New Concept: Credit Union Pop-Up Branch

Can you imagine opening a branch for $2,300?

That’s what the $104 million, 7,720-member South Bay Credit Union in Redondo Beach, Calif. accomplished by creating a new branch concept that is incredibly inexpensive, of course, and more importantly, introduces the value of credit unions to hundreds of potential members who work under one roof.

It’s called a Pop-up Branch.

All that it requires is a small office space with desks, a couple of laptops and tablets and outgoing staffers willing to dive into the brave new world of a community co-working office space where young professionals are busy weaving their dreams and need a financial partner to make them happen.

The credit union’s pilot pop-up branch is located at Cross Campus, a community co-working office center at Los Angeles’ South Bay. The new branch can process just about any traditional transaction except for accepting and dispensing cash. The California cooperative pays about $1,800 on a month-by-month office lease, and it invested another $500 for miscellaneous improvements to the office space.

“At this site, no one takes cash, even the vending machines don’t take cash. The restaurants off the premises don’t take cash. This is a key FOB environment,” South Bay President/CEO Jennifer Oliver said, who has been staffing the pop-up branch on a part-time basis, along with Cesar Reynoso South Bay’s virtual branch relationship manager and Heather Steele the credit union’s marketing coordinator.

“It makes you realize there are different ways of transactions that occur. By being here and experiencing it, we’re getting a completely different perspective,” she said. “I’m not a millennial, but I’m learning how millennials communicate, what services they need. I’m learning to be a millennial. I’m feeling young again.”

Opening the pop-up branch in the culture of a community co-working office changes the way credit union employees interact with members and potential members.

“What I noticed is when you’re sitting at a branch, people have found you and they want something from you, and that becomes an easier discussion,” she observed. “When you go out and you are part of a culture and not the destination, you get different sets of questions. Where I see our value proposition is, it’s in the financial coaching of individuals. We become a partner of theirs before they become a member.”

For example, interactions South Bay has had with prospective members at Cross Campus show they are not asking about rates, which is something that credit unions obsess about.

“They’re asking how can they improve their credit or they don’t even know what their credit score is,” Oliver said. “They’re asking about the process of going through a mortgage application. So it’s really more of helping them navigate the financial decisions of their lives more so than about getting the best rate or the best deal.”

The idea of the pop-up branch first popped up — pun intended — in the mind of Oliver when she was attending a meeting with her Board Chair, Chris Otey, one of the founders of CU 2.0, a digital consultancy for credit unions and Fintech firms. The meeting was held at Cross Campus where Otey is a member.

“Six or eight months ago, Jennifer had this genius idea of opening a branch here,” Otey recalled. “You have to picture where we’re at. It’s about 350 offices, and about 500 to 600 people working in here from all walks of life. They’re in blockchain, they’re in aerospace, they’re in legal, they’re in entertainment, they’re in video production, but they are all in our field of membership because they all work in the South Bay.”

Oliver indicated she got the idea about the pop-up branch after seeing pop-up stores in her area that have become — believe it or not — a worldwide $50 billion industry, according to PopUp Republic, a Chicago-based marketing support firm that serves pop-up shops.

On busy streets, crowded malls and lifestyle centers throughout the U.S. and the world, retail stores first began popping up in the 1990s. The pop-up stores all had one thing in common; they were only be open for business for only a few days, weeks or months, according to Storefront magazine in New York that covers the pop-up retail industry. Some pop-ups are only open during busy shopping seasons such as Christmas, Halloween, Valentine’s Day, Mother’s Day or the Fourth of July. While many of the pop-up stores are run by local entrepreneurs, some big brands such as FILA, Ikea, Penguin Random House, Leesa and Danone are getting into the action of pop-up shops.

In addition to attracting new customers, building brand awareness and costing far less than a permanent store, pop-up stores apparently sell more merchandise than they sell on line, according to research cited by Storefront magazine.

Whether a pop-up credit union branch will successfully work in a community co-working office is another matter, however, and that’s what South Bay is trying to find out.

Like the estimated 1,643 community co-working centers currently operating across the U.S., Cross Campus provides professionals, start-ups, entrepreneurs, freelancers and small business owners with affordable access to office space and amenities such as conference rooms, meditation rooms,  kitchens, bathrooms, showers and some, like Cross Campus, offer an after-work hours bar that serves beer on tap.

“The whole culture here at Cross Campus and some other shared working facilities like WeWork is that you pay month to month, you don’t need to worry about a long-term lease,” Oliver said. “With that, they give you coffee. They give you concierge. They give you fast Wi-Fi. And you have (24/7) security already built in to the facility. This environment is perfect for this concept of a pop-up branch. We literally walked in with our laptops and started up.”

South Bay’s Pop-up branch startup date was July 15.

The credit union hosted a happy hour to break the ice with Cross Campus members. Perhaps the most valuable benefit of Cross Campus is that it gives credit union employees plenty of opportunities to meet potential members and to develop relationships with them.

“The idea was to come in here and see if we could add as many members as possible to the credit union. But when you come into a spot like this, you can’t come in with signature cards, printer, paper and fax machines,” Otey explained. “You got to come into a spot like this with an iPad. So if someone says I’d like to open an account, a rep can whip out an iPad, ask a couple of questions, take a photo of the person’s ID and boom, you have a new member. That’s the kind of stuff you got to be able to do if you’re going open up in a spot like this.”

For more than four years, South Bay CU has been working on and implementing its digital transformation plan that includes digital, physical and mobile banking elements. Executing on that plan has enabled the California cooperative to transact business from anywhere members and potential nonmembers are.

“The term we use for it is ‘phygtial,’ Otey explained. “It’s a mix of physical and digital.”

He noted that while credit unions will spend millions to open a new branch, they might not invest enough on the digital side of branching. But in order to stay competitive, Otey believes credit unions need to plow sufficient resources into both channels.

“There’s an inherent advantage to being in a digital-first, mobile-first environment like Cross Campus,” he said. “We can use the tools that are provided by the environment we’re in. In this particular community co-working space, they use the Slack app, so we’re able to use Slack to promote our services. Each community workspace will have a different digital presence whether it be Slack or whether it be WhatsApp or whether it be LinkedIn. Whatever they use, we can leverage that to make our presence known.”

South Bay CU intends to run its pilot pop-up branch through the end of the year and evaluate it to determine whether to continue operating pop-up branches at other local community co-working office centers. In the greater Los Angeles area, there are more than 30.

“My guess is, it’ll be successful,” Otey said.

Although South Bay would not share specific performance metrics, Otey said in terms of new accounts and loans generated from the pop-up branch versus the cost that goes out, “we’re covering that.”