The Fall of the Teller Wall: Branch Service Enters a New Era

We’re currently living in what you might call a “heyday for homebodies” – as technology becomes more advanced, there are fewer reasons to go outside of our residences. Consumers want to help themselves, whether by ordering everyday household items online or using a self-check-in kiosk at the airport. And it’s no different in the financial services industry, where consumer-facing technology has made it simple to apply for loans and complete transactions without leaving the couch.

It’s natural to assume that this digital shift means brick-and-mortar credit union branches are soon destined to shutter just like a sad old Sears store. But that is not the case.

At CU Times, press releases continue to flow in announcing new and redesigned credit union branches. And some hard facts recently came out to quiet skeptics of the branch’s longevity: An ATM Marketplace study, “Branch Transformation for Financial Institutions: In an Industry Guide,” which is based on a summer 2018 survey of 150 financial institutions worldwide, 71% of respondents said their branch strategy in the next three years is to “modernize/transform branch design,” while only 21% selected “close branches.” When asked specifically if they planned to close branches in the next three years, 57% of participants said no.

Credit union branches aren’t closing – they’re evolving. They’re becoming smaller, being redesigned to feel more warm and welcoming for the member, incorporating more elements of self-service technology and being staffed by employees who are trained to deliver a flawless, end-to-end member experience. The transformation of credit union retail spaces is such a prominent trend in the industry that we decided to center this week’s print issue around Branch Evolution – a new Focus Report topic this year for CU Times.

I’ve had the opportunity to witness the branch evolution of one Pacific Northwest credit union, the $1.1 billion iQ Credit Union of Vancouver, Wash., up close. About two years ago, iQ expanded south of the Columbia River, which divides Washington State and Oregon, into the Portland area with a new branch boasting a new look in the city’s North Williams neighborhood. The branch, which I visited when it was still under construction and soon after it opened, is about half the size of iQ’s original locations and has an open floor plan in lieu of a teller wall. Employees are trained to assist members individually from the moment they enter the branch to when they leave, so as not to disrupt their experience by handing them off to someone else.

A few weeks ago, I visited another under-construction iQ branch in Portland’s St. Johns neighborhood, which also features this modern design. This one will include a large sliding glass door that opens to an outward-facing, bar-style seating area, plus a courtyard where the credit union can host events during the summer months.

In a post-visit interview, iQ SVP of Retail Delivery Ali Migaki described how the new branch size, design and service strategy has led to more personalized member service and consistent member growth (over 6% in 2018), helped iQ save on operational costs and even made branch employees feel more valued thanks to their expanded knowledge and roles. She said the most common reasons for branch visits today are to open a new membership, discuss major financial moves that will impact the member’s life, and pick up a new payment card after a fraud incident instead of waiting for one in the mail. “When the member has already gone through a traumatic fraud event and is getting back on their feet, we’re able to put a card in their hands right away – that’s the best kind of service we can provide,” Migaki said.

Establishing a brick-and-mortar presence can also open doors to strong neighborhood connections. In St. Johns, iQ staff have already been attending business and neighborhood association meetings, will participate in the St. Johns parade and farmer’s markets, and are meeting with local businesses to determine their community service needs (each year, iQ employees are asked to spend one full work day serving the community). For iQ, the sales of business banking services is not the goal of neighborhood outreach, although it can be an added benefit. “We’re here for the community and we want to invest in them,” Migaki emphasized.

The branch is here to stay, but so is digital banking, and it’s critical that credit unions connect the two channels seamlessly, as I learned in a separate interview with Kari Anne Arnosk, principal consultant for PSCU’s Advisors Plus. That means understanding what the member journey looks like as they navigate your credit union’s various touchpoints step by step, and eliminating any points of friction by, for example, making your website more user-friendly, improving contact center employee-member communication and ensuring all branch employees are well-versed in your digital channels. “Everyone should take a look from the inside out and perfect that continuously, because once the word gets out that it’s easy to do business with you, you’ll have that competitive advantage,” Arnosk recommended.

Arnosk and Migaki both called the branch of today – and the future – more “consultative” and focused on deepening the member relationship. Arnosk noted the branch still truly represents the credit union’s brand, and sees the modern branch as a hang-out spot where members can find a sense of community – a place that’s more about the experience than the transaction. And both executives agreed members will continue to use multiple banking channels and expect the ability to move between them with ease. “The bottom line is giving your members choices for how they want to interact with you,” Arnosk said.

I don’t know about you, but even as computers do more of our work for us, the thought of a credit union industry void of human interaction is a pretty lonely one. Our motto is “people helping people” after all, not “machines helping people,” so let’s keep our investments in real, live staff top of mind.

Natasha Chilingerian is managing editor for CU Times. She can be reached at nchilingerian@cutimes.com.