WEST PALM BEACH, Fla. – When it comes to building a new branch, experts caution credit unions to think planning and strategy before jumping straight into location, location, location. Despite past predictions that the branch would go the way of the dinosaur, it is popular once again, and it seems everyone wants new branches-especially members. A CUES White Paper Findings from the Credit Union Member Preferences Study, has found that increases in branch conveniences could substantially improve a credit union's growth. The study also found that most of the increases in balances would come from non-PFI members since 58% responded that they would do more business with the credit union if they had a more convenient location. "Today credit unions need both branches and technology," said Emick, Howard & Seibert, Inc.'s Paul Seibert,CMC. "The best members are multi-channel users and 65% live or work within five miles of a branch-they want it all. Effective branches are going to be those that merge the physical with the virtual." According to Seibert, credit unions are the leaders in branch innovation because they can make those decisions a lot quicker and are more willing to take chances than their bank counterparts. But with that flexibility comes a greater responsibility. "Before any decisions are made about whether or not to build a branch, do your homework-front end planning is so important," said DEI Senior Consultant Mike King. "The board and CEO need to have an entire roadmap so they have an idea where the credit union is headed. The roadmap serves as the master plan so when things change rapidly, the CU has enough information up-front to adjust decisions accordingly." There is no one specific litmus test for credit unions to gauge when they need a new branch. Reasons vary but, according to King, each credit union needs to identify its overall brand strategy/position; what products/services it wants to develop; who its existing and future members are; and from there use due diligence to find out if a new branch is the solution or if alternatives like a shift in policy or staff are a better option. IBT Senior Vice President Design/Engineering Thomas M. Hidell adds that CUs have to understand the whys behind a branch's growth peaking. Is it too busy, inconvenient or is it because of the growth of new members? Have the demographics or traffic patterns changed? Conducting a demographic study of points the branch currently has and comparing it to historical numbers could help discover why a particular branch is no longer viable. Reasons can range from population migration to industrial developments but credit unions have to ensure the preliminary research is done before any steps are taken. "The tendency is to look out of side windows instead of where they are going in the broader picture," said Hidell. "Credit unions view the market differently and have long had the workplace covered but little historically with where people live and retire. CUs should constantly ask `is my distribution able to satisfactorily take care of members' needs and am I convenient to my target member?' " Experts all agree that one of the worst mistakes credit unions can make is to buy a plot of land or abandoned bank branch just because the location is in a " hot" area without doing their homework beforehand. PWCampbell Executive Vice President James G. Caliendo says two issues -marketing and "build-ability" go into selecting the right location. "From the marketing standpoint never go into any locale without a demographic review of the area. Always keep in mind what demographic profile you most want to attract," said Caliendo. "From the standpoint of build-ability, do not buy a piece of ground until it is researched. Find out such factors as soil conditions; are there natural accesses enter/exit ways to ensure proper stacking; are there any environmental issues to be aware of; and can I economically develop the site and build. It is so much more cost effective to spend upfront to minimize the CU risk and assure success. There are horror stories where a CU buys three-acres of land only to find out that it is only 30% build-able." HBE Facilities Vice President of National Sales Tom Lombardo agrees and adds profitability to the list of considerations in site selection. "All the conditions such as households, age demographics, the competitive landscape should support what the CU wants to achieve in its business model," said Lombardo. "The return on investment is important and if that branch has not at least paid for itself in three to five years then something else needs to be addressed." If a new branch is needed then Seibert suggests that credit unions keep the following questions in mind: * How does this enhance my brand image and drive that image of who we are in strong way to each member? * What is our ROI going to be? * How does it fit in our business model and does that model change what type of branch we should be using in different locations? * How will this new branch enhance performance, retain existing members, develop new memberships, increase profitability while helping reduce long-term costs? [email protected]