Looking for True Branch Success? Then Don't View Branches as an Aggregate

WEST PALM BEACH, Fla. -When it comes to measuring branch performance, individuality counts. “What is amazing is that more often than not individual branch tracking simply isn’t done by a great number of credit unions,” said Paul Seibert, principal of design/build firm Emick, Howard, Seibert. “Usually clients say they would like to but because our overall ROA has increased `the whole branch system seems to be working fine now as it is’. Unfortunately they are missing an opportunity to really vault production forward.” Reasons for not tracking individual branches generally run the gamut from fears that measuring individual branches and holding employees accountable for meeting certain service or product goals would foster a “sales not service” environment to not having the funds to install such a system. Design/build firm PWCampbell EVP/COO James Caliendo says that credit unions with this mentality are making a huge mistake. In addition to effectively gauging a branch’s performance, individual branch tracking can also provide vital information that can be used in other areas from human resources to marketing and business development. “Measuring branch performance today is more an issue of goal setting and credit unions have to do their homework before they even make a move to build a branch,” said Caliendo. “And they have to make sure they have the technology and financial reporting systems in place to separate out their expenses and products including deposits and loans by branch and review it on a monthly basis.” According to Seibert, ongoing individual branch tracking also provides a tangible way to quantify historical spending. For example, while credit unions measure member satisfaction increases what does that positive statement mean in terms of performance and returning to the credit union in terms of enhanced relationships? Seibert says it is something credit unions need to know and analysis of detailed data helps determine if the strategic course needs to be altered. “Being able to identify and market to the types of relationships being developed in some markets and reconfiguring the branch network accordingly is tremendous,” said Seibert. While there is no set branch tracking formula, experts agree that the first step is establishing the kinds of questions that need to be answered and what data is needed to provide answers those questions. Next, determining the proper technology, from CRM and MCIF to accounting and data processing systems, needed to best gather that data. Credit unions should also have a way of measuring individual branch profitability. In addition, credit unions should clean up their household demographic information to accurately represent the number of members that have active accounts and do business with each branch. Seibert says too often members are assigned to the branch of origin rather than the branch of activity and it becomes difficult to accurately analyze each branch’s data. Such hidden productivity elements can be pulled and monitored to tell the true story of member relationships and used to multiply marketing profitability. “Once credit unions start constructing their own measurement matrix they can get the answers they need such as what triggers adding a branch or why a particular branch is not doing as well as expected,” said Seibert. “The measurement system forms a model which can be used to provide a financial analysis of future branches and a more tangible estimation of productivity rather than an aggregate response.” Caliendo says considering the depreciation on the capital of the facility, costs and growth, doing the work upfront and setting up the data collection system also saves credit unions a lot of money and frustration in the long run. “One of the biggest myths is `they just built a Wal-Mart here so our branch should be here too’. It is so important to break down the demographics of the area and based on the market-their age, income, values-and review what financial services are used in that market to determine what facility if any will work in that area,” said Caliendo. “When it comes down to it you can build the best looking facility but you have to know the market and have the right people inside that are going to retain and grow that facility.” [email protected]