There's no doubt that mobile banking has been a game changer in the financial services industry. However, given the amount of reporting done on the topic and the proclamations and predictions made, I can't help but wonder if its impact hasn't been over-stated. With that in mind, I took a close look at the role mobile banking is playing in shaping the future of credit union facilities.
Time for a Makeover
Within two years, mobile banking will likely become the preferred banking channel for consumers for quick transactions and access to basic financial sales and service questions. Yet, it's just one of several channels – online banking, 24/7 call centers, ATMs, in-branch self-service kiosks – that provide members with the ability to bank when, where and how they want. This has resulted in the explosion of electronic transactions; the handling of which is probably the single most important factor driving change in the design and function of credit union facilities. Regardless of how or where a transaction originates, it must be received and processed somewhere to be completed. In the face of the sheer volume of transactions, credit unions are beefing up their back office operations to support the exponential growth. Specifically, the headquarters is evolving into the omni channel epicenter that houses corporate operational functions and serves as a sophisticated retail communications and processing clearing house.
Evolving Role of the Branch
Much of the media coverage surrounding mobile banking has focused on the seemingly imminent demise of the branch. The fact is the branch survived the introduction of various alternate channels prior to mobile banking. Instead of replacing the branch, these channels modified or enhanced the role of the branch adding convenient alternatives to complete transactions. While members certainly demand convenience, they also place a high value on personal visits to a branch to open accounts, solve a problem, handle a complex transaction or seek advice.
Recent research shows that more than 80% of millennials prefer to initiate their relationship with a credit union in person. Even though these young tech savvy members prefer alternate channels now to manage simple transactions, as they mature and their financial dealings become more complex, they too will migrate to the branch for personal assistance.
The bottom line is that branches aren't going to disappear. Members like knowing there is a physical location conveniently located where they can go. It provides them with a sense of security. However, that sentiment has an inherent downside; it can breed complacency. And that is a much more serious threat to branches than mobile banking.
How to counter the threat of complacency? Credit unions need to take a long look at their branch locations. Start with appearance. The external facade and signage should be appealing and draw members in. Once inside, the interior should give off a positive vibe: fresh carpet and paint, modern furniture and lighting. Yes, these minor improvements speak volumes about your commitment to the members and market.
Next, there's the layout. Ideally, it's designed around the member journey and their needs. As they enter the front door, members should be engaged by an enthusiastic employee able to direct and assist them. Also, self-service options should be conveniently located to allow for a quick in and out. Digital displays with dynamic content should replace stale static merchandising.
Technology should permeate the retail space with touch screens, tablets and digital download centers; videoconferencing should allow access to product experts not on site.
Your brand should be pervasive. Each branch should have signature retail elements including signage, colors, retail communications and design elements that convey a consistent image. Too often, there is a brand disconnect, usually in older legacy branches.
How a branch looks and feels are not only critical in attracting and retaining members, it's also critical for staff. There is a direct correlation between a branch's physical appearance and design, and employee morale. Not surprisingly, there is also a direct correlation between employee morale and the quality of member service and satisfaction.
Redefining Convenience
Mobile banking has taken convenience and flexibility to a whole new level. While it is difficult for the branch to compete with a hand-held device for transaction convenience, there is still a vital role the branch plays in providing convenience to the member. Smart executives recognize this and are presently assessing their network's current physical footprint by evaluating existing facilities in terms of location and services offered, and uncovering and filling gaps. Members generally will not travel more than five to 10 minutes to visit a physical branch, therefore careful attention to making physical locations convenient, are essential to building a deeper relationships with members.
As stated upfront, there is no denying that mobile banking is a formidable force that has turned the financial services industry on its ear. It will continue to be a dominant factor going forward. Credit unions' physical environments are changing as a result. The key to success in the future will be redefining the roles for a branch network and back office.
Kevin J. Blair is president/CEO of NewGround.
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