Innovative assets to meet change in the financial world.

How you can remain competitive and compliant and enhance the

consumer experience.

2

Market trends 3-4

Persona: Introducing the Millennial 3

Channels: Creating Connections 4

Branch technology 5-10

Five Reasons You Can’t Afford to Wait on Mobile 5

The Next “Big Thing” in Technology 7

Concierge Video Services: Consumer-Driven Services for the Branch 10

self-service convergence 11-12

Operation 4-1-1: Four Components. One Company. One Request. 11Windows® 7 Migration | EMV Adoption | PCI | ADA Compliance

virtual liBrary 14

Contents

1

How to navigate this interactive eBook

MoBile downloadsText* the keyword provided to 63420 to receive a link via

SMS text message to download your request

*Standard message and data rates apply.

For assistance email: requests@diebold.com

watch videoClick video icon or image to play

join linkedin groupsClick on icon to access our LinkedIn groups

Use the navigation tabs on the right of the document to access a subject

TAB

LE O

F CO

NTE

NTS

MA

RK

ET TR

EN

DS

BR

AN

CH

TEC

HN

OLO

GY

navigation

taBs

Return to the Table of Contents

Toggle forward and backward with arrow buttons

WatcH Video

Mobile banking

$

3

The Millennial generation is beginning

to saturate the retail banking customer

base, and it shows no signs of slowing.

As these potential customers mull their options for long-term financial partners, it will pay to get to

know them now.

MEET THE MiLLENNiAL

Also known as Generation Y, members of the Millennial generation were born between the late 1970s and

early 2000s. They grew up in an age of technology and economic boom in the United States. Naturally,

they’re very comfortable with communication technologies and virtual environments.

THE MiLLENNiAL SHiFT

Currently representing nearly one-third of American adults,1 Millennials are also called “Echo Boomers”—

a nod to the generation’s comparable size to Baby Boomers. By 2017, Millennials will have the most spending

power of any generation. Today, they account for 9 percent of total transactions; within five years,

it will be 40 percent. And by 2025, Millennials will make up 75 percent of the workforce and will surpass

all other generations in total earnings.2

THE ENTiTLEMENT iSSuE

Known for high expectations, demand flexibility, access and advanced technology in all aspects

of their lives. In a 2010 study, Gen Y respondents scored 25 percent higher for levels of narcissism and

entitlement than respondents aged 40–60 and 50 percent higher than those aged 61 and older.3

THE TECH GENERATiON

The most tech-savvy generation yet, members of Gen Y expect technological conveniences.

Compared to Boomers, Millennials are:

• 15 percent more likely to let financial institutions’ websites and online communities impact banking decisions

• 29 percent more likely to try new technology-enabled tools4

THE MOBiLE GENERATiON

Millennials are connected to their mobile devices. Of note, 31 percent of Gen Y reviews account balances

more than eight times a month.5 Compared to Boomers, Millennials are:

• 8 percent more likely to use remote check deposit capture

• 33 percent more likely to use mobile banking functionality4

THE ExpERiENCE COuNTS

Millennials are driven by experiences, desiring consistency and efficiency in their interactions with financial

institutions regardless of what channel they use. Despite their affinity for technology, Millennials aren’t

refraining from using traditional channels. They average 2.5 branch visits per month,6 and 59 percent say branch

locations are important. Surprisingly, a Gen Y consumer is more likely to visit a branch, drive up to an ATM or

use a call center than any other age segment.7 However, this could be because Millennials aren’t getting what

they need from their preferred digital self-service channels.

1. Derived from U.S. census data in 2009, applied to 2012.

2. “Insuring the Catalyst-Customer: Generation Y and the Insurance Industry,” Deloitte, 2009.

3. University of New Hampshire management study, P. Harvey, 2010.

4. “Omnibus Survey,” Forrester, Diebold, Fiserv, 2012.

5. “Gen Y: How to Engage and Service the New Mobile Generation,” Javelin, 2011.

6. “Winning Strategies for Omnichannel Banking,” Cisco® Internet Business Solutions

Group, 2012.

7. Fiserv Consumer Trends Survey, 2011.

pERSONA: iNTRODuCiNG THE MiLLENNiAL

CHANNELS: CREATiNG CONNECTiONSTAKiNG A MuLTiCHANNEL AppROACH TO BuiLDiNG RELATiONSHipS

In today’s market, offering multichannel solutions is a must.

But remember that each channel should focus on what it does

best. Your branch is the hub for acquiring and deepening

customer relationships. There, you can offer one-on-one

consultation, customer service and problem resolution for

richer customer experiences. Call centers bridge the gap

between face-to-face and self-service, satisfying information

needs and resolving problems. The anytime convenience of

mobile, online and ATM channels makes them best-suited for

routine self-service transactions. However, as important

extensions of your brand, they need to offer comprehensive

and convenient services that satisfy customer demands.

RELATiONSHip-BuiLDiNG AT THE BRANCH Consumers continue to value personal interaction at the branch—and not just for transactions.

• 83% are interested in branches that offer more financial and advisory services1

• 26% would leave their current institution if advisors were removed from branches1

• 80% prefer opening a deposit account at a branch2

• 75% prefer applying for a loan at a branch2

• 56% believe branch location is important when selecting an institution3

BE MOBiLE Mobile services are must-have offerings to appease

technology-hungry consumers—especially Millennials,

who will account for 40 percent of total transactions by

2017. Millennials are 33 percent more likely than Boomers

to use mobile banking functionalities like:4

1. Cisco® Internet Business Solutions Group, 2012.

2. “Forrester/Diebold Research,” Forrester, Diebold, 2011.

3. CEB TowerGroup, 2011.

4. “Omnibus Survey,” Forrester, Diebold, Fiserv, 2012.

DON’T GET LEFT BEHiND

To meet customer expectations, financial institutions need

to keep pace with technology. And that pace is rapidly

accelerating. The Apple® iPad® took a mere 18 months to

go mainstream, compared to 50 years for the telephone.

Mobile reMote deposit capture

person-to-person payMents

debit card-locking security features

cardless transactions

routine transactions simple information needs

detailed information needs simple problem resolution

financial planning, advice and sales customer service and problem resolution

physical brand presence

Mobile phone

tablet

laptop

atM

phone

branch

Ric

hnes

s o

f E

xper

ienc

e –

Any

tim

e C

onv

enie

nce

Richness of Experience – Deeper Relationships

technology

50 years |

25 years |

| 18 months

Mainstream acceptance

13 years |

| 3 years

telephone

television

Mobile phones and pcs

apple® ipod®

apple® ipad®

4

5

FivE REASONS YOu CAN’T AFFORD TO WAiT ON MOBiLEALREADY A GAME-CHANGER, MOBiLE TECHNOLOGY’S iMpACT ON FiNANCiAL SERviCES HAS ONLY juST BEGuN

Aite projects the number of U.S. consumers accessing bank accounts via mobile devices will increase from 33 million

to 96 million by 2016. More importantly, customers are increasingly relying on the mobile channel as their primary form

of communication. If that’s not enough, here are five reasons financial institutions should adopt mobile banking in 2013:

1. CONSuMERS ARE DEMANDiNG iT

Mobile banking offerings have become

deciding factors for new customers. With 6.4

billion mobile transactions conducted in 2011,

TowerGroup predicts this will grow to 17 billion

by 2015. But customers want more than the

basics. Mobile payments, merchant coupons,

remote deposit capture, person-to-person

payments and ATM transaction pre-staging are

just a few of the advanced options financial

institutions can offer customers.

2. iT’S COST-EFFECTivE

Like other self-service channel technologies,

the mobile channel reduces transaction costs.

According to TowerGroup, a typical mobile

transaction costs 86 percent less than at a

branch and 95 percent less than with a call

center agent. On average, mobile transactions

are even one-third the cost of ATM transactions.

3. MOBiLE iNTERCONNECTS CHANNELS

Providing a seamless experience

anytime/anywhere, mobile banking can

help financial institutions integrate channels

and offer consumers a consistent experience.

Creating a similar look and feel for online and

mobile platforms is a start, but financial

institutions can also tie branch and ATM services

into the increasingly popular mobile channel.

6

4. ANYWHERE/ANYTiME ACCESS

DEEpENS CONNECTiONS

Allowing consumers to access their financial information

anytime/anywhere also gives financial institutions unique

opportunities to connect with customers. A mobile app can

be a marketing device, allowing financial institutions to

present new offers when consumers are actively thinking

about banking. Based on real-time transactional data and

mobile GPS technology, financial institutions can also analyze

critical data about where and when consumers access certain

types of information—essential information for marketers.

5. MOBiLE CONTiNuES TO EvOLvE

Mobile adoption continues to grow quickly toward the

proverbial tipping point. As technology evolves, financial

institutions will experience a rapid increase in usage and

opportunities to integrate. Those financial institutions

that wait on mobile offerings will fall behind, missing an

opportunity to engage customers before they look elsewhere

for mobile banking that meets their needs.

Adoption of mobile technologies and mobile banking is occurring faster than we’ve ever seen.

telephone dishwasher automobile Microwave Mobile phone color tV Mobile oven banking

30

25

20

15

10

5

0

num

ber

of y

ears

Time for innovations to reach 10% of available users

MOBiLE TRANSACTiON SCHEDuLiNG AT THE ATM puTS MORE CONTROL iN CONSuMERS’ HANDS

WatcH Video

“In my ideal, in-branchself-service experience,I want to feel in control.I don’t want to wait or torely on anyone else.”

I am informed. I am advised.I am protected. I am at ease.

7 8

THE NExT “BiG THiNG” iN TECHNOLOGY: A SuCCESSFuL BRANCH TRANSFORMATiON iS GREATER THAN THE SuM OF iTS pARTSRAjA BOSE, SENiOR DiRECTOR, CONSuMER TRANSACTiON SOLuTiONS, DiEBOLD, iNCORpORATED

Financial institutions have been contemplating the “Branch of the Future” for more than a decade. However, dramatic

changes in consumer behavior, lingering impacts of the most recent economic downturn and the rapid adoption of mobile

technology over the past five years have significantly accelerated the need to take action and change their most expensive

distribution channel.

THE NEED FOR A CHANGE

Coming off the heels of a deep economic downturn and unparalleled regulatory constraints, financial institutions have been

under tremendous pressure to deliver improved and sustainable profitability. As traditional revenue streams have eroded,

many of them have turned to aggressive cost rationalization exercises to improve profitability. A key area of focus has been the

branch channel. However, this remains a challenging proposition as the majority of new accounts are still opened in branches.

Further, in most cases, the branch represents the primary and most effective way to communicate a financial institution’s brand

to their customers. Lastly, the reality is that many customers still prefer to visit the branch for specific transactions and consider

branch location when selecting a new banking relationship.

For years, financial institutions (FIs) referred to their digital channels (initially online and now mobile) as their “alternate”

channels. But, as current transaction volumes suggest, online and mobile are increasingly becoming customers’ primary channels

for routine transactions. And the branch, where we’ve seen a steady decrease in transaction volumes, is now actually the

alternate channel. And while the branch will continue to be the channel of choice for opening new accounts, seeking financial

advice and resolving complex problems, today’s branches don’t necessarily reflect this new reality. Specifically, the size of the

branch, the number of branches in an FI’s network and the role of the branch are not aligned with typical consumer behavior.

If the branch is central to complex, relationship-based transactions, it should be reconsidered from a staffing, design, operations

and technology perspective.

While digital channels have created greater convenience to customers and have reduced the cost to serve for some FIs, their

broad proliferation has, in some ways, diminished any differentiation that early adopters of these channels once enjoyed. In a

somewhat counterintuitive way, the branch has become the primary way for FIs to differentiate themselves from competitors.

To that end, FIs should look for opportunities to transform their branches in such a way that drives operational efficiency and

enables their staff to focus on what really matters—delivering the high-value service and advice customers want and need.

As many top retailers have realized, physical location still matters to most consumers. It’s why Apple® revolutionized the

retail experience, and now even Google™ and Microsoft® are contemplating retail stores. However, leading retailers have

also realized that a physical store not tightly integrated with its online and mobile presence quickly loses relevance with

today’s consumer. Examples of some retailers that have successfully bridged online/offline gap include BestBuy®, Banana

Republic® and Great Clips®. As a whole the retail financial services industry has not kept pace with top retailers in this

regard. Today, most branches are still digital “islands” — essentially disconnected from the FI’s online and mobile

channels. To make branches relevant for the next generation of customers, FIs must look for ways to better integrate

the experience across their digital and physical channels.

THE TRANSFORMATiON OppORTuNiTY

Many financial institutions are looking for the next “big thing” in technology to help them solve their branch challenges.

However, we believe the most successful branch transformations followed a balanced approach to upgrading branch staff

skills and goals, rethinking processes, making changes to the branch layout and design and lastly through the thoughtful

deployment of technology that enables many of these changes to occur. The reality is that most branch transformations

can be completed with today’s technology. They can be done using traditional ATM, teller cash dispensing/recycling

and two-way video conferencing. FIs can leverage the investments they’ve already made in facilities and technology

to create a more effective branch presence.

Branch staff will likely assume more “universal” roles within the branch and focus more on sales, complex problem

resolution and improving the customer experience rather than tending to routine transactions. While these roles will

require better qualified and more expensive staff, the incremental cost will be more than outweighed by lower attrition

rates, improved customer satisfaction and higher sales.

In conjunction with new staffing models, branch processes must be modified to enhance the customer experience that

FIs wish to deliver. Everything from how a customer is greeted upon entering the branch, to how they are directed to the

appropriate area to be served, to how cash is handled (or not handled) by staff needs to be rethought. These changes

should not only consider the end-customer experience but also how the branch can be operated more efficiently,

allowing branch staff to focus on what they do best—engaging customers.

While there have been attempts at revamping branches, generally, they amounted to adding a few sofas, serving coffee

DiEBOLD HELpS TRANSFORM uNivERSiTY FEDERAL CREDiT uNiON BRANCHES

WatcH Video

jOiN THE LiNKEDiN GROup: RETAiL BANKiNG BRANCH TRANSFORMATiON

TAB

LE O

F CO

NTE

NTS

9 10

CONCiERGE viDEO SERviCES: CONSuMER- DRivEN SERviCES FOR THE BRANCHviDEO uSAGE BY FiNANCiAL iNSTiTuTiONS iS BEiNG RE-iMAGiNED THANKS TO CONSuMER ExpECTATiONS WiTH TECHNOLOGY

and putting aside some space for a children’s play area. Although these

elements are potentially attractive, we believe that changing the look and

feel of your branch should not only reinforce your brand (such as sofas and

coffee may do), but also facilitate ease of interaction with your customers

and make your staff’s job easier to perform. For example, one institution

wanted its staff to greet customers at the door as they walked in. They

installed floor-to-ceiling windows along two sides of its branch, enabling its

staff to see customers as they arrived in the parking lot and well before they

were at the front door. They were then able to be waiting for a customer

rather than rushing to the front as someone walked in.

Lastly, consider the technology your branch needs to enable these changes

to occur. Much of this will depend on your overall strategy. For example, one

FI may be highly focused on efficiency. In that case, the FI may opt for more self-service devices. It would modify its branch and staffing

model to encourage consumers to use self-service devices, resulting in reduced cost from potential staffing reductions. Another FI may

want to offer a high-touch consumer experience strategy, in which tellers continue to complete the transaction on behalf of consumers.

This FI may benefit from cash recycling technology that streamlines teller-based transactions. The reality is that most FIs fall somewhere

in the middle and would benefit from deploying a combination of these models.

MAKiNG TECHNOLOGY pERSONAL

On the surface, interfacing with ATMs and online and mobile banking platforms appears to be highly impersonal. There’s no familiar

face greeting the customer. There’s no conversation. No rapport. Yet the self-service banking experience can still be personal. It’s more

than an ATM or online interface simply knowing a customer’s name or remembering his or her transaction preferences. It’s about

enabling customers to complete efficient, reliable transactions that emulate a human interaction.

For example, ATM deposit automation technology allows a customer to complete cash and check deposits in much the same way a

teller does. And when it comes to resolving issues, such as temporarily increasing an ATM withdrawal limit, two-way video at the ATM

can connect customers directly with live representatives. Customized ATMs can even offer the ability to print checks at the terminal.

Essentially, the experience you offer your customers is the “face” of your institution. In each of the above cases, customers are

interacting with a machine, yet they are able to perform tasks that were once relegated to the branch. Similar experiences extend to

online and mobile channels, where customers can easily make remote deposits, check account balances and transfer funds.

Beyond the technical capabilities of new technology, banks should also consider how they deploy new solutions. We have seen

numerous instances of an FI’s simply installing new technology and expecting that customers will simply adopt a new way of transacting.

A more successful approach entails truly understanding your customers, including demographics, transaction profiles and propensity

to use new technology among others. Once you understand your customers (which will likely vary by markets), you can develop a

comprehensive plan that includes elements such as employee education, consumer marketing, changes to pricing and incentives and

live support.

The industry is rapidly moving to automate more functions that are performed within branches. However, given the relative low

adoption rate among customers of capabilities already available and deployed today, there is ample room for improvement. However,

if FIs look at branch transformation more holistically and begin to make changes in staffing models, processes and branch design, they

will be well-prepared as technology improves — as it inevitably will.

Two-way video allows for more complex transactions at an ATM or kiosk

Two-way video technology can increase operational efficiency, improve consumer experience and boost growth and retention

The right partner can optimize adoption of new video technology

CONCiERGE viDEO SERviCES FROM DiEBOLDWatcH Video

DiEBOLD MiLLENNiAL-iNSpiRED ATM CONCEpT WatcH Video

11 12

Over the next few years a number of required changes are coming to the self-serve channel. A mix of payment card

industry (PCI) compliance requirements, technology shifts and supplier support changes will necessitate upgrades to your

self-service equipment and/or reevaluation of deployment strategies in 2013, 2014 and beyond. Diebold is here to help

with Operation 4-1-1. Receive four necessary upgrades, from one trusted source, with one request.

THE 4-1-1 ON WiNDOWS 7 HARDWARE MiGRATiON

Most ATMs currently run on a Microsoft® Windows® XP operating system, which has become an industry standard. On

April 8, 2014, Microsoft will no longer support Windows XP, according to its lifecycle policy, focusing on Windows 7

instead. As a result, operating system upgrades on all ATMs are necessary to ensure you can receive technical support

for your terminals and remain PCI-compliant.

THE 4-1-1 ON EMv ADOpTiON

The distinguishing feature of EMV (Europay, MasterCard® and Visa®) is that the consumer payment application is resident in

a secure chip that is embedded in a plastic payment card, often referred to as a chip card or smart card, or in a personal

device such as a mobile phone for future applications. The chip contains the information needed to use the card for

payment and is protected by various security features. It can also facilitate robust authentication, which can significantly

reduce fraud rates at the point of sale or ATM.

FOR ONGOiNG upDATESVisit the Regulations & Compliance site on: www.diebold.com

THE 4-1-1 ON pCi (pAYMENT CARD iNDuSTRY)

The PCI Security Standards Council’s mission is to enhance payment account data security by driving education

and awareness of the PCI Security Standards. Encrypting PIN Pads have been required on ATMs for some time as a

means of maintaining the security of a terminal user’s PIN, but have evolved over time to provide increasingly complex

security. In order to remain PCI-compliant, ATMs installed or moved after April 2014 will need to

have a new, more robust EPP, known as EPP7, which will be released for network certification in mid-2013.

THE 4-1-1 ON ADA COMpLiANCE

The Americans with Disabilities Act has already been affecting your operations, hardware layout and design parameters

for some time now, as you have sought to meet all federal guidelines for enabling consumers with special needs to carry

out financial transactions effectively. As it has done for the past several years, Diebold will continue monitoring for any

legislative or judicial adjustments to the ADA that might affect your business. Diebold remains committed to determining

exactly what is required of FIs and how they can remain compliant as efficiently as possible. If your hardware is not

currently in compliance with federal mandates, Diebold can make any adjustments necessary as part of

Operation 4-1-1 upgrades to your units.

DiEBOLD’S OpERATiON 4-1-1 | pROACTivE pREpARATiON FOR SELF-SERviCE CONvERGENCEWatcH Video

Mobile banking

$

jOiN THE LiNKEDiN GROup: DiEBOLD OpERATiON 411

TAB

LE O

F CO

NTE

NTS

13

CONTiNuE THE CONvERSATiONAccess valuaBle insight throughout 2013–2014

Diebold is committed to providing financial institutions with actionable insight that can help them create a distinctive

competitive advantage in the marketplace. Whether it’s consumer, regulatory or marketplace insight, if it’s important to your

business, it’s important to us. It’s why we’ll bring you access to the content within this interactive eBook—as well as a variety of

other insightful pieces—throughout 2013–2014.

As we work together leveraging technology to humanize service, let’s continue the conversation. Join us to talk about how

technology can enable you to expand offerings while enriching the customer experience.

GET THE LATEST NEWSVisit our newsroom for information about the latest technologies and trends: http://news.diebold.com

14

twitter: @DieboldInc

linkedin: /Diebold

facebook: www.facebook.com/DieboldInc

youtube: www.youtube.com/DieboldInc

Let’s get social.

For more information, visit www.diebold.com

1.800.806.6827 | requests@diebold.com

viRTuAL LiBRARYAccess to More downloads

MoBilevideo

DiEBOLD HELpS TRANSFORM uNivERSiTY FEDERAL CREDiT uNiON BRANCHES

DiEBOLD MiLLENNiAL-iNSpiRED ATM CONCEpT

MOBiLE TRANSACTiON SCHEDuLiNG AT THE ATM puTS MORE CONTROL

iN CONSuMERS’ HANDS

CONCiERGE viDEO SERviCES FROM DiEBOLD

DiEBOLD’S OpERATiON 4-1-1 | pROACTivE pREpARATiON FOR

SELF-SERviCE CONvERGENCE

WatcH Video Mobile banking

$

*Standard message and data rates apply.