SAN DIMAS, Calif. — After months of anticipation, the latest significant expansion of nationwide shared branching has come online.

Starting last week, members of credit unions who participate in shared branching have been able to walk into 2,000 7-Eleven stores across the country and have available all the shared branch transactions that they would have had if they had walked into a participating credit union and stood in line for a teller.

In order to use the kiosks the members will have to initially answer some security questions that validate their identity, as well as choose a shared branching personal identification number to use in future transactions, but after this initial session just the use of their ATM card and the PIN will be sufficient to let them in.

“This has been a long time coming but we are just thrilled with what this can mean for all credit unions in the whole country,” said Sarah Canepa Bang, CEO of Financial Services Centers Cooperative, the shared branching network headquartered on the East Coast who put the deal with 7-Eleven and Vcom together.

Even though the arrangement was just between FSCC and 7-Eleven, because of the cooperative nature of shared branching, members of credit unions who are not FSCC member institutions can use the machines as well.

The network first announced the deal in 2006 and has been working since on ironing out the kinks. The final stage was a beta test with nine locations that started in July of this year and has recently completed, Bang said.

A recent trip to a nearby 7-Eleven that has one of the new kiosks to check out whether the reality is able to stand up to the promotion found that it largely can. The kiosk was easy to use and intuitive, starting out not even by asking for the ATM card but rather for the CU's name, which did not need to be typed in but which could be chosen from a series of screens based on the first letters in its name. The security questions were not hard to answer and the one potential difficulty was that the member needed to know their account number in order for the process to move forward.

“We are aware from our experience with shared branching that members do not always know their account numbers,” Bang acknowledged. “But they would need to know their account number at a traditional shared branch as well.”

Bang agreed that the point highlights what may be FSCC's biggest challenge over the coming months, helping shared branching credit unions explain the new machines and educate their members about how to use them. She acknowledged that the look of the machines can be intimidating and that convenience stores can seem an odd place to conduct financial business. But she also noted that that the 7-Eleven convenience stores were hard to beat in terms of convenient locations and the move brings the ability to make easy financial transactions into members' daily lives.

“How many people stop every day at a 7-Eleven to pick up a coffee and a paper or get something else they need?” she asked, “Now they can easily make a loan payment, move money from account to account, deposit a check among several different accounts or whatever else they need to do as part of their daily affairs, without having to make a special trip or anything else.”

Low-Income Advantages

FSCC also said it had picked up on a line of thinking among some of its members that the kiosks may help them better reach out to low-income communities, a development which Bang said she would welcome.

Certainly shared branching will not give credit unions the same kind of impact of having their own standalone branches in a given area, she said, but this will allow them to more easily market their services to people who might not have been able to use the credit union previously, she said.

Bang said that based on FSCC's experience with kiosks the network expected that use of the machines would grow slowly but steadily as more members got used to them and became more familiar with how the technology could help them meet different challenges. Any new technology, she noted, will need to be adapted and put in the context of the users' needs and life, she observed.

The point is notable because there are some who believe the addition of the shared branching locations is not that important.

“It's not significant at all,” said Stan Hollen, CEO of CO-OP Financial Services, the parent CUSO of the nation's other, larger, shared branch network and a competitor of FSCC. “We believe that most people using machines in those areas are going to use them primarily to withdraw cash from their accounts and they can already do that more cheaply through a CO-OP Network ATM.”

Hollen observed that CO-OP already has a relationship with 7-Eleven and already has surcharge-free ATM access available in the same locations. Further, he also said CO-OP expected to be able to take deposits through those machines starting in the first quarter of 2008.

Using a CO-OP surcharge free ATM in those locations, at roughly $.75 per transaction, will be less expensive to the participating CU than having members make withdrawals through the shared branch screen which is going to cost significantly more money, he argued.

But Bang countered that if all a member wanted to do was withdraw funds, he or she would likely choose the ATM option on the machine and not take the shared branch option with its additional accounts and screens. The market for the new shared branch outlets will be members who need to make more detailed transactions, she said.

“We believe the default will be for the easier screen and easier transaction,” she said.

She also clarified that the pricing on using the machines will mirror pricing in place for shared branching generally in that FSCC member CUs whose members use the kiosks will get a roughly 18% discount on the transaction fees just as if their members had walked into another FSCC participating CU.

Likewise CUs who participate in shared branching but who are not FSCC members will pay the same transaction rate, from FSCC's point of view, as if their members walked into an FSCC participating CU to make a shared branching transaction.

“We are not charging any higher fee for these transactions than those at a credit union,” Bang said. “The rules allow other network participants to charge higher fees on their end for out of network transactions,” she added, “but we are not.”

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