NCUA Endorses Shared Branching; Says it's More Than Just a Disaster Relief Tool

ALEXANDRIA, Va. – NCUA has stepped up its endorsement of shared branching, urging credit unions on a recent visit to legislators to begin looking into shared branch networks. “Even credit unions that think they just serve their local communities can be saved by shared branching,” explained Holly Herman, chief of staff to NCUA Chairman JoAnn Johnson, to credit union executives and directors participating in a recent Hike The Hill lobbying visit. “There are definitely situations where it can come to the rescue. Some credit unions may not have ever thought they would use shared branching in their business model.” On their final day in the D.C.-area, the group of CU supporters from Minnesota met with Herman. Herman brought up the shared branching role in disaster recovery, a topic Johnson had only touched upon before. The impacts of Hurricanes Katrina and Rita have helped both draw attention to, and overcome, some of the most common misconceptions about shared branching, a Minnesota executive explained. Peter Skaalen, COO of the Minnesota Credit Union Network, explained shared branching helps Minnesota credit unions learn about and utilize shared branching services. “It is a common misconception that by allowing members to be served at service centers around the country (some operated by other participating credit unions), they will lose members to those credit unions. This has not been the case,” Skaalen said. “In fact, there are rules that forbid participating credit unions from soliciting each others members.” The shared branching network has grown tremendously from just 318 service centers in 1999. “Today, there are over 1,900,” he said. “Most data processors and service bureaus have software available, and service start-up is easy.” Many consumers may not use credit unions as their primary financial institution because they don’t feel they are as convenient as the mega-banks of the world, who seemingly have branch locations and ATMs on every corner. But with shared branching, credit unions can be just as convenient, if not more, MCUN said. Meanwhile, another credit union in New Orleans is relating how shared branching has helped its members stay connected to their credit union. The $101 million RiverLand Credit Union is headquartered in the storm-ravaged Superdome. After the storm it found its members relocated throughout the mid-South region and without an ability to contact their credit union. “After the hurricane, we called CO-OP Network and their subsidiary SCC (Service Centers Corporation) and learned that establishing a temporary Jackson branch would cost much more than partnering with SCC, which already has several shared branch outlets there,” says RiverLand CEO Carol Irby. “Besides, with many of our members relocated across the country, we could quickly gain access to an additional 1,900 branches through SCC’s national shared branch network.” Irby added that in spite of all the available electronic account access, people still like brick and mortar branches, so shared branching allows us to provide our members with personalized access to their accounts across the U.S. After being relocated to Houston for a few weeks, Irby and her RiverLand staff returned to New Orleans to find that all employees had some degree of damage to their houses and five employees had completely lost their homes. They’d made contingency plans prior to Katrina and had gone through mock disaster drills, but, according to Irby, “nothing could have prepared us for when we returned.” “It was eerie,” she said. “Downtown was essentially closed and there was complete havoc everywhere. Amazingly, though, our office was unscathed – no water, no damage. We’re open again, but it will be months before there’s any normality.” An example of the abnormality is New Orleans’ mail service. Because the local post office was completely flooded, RiverLand only began receiving mail last week. However, in the seven weeks since the hurricane, many members continued their usual bank-by-mail habits with the credit union, like sending deposits and making payments, unaware there was nowhere for the mail to go. “Despite all of our preliminary planning, Katrina caused some unexpected challenges for the city and people of New Orleans as well as our credit union, but everything will be fine,” said Irby. “I deeply appreciate CO-OP Network and SCC stepping in to help, bringing a small degree of order to the lives of our members.” -