KeyBank 2012 Annual Report Download - page 8

an efficient, comprehensive and effective manner. These changes are
consistent with our strategy, enable us to acquire and expand relationships,
and allow us to deliver more value in a cost-effective way by providing bundled
solutions across all of Key’s business segments.
In 2012, we re-entered the credit card business with the acquisition of a
$725 million Key-branded credit card portfolio comprising current and former
Key clients who have significant, broader relationships at the bank, including
approximately $10 billion in loans and $6 billion in deposits. We also began
self-issuance of credit cards. These actions are part of Key’s strategy to
mitigate the economic impact of regulatory changes, while also diversifying
our revenue streams.
Overall, our re-entrance into the credit card business provides meaningful
opportunities for future growth and the early results have exceeded our
expectations. Production of new accounts is up sharply and the penetration
of our existing client base is increasing.
Further, Key expects to launch enhanced commercial card capabilities
in 2013, providing our clients with more comprehensive and integrated
commercial payments solutions. Our strengthened payments platform
presents new product and market opportunities, which will drive revenue
and strengthen relationships.
Key also entered into a new merchant services arrangement, which is more
direct and efficient as it provides us with the opportunity to more fully integrate
merchant processing services into our overall payments solutions for commercial
clients. With direct responsibility for new business originations, as well as
the merchant services sales force, Key will be better positioned to impact a
client’s entire relationship, earn more attractive economics from the relationship
and garner insights that drive optimal client solutions. We have the ability to
more effectively attract and retain merchant clients while also realizing an
approximate 50% reduction in processing costs.
Additionally, Key’s ATM and debit branding and processing agreement,
expected to be implemented in the first half of 2013, positions Key to meet
its consumer clients’ payments needs with industry-leading debit payment
solutions and processing capabilities. The agreement significantly improves
overall operating efficiency and better aligns Key’s expense base with the
current environment.
Finally, in 2012, Key launched a comprehensive relationship rewards program
with an expanded offering for clients. We are now able to reward clients
for a more extensive relationship with the bank, which is consistent with
relationships being at the center of our value proposition.
2012 KeyCorp Annual Review
“Our payment product capabilities support our relationship strategy by
providing consumer and commercial clients with ready access to their money
and value-added tools to manage their cash more effectively.”
Bill Koehler
13
$725 million
Credit card portfolio
of current and former clients
acquired in 2012.
Channels
At Key, we serve our clients through varied channels to deliver convenience
and value. We have a constant focus on improving and strengthening each of
our channels, including: branch, online, mobile, call center and ATM. Consumer
and commercial clients both continue to value our branches, which provide an
important face-to-face contact point. At the same time, our online and mobile
channels are becoming increasingly popular and complementary to the
branch experience. We have seen both online and mobile banking penetration
continue to climb.
We have also been rationalizing our branch network to improve efficiency
and effectiveness. In 2012, we acquired 37 Western New York branches to
meaningfully strengthen our share in Buffalo and Rochester. The acquisition
serves as a good example of how we are selectively investing in markets
and industry segments where there is opportunity to serve targeted client
segments and gain share. Additionally, aligned with our efforts to improve
efficiency, in 2012 we announced that we were targeting the consolidation
of approximately 5% of our franchise by year-end 2013. We consolidated
19 branches in 2012 and have an additional 50 planned for 2013. We are being
disciplined and diligent with our branch consolidation plans, identifying areas
where client demand no longer supports a branch and redeploying those
resources to more productive areas.
Technology
Banking is becoming more technology-driven every day. At Key, we are
advancing our technological capabilities while also driving enhancements that
promote both efficiency and effectiveness. This includes investing in online and
mobile capabilities to meet evolving client preferences. In 2012, we delivered
new mobile apps, continued to enhance our website and promoted our
expanded bill pay capabilities.
We are also improving our sales and service tools while maintaining our
image-enabled infrastructure. Doing so aids productivity, fulfills client
preferences and improves the efficiency of our workforce. Finally, we are
developing solutions to comply with new industry-wide regulations.
As we look ahead, we remain diligently focused on identifying and executing
opportunities to grow our businesses. We are leveraging and building upon
our success in growing organically, both by expanding and acquiring client
relationships. Through investments of time and capital, we are driving our
business forward and positioning ourselves for growth in the years to come.
45%
Mobile banking
penetration in 2012,
up twofold from 2011.
12
Note: Fair value of acquired credit card portfolio approximately $718 million at August 1, 2012.