTH
STRATEGY ALIGNMENT
& EXPERIENCE
ENHANCEMENT COST REDUCTION
CHANNEL
OPTIMIZATION
45%
YOY increase
in
business
accounts
Evolved vast majority (85%+)
of clients only using tax
services to add-on wealth
management services
160new accounts
monthly
Micro-branch
715 SF
Saved tens of millions of
dollars on Private Client
initiative with the rapid test
approach done in our
Collaboratory
SHARED TENANCY
50%
less cost
DOUBLE
traffic
2 FTEs less per location
Closed 2 underperforming
branches to optimize others
Developed go-to-market branch
strategy in
3 MONTHS
TARGETED
SEGMENTATION
Attracted largest depositor
through event held in the
“Community Room”
Created new regional HQ that
incorporates all business aspects
49%
YOY increase
in
loan
origination
53%
YOY increase in client growth
THE RESULTS

59. SHRINK THE ENTIRE PROCESS BY
SPENDING ONE DAY
AT THE IDEATION CENTER

60. Where more than 400
financial institutions started
their branch transformation
efforts
Learn the Top 10
retail banking barriers that
affect sales and service
Interact with over 20
retail components
and technologies
Discover the latest trends in
retail and learn how they can
work for you
IDEATION CENTER
YOU’RE INVITED!

61. Q&A

62. JOHN W. SMITH
CEO | DBSI
jwsmith@dbsi-inc.com
BOB MEARA
Senior Analyst | Celent
bmeara@celent.com
THANK YOU
FOR ATTENDING!
Questions? Feel free to reach out: