Low Transaction Volume Branches
Low transaction volume branches power point
May 22, 2015
What is the impact of your low transaction volume branches? One often overlooked opportunity is increasing productivity rates of labor in Low Volume Branches (LVBs) – those branches where teller transactions average less than 3,000 each month. On average, LVBs represent 22% of most retail branch networks, yet only 6% of the total transaction volume, resulting in an average paid labor cost per transaction being 106% higher for LVBs.
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
Agenda
• Welcome and Introductions
• State of the Financial Institution Industry
• Low Volume Branch Teller Transaction Analysis
• Review Cost Impact
• What Can We Do with Low Volume Branches
• Next Steps
• Open Discussion including Q&A Session
Today’s Speakers
• Gordon A. Williams IV, FMSI - Senior Vice President
• Deonne Edwards, Kitsap Credit Union – KCU Regional
Manager Branch Operations
• W. Michael Scott, FMSI – President/CEO
• Chad Davis, FMSI – Marketing Manager
State of the Financial Institution Industry
In 2011 community banks and credit unions face many external conditions, which affect their bottom lines, including:
• Regulation E – a reduction in NSF fees• Continued loan losses from unemployment, an ailing housing
market, and a sluggish economy• Reduced revenues from loans and associated fees due
to the economy• Rising labor and overhead costs
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
Industry Branch Teller Transactions (Thousands)Lo
w T
ran
sact
ion
Vo
lum
e B
ran
che
s
Industry Pay Rate (Hourly: S+B)Lo
w T
ran
sact
ion
Vo
lum
e B
ran
che
s
Industry Teller Labor CostLo
w T
ran
sact
ion
Vo
lum
e B
ran
che
s
How Are Low Transaction Volume Branches (LVB)Affecting the Industry?
• A November 2010 Teller Transaction Analysis study shows the current environment of LVBs compared to larger volume branches.
• Comprised of both community banks and credit unions. • Includes 100 financial institutions nationwide.
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
LVB Branch Teller Transaction Analysis: November 2010 Data
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
Teller ProductivityLo
w T
ran
sact
ion
Vo
lum
e B
ran
che
s
What is the Business Intelligence from These Numbers?
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
LVBs Are Costly to Operate
The combined cost of labor, utilities, technology, maintenance,
and property taxes adds up
• A minimum of $150,000 to $250,000 per LVB
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
What Is The Breakeven on Operating Expenses?
Branch would have to generate and maintain a collectable loan portfolio, with a net 3% interest rate margin spread, totaling
$5,000,000.
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
Why Does This Environment Exist?
• LVBs were inherited from an acquisition.
• LVBs were new branches that never grew as expected.
• LVBs are in a community that would otherwise not be served.
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
Why Does This Environment Exist? (cont.)
• The focus was on the larger branches.
• The magnitude of the low volume transactions and the costs associated with them was simply never realized.
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
What Can We Do with Low Volume Branches?
Reduce the weekly hours of operation.
• Actual hours of reduction will vary based on your particular branch network environment.
• The average weekly hours of operation could be reduced as much as 25-35% from the current study’s 45.9 hours per week to a more modest number of
• 30 (M-F 9 to 3)
• 35 (M-F 9 to 4).
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
What Can We Do with Low Volume Branches?
Kitsap Credit Union (KCU) Case Study
• Deonne Edwards, Kitsap Credit Union – KCU Regional Manager
KCU is an 18 location $820,000,000 Credit Union located in Washington State
2007 – Implemented FMSI Staff Scheduling Software2008 – Evaluated and analyzed information provided on a monthly basis2009 – Began making changes to the way that we were hiring, scheduling and utilizing
staff in an effort to:–Increase Productivity (Teller Transactions per Hour)–Increase the % of Part Time Employees–Decrease Excess Waiting for Work Time and–Lower Excess Labor Costs
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
What Can We Do with Low Volume Branches?
Kitsap Credit Union Case Study (continued)
Results from 2009 efforts were positive! –Productivity and Part Time Utilization increased while Excess Waiting for Work time decreased significantly. Sharp decline in excess labor costs was also realized!
2010 Organization-wide Initiative (Reduce Expenses & Increase Efficiencies)
Full Optimization of Branch Network
Goals and Plan of Action –Analyze Hours of Operation at each location with a focus on the Low Transaction Volume Branches
–Reduce Hours of Operation with no employee layoffs and minimal member impact
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
What Can We Do with Low Volume Branches?
Kitsap Credit Union Case Study (continued)
KCU’s Low Transaction Volume Branches – 3 Branches on Military Base Installations that would not otherwise be served– Reduced weekly Hours of Operation (from 107 hours to 90 hours at these 3 LVB’s)– Resulted in reductions in labor costs and excess waiting for work
Employee Morale
Member Reaction - increase in member satisfaction ratings
Ongoing Plans
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
What Can We Do with Low Volume Branches? (cont.)
Close LVB Saturday operations.
• Result in a minimum impact on branch network transaction volume (given these branches average only 50 transactions on a Saturday).
• Actual institution impact will vary.
• Should closely mirror the FMSI study results.
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
What Can We Do with Low Volume Branches? (cont.)
Minimize labor intensive dual control with the use of technology.
• The use of a cash recycler would take the place of dual
control and the cash vault.
• The teller image capture will eliminate the need for
branch capture and provide a good audit trail.
• These technologies can reduce the teller labor
costs by 50%.
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
What Can We Do with Low Volume Branches? (cont.)
Remote Video Teller Screens
• Video Chat
• Approach eliminates the staffing need at remote locations, while still providing the branch services for the account holders in the area.
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
What Can We Do with Low Volume Branches? (cont.)
• Branch consolidation, absorbing these LVBs into other
nearby branches.
• Close some of the LVBs and leave that particular market.
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
What Can We Do with Low Volume Branches? (cont.)
Offer free checking in LVBs to increase market share and better utilize those facilities.
• Larger banks moving to tiered checking account fees.
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
Next Steps
Take the right steps to analyze your LVBs and take appropriate actions. Knowing your particular numbers is the first step.
• How many LVBs do you have?
• What are your costs per LVB?
• What is your decision criteria to keep a LVB open?
• Have you conducted an Hours of Operation Analysis?
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
Conclusion
Financial institutions that implement an initiative that
ultimately decides how they handle low volume branches –will achieve great indefinite cost savings.
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
FMSI
FMSI has assisted over 600 financial institutions nationwide
in optimizing their branch networks, through applyingActionable business intelligence from the analysis of transaction data. – Learn more at www.fmsi.com or call 770.619.3443
Low
Tra
nsa
ctio
n V
olu
me
Bra
nch
es
Related Documents
