Contrary to popular belief, reports of the death of the credit union branch are greatly exaggerated.
Perhaps no one understands this more than the executives at the $1.9 billion Vantage West Credit Union, who are working to open 10 new branches by 2022 throughout the Phoenix, Ariz., metropolitan marketplace, teeming with population growth, business expansions and new jobs.
Richard Paige, director of market and product development, and Andrew Downin, vice president of marketing and communications for Arizona’s third-largest cooperative by assets and second-largest by members, explained why and how they are leveraging a data-driven, submarket branch strategy to serve current members who live in the Phoenix area. They also discussed opportunities for attracting prospective members who are moving in droves to the Valley of the Sun.
The U.S. Census Bureau reported last spring that Maricopa County, where Phoenix is located, saw a population increase of nearly 74,000, the most of any county in the nation, in just one year (2016 to 2017). From its current population of 4.3 million, the county population is expected to hit more than 5.3 million by 2030. What’s more, the Phoenix-Mesa-Scottsdale metropolitan area posted the fourth-largest population gain in the U.S. from 4,648,498 in 2016 to 4,747,270 in 2017. Phoenix is now the fifth-largest city in the nation with a population of 1.6 million.
The area’s thriving technology, biomedical and small manufacturing industries are fueling the current and future population growth trends, according to local media reports and Phoenix’s community and economic development department. Phoenix, nicknamed Silicon Desert, is home to more than 285 technology firms. Just six years ago, there were only 67 technology companies based in Arizona’s largest city.
Vantage West is based in the state’s second largest city, Tucson. Though it has been serving the Phoenix area for 32 years, the credit union operated only two branches there and about a third of the credit union’s 154,732 members live in that area.
“[Phoenix,] Arizona represents close to 80% of all the available deposit relationships. So in our situation, we saw a significant percentage of our membership that we were underserving by not being there,” Paige explained. “And then we saw really strong areas where there are opportunities for growth in specific sub-markets where there are high concentrations of consumers who bear all the markers of those that have a high propensity to buy our deposit products. And when you layer those things together, it begins to tell you where you need to be.”
Vantage West’s research determined the best way to reach those market opportunities is through new branches strategically located in Phoenix’s submarkets.
Although some pundits have declared the branch is dead because young consumers prefer the convenience and speed of online and mobile banking, Vantage West said its research has shown the branch remains valued across all demographic groups.
Paige noted both members and nonmembers do not care about features and benefits unless the financial institution is convenient and is easy to access. However, the No. 1 aspect consumers associate with convenience and access is their physical proximity to a branch.
“The reality is that retail banking is not dead. But what is true is that the utility of the retail space is changing dramatically,” Paige said. “And you no longer need a $7 million, 6,000-square-foot
monument for consumers to know you are there. What you do need is [a branch] that is professional, convenient, easy to access, low-cost and serves as a beach head in specific targeted sub-markets to give people a reason to do business with you.”
Without getting into specific numbers, the 10-branch development project will cost what Vantage West used to spend on just two freestanding branches. In addition, Vantage West plans to lease all locations that will range between 2,200-to-2,500 square feet with simple floor designs.
“That’s the elegant simplicity of what we’ve developed. We are not trying to over-invest in
speculative technology for the purpose of trying to appear to be innovative,” Paige said. “What we are doing is deploying low-cost, proven technology that drives a level of engagement between our staff and the member when they want to come in and meet with us. We’re interested in making the process of doing what the member needs so simple for our staff so that their only focus is engaging with that member because that’s why the member is there. It’s pretty simple, no frills, nothing fancy, just convenience, ease of access and accuracy to drive a personal level of engagement when people walk in … and to provide whatever service they need.”
Opening the new branches in sub-markets throughout the Phoenix area may also yield an advantage by enabling the credit union to produce and measure the effectiveness of targeted marketing messages in those submarkets.
Vantage West’s goal is to become the No. 1 banking option for members and potential members who live within a 15-minute or less drive from any submarket branch in Phoenix.
Downin said Vantage West will leverage brand-focused marketing messages that will be delivered through geographic social media channels. The credit union is also looking to promote its brand on streaming television services such as Hulu and Netflix, which is reportedly testing “ad breaks” for its original content.
“We need to let them know who we are first and why they should even care before we offer them an incentive on a checking account, a credit card or other product,” Downin said. “We have to compel them to give us a chance, and that’s easily done in a very focused way through social media and digital media.”
Vantage West is collaborating with an online research firm to measure the effectiveness of the brand marketing messages by gauging the extent of awareness of the credit union among consumers who live near the new branches.
The credit union also plans to measure consumer attitudes about Vantage West.
“If they are aware of us, we want to know what they think about us. Are there any preconceived assumptions about who we are and what we’re doing in the community?” Downin explained. “And ultimately [we’ll want to measure] if they’re walking through the doors [of the new branches] to open up a new account.”
The brand marketing campaign will be followed by digital marketing projects that will use demographic data to target market the credit union’s products and services.
“Leading with brand has been a success for us,” Downin said. “We actually had better checking conversion rates when we presented the brand message first and then the checking [product] message, versus going out there with ‘Hey, we’ll throw cash in your lap if you get a checking account with us.’”
Downin noted the credit union plans to measure its marketing metrics on a weekly basis in order to adjust and improve the marketing plan for every new branch.