Case Study:Expanding Your Bank Brand with an

Off-Premise ATM Partnership

Steve Karp, Senior Vice President, SunTrustEnterprise Payments Strategy

November 3, 2011

1. About SunTrust

2. Role of ATM Channel in Retail Banking

3. Rationale for Branding

4. Partnership Criteria

5. Analytical Methodology

6. Tactical Considerations

7. Key Performance Indicators

8. Strategic Leverage

Today’s Discussion

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• Headquarters Atlanta, GA

• Employees 29,235

• Revenue $8.7 Billion

• Assets $172 Billion

• Branches 1,661

• ATMs 2,919

• Debit Cards ~ 5 Million

SunTrust is the 9th largest bank in the U.S.

Note: SunTrust data as of June 30, 2011, except revenue (based on full-year 2010). Industry ranking as of June 30, 2010 based on total domestic deposits 3

ATM branding represents a key component of SunTrust’s overall channel strategy

Typical mix for a “big bank”

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There is a compelling body of evidence that speaks to the critical role ATMs play in retail banking

• “ATM withdrawal fees” ranked as most important feature in consumer’s DDA choice – 1.5x more important than branch location (GCI / McKinsey & Co.)

• “Proximity to home and work” identified as the most important factor in selecting a bank – 1.4x more important than free services (J.D. Power)

• “Accessibility” identified as most influential attribute affecting a consumer’s choice of financial institution – 1.7x more important than good service (Maritz)

• “Location of ATMs/branches” accounted for 20% of DDA attrition (FRB)

• Density of a bank’s remote ATM network is one of the five statisticallysignificant factors in predicting core deposit growth (First Manhattan Consulting)

• High rate of foreign ATM transaction activity is strongly correlated with higher customer attrition rates (Dove Consulting)

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In early 2008, SunTrust decided to pursue an off-premise ATM branding partnership• Three key ATM channel questions:

Do we have enough ATMs? i.e., scale and densityAre they in the right places? i.e., locationDo they do the right things? i.e., functionality

• With a network of about 2,400 ATMs, SunTrust lagged its regional peers by ~500 and its national competitors by ~1,000, based on:

Ratio of ATMs/branchesRatio of ATMs/debit cards

• Other alarming trends:Growing position as a “net issuer” of foreign ATM transactions (sign of declining relative ATM density)J.D. Power’s 2008 Retail Banking Satisfaction Survey indicated that SunTrust lagged its peers in number of convenient ATMs

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Realistically, how does a bank like SunTrust playcatch up?• Compete with ISOs to win retail placements:

Banks are at cost structure disadvantage

Downward pressure on transactions make profitability more challenging

• Leverage Corporate and Treasury relationships to more aggressively grow off-premise footprint:

Difficult to build scale quickly

Opportunities defined by client relationships, not footprint needs

• Branding partnership:

Gain quick access to prime real estate

Leverage capability and infrastructure of partner

More cost effective than wide-scale proprietary ATM deployment (even if you somehow had secured the rights to good locations)

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When evaluating third-party ATM branding partners, SunTrust took into account several key criteria

• Core competency and focus on off-premise ATMs

• Experience working successfully with financial institutions

• Turnkey front and back-office (e.g., in-house switch/terminal driving)

• Control of the right real estate:

Super-regional and national retailers

“Everyday spend” category (e.g., grocery, gas, drug)

Brands that “fit” for SunTrust

• Buying power with key service providers

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SunTrust employed an analytical screening methodology to identify and prioritize market needs

70 MarketsSunTrust retail customer footprint

70 MarketsSunTrust retail customer footprint

25 Markets90% of footprint population

25 Markets90% of footprint population

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Apply screening criteria to determine markets with greatest need for

additional ATM coverage

Apply screening criteria to determine markets with greatest need for

additional ATM coverage

21 MarketsAvailable branding sites

21 MarketsAvailable branding sites

Eight screening criteria were applied to each of the 21 markets to develop a “branding opportunity score”• Macro-Economic:

Projected population growth

Overall market deposit growth

• ATM KPIs:

Ratio of ATMs/branches

Ratio of ATMs/debit cards

Ratio of foreign issued/total ATM trans.

Ratio of foreign issued/foreign acq. ATM trans.

• SunTrust Corporate Priorities:

STI deposit growth

Branch strategy designation10

Using a staged, prioritized roll-out, SunTrust deployed 480+ ATMs in CVS stores across 4 states/19 markets

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• CVS was the “right” retailer for SunTrust

• Density of CVS stores in targeted MSAs allowed saturation in key markets

• ATM distribution lift:

2.5x in Charlotte

2x in South FL

3x in Charleston, SC

2x in Jacksonville

STI worked closely with Cardtronics to develop and implement a compelling brand look at CVS locations

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We had to navigate a series of tactical considerations as the partnership unfolded

• Surveying and in-store placement process:

What level of penetration can ATM deployer deliver? Anything less than 85%+ is going to create a challenge

Who determines if a store can support an ATM….HQ, regional, local?

Who decides where ATM goes in store?

Is window and/or exterior signage allowed?

• ATM look and feel:

How similar/different than bank-owned off-premise ATM?

SunTrust decided on unique topper and wrap

Certain functionality lost from owned ATMs though – e.g., preferences

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SunTrust Key Performance Indicators(based on 24 mth vintage portfolio)

• # SunTrust Trans. per ATM 40% above plan

• SunTrust Trans as % of All Trans ~50% (range is 40%-60%)

• Availability 10-20 bps better than STI

• Local Market Deposit Share

• Local Market DDA Acquisition Rate

• Local Market DDA Retention Rate

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Difficult to isolate impact of ATM

branding

If you agree that the ATM channel is a “differentiator”, branding partnerships can provide strategic leverage

Source: Aite Group, “U.S. Bank ATMs: Self-Service Trends in a Challenging Environment”, August 2011 15

Closing Perspective on ATM Branding Partnerships

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475 BrandedOff-Premise ATMs

+5 Yr. TCO =$10 million+Outsource operational, technology, and revenue risk+Allows bank to focus on their strength

475 Bank-Owned Off-Premise ATMs

–Assets = $5+ mil.–5 Yr. TCO = $20 million+++++–Assume all operational, technology, and revenue risk–Spend more time running the ATMs than leveraging their capabilities