The Power of Place

Like many of the physical spaces we frequented before the pandemic began, the credit union branch can be associated with a form of longing – longing for the days when we could enter a public place without wearing a mask, when our only concern about a crowded business was how long the wait might be, and where we could strike up a conversation with a stranger without worrying about stepping too close to them.

While digital tools have done a fine job of allowing us to complete functional tasks without having to go out in public, entering a physical, shared space delivers a sort of magic that can’t be replicated online. Walk inside a business, and the combination of colors, designs, scents and sounds that have been carefully selected for the space will influence the way you perceive that business’s brand. Interact with others, and you’ll have the advantage of interpreting non-verbal cues and body language, build chemistry and develop relationships – all things that are difficult to achieve over a screen. And of course, there won’t be any awkward moments of technology going awry, like frozen screens and dropped connections.

Despite the ramping up of digital banking that’s occurred at credit unions this past year, we’ve learned that the branch channel still isn’t going anywhere. There’s something about having a physical presence in a community that not only can’t be reproduced virtually, but that plays a key role in growth and business development for credit unions.

CU Times has been revisiting the topic of credit union branch evolution annually for the past several years. In 2019, leaders in the industry were talking about how the branch was beginning to look different – no more roped off lines in front of a teller wall, “universal” employees who roamed around an open space wielding tablets and taking a consultative approach to service, and pod-like structures with interactive screens were among the big themes discussed.

Last year, with everything closed, credit unions quickly pivoted to drive-thru and appointment-only models, and saw their digital and self-service investments being put to the ultimate test without warning. Those that had already taken the plunge with tools like ITMs pre-pandemic were thankful they did so while those that didn’t were experiencing some form of regret.

Now, a year into varying levels of business capacity restrictions, we’re reflecting on how the pandemic has shaped the branch channel further – how our circumstances have forced credit union leaders to change the way they think about the branch, as well as how they’ve accelerated some trends that were already in motion pre-pandemic.

I recently spoke with experts from Fiserv, the fintech and core processing giant based in Brookfield, Wis., and Strategic Resource Management (SRM), a Memphis, Tenn.-based consulting firm serving banks and credit unions, about what the future holds for credit union branches and identified these four takeaways:

Credit union branch networks are being rationalized. Bill Handel, vice president of research for Raddon, a Fiserv company, shared that the number of financial institution branches has been declining since 2008, and in 2020, about 60% of them happened among large banks that had generously peppered the maps of metro areas with their locations. Since credit union branches haven’t multiplied at the pace big bank branches have, the absence of foot traffic seen in 2020 didn’t require them to reduce their branch count at the same scale. Instead, credit unions have focused on increasing efficiency throughout their branch network and ensuring it meets the needs of their membership. “Think of it as branch rationalization, not closure – making sure their branches are in the right places,” Handel said.

Branches will look different throughout a single credit union’s network, and there will be an increased focus on self-service. “A big theme will be differentiation and segmentation within the branch network,” Myron Schwarcz, EVP for SRM, said. So a credit union might have one fully-staffed flagship branch where the majority of its members are located that offers everything from basic transactions to financial counseling, several small locations that only house ITMs and a few staff members hired to assist members with the machines, and another subset of branches catered to members who desire a particular experience, such as those seeking financial advice or who are looking to open a new account, he explained. Self-service banking tools will be popular, as well as video – members will not only interact with credit union staff through devices at home, but through screens located inside branches, experts said.

Credit unions will need to continue improving the member experience across channels. Giving members the option of conducting their transactions by phone, text, on a web browser, on a mobile app or in person is crucial to prioritizing convenience for the member, but it also leads to broken member journeys. In a recent survey from Lightico, over 30% of 1,008 participating consumers reported being directed to a physical branch or asked to print, sign and email papers during an online transaction.

Schwarcz explained that credit unions have not been anticipatory enough in their interactions with members – that they are often pushing members to certain channels that aren’t convenient for them and being forced to navigate them on their own. “Going forward, credit unions are advised to anticipate what the members’ needs are and give them solutions, interactions and experiences where and when they want them,” he said.

Community engagement will play a role in branch network strategy. Where a credit union chooses to place branches often tells a story about where it sees the most opportunity for local business partnerships and member growth within a community. For example, while some financial institutions shut down branches located in grocery stores this past year due to dwindling numbers of shoppers, OnPoint Community Credit Union ($7.9 billion, Portland, Ore.) is currently opening 20 new branches inside popular Oregon grocery chain Fred Meyer, demonstrating the credit union’s commitment to partnering with a business that current and prospective members are known to frequent, pandemic or no pandemic. “The credit unions that can be flexible and adapt, proactively look for community partners and continue to cross-sell to existing members are those that will succeed,” Schwarcz noted.

As CU Times continues to follow news of the evolving credit union branch, I’m personally looking forward to seeing more creativity being injected into branch designs. One that comes to mind is an O Bee Credit Union ($421.6 million, Lacey, Wash.) location in Tacoma, Wash., that I visited in 2018, which has a history of serving beer makers and placed decorative beer taps across the teller windows. And I’m loving the look of Michigan Legacy Credit Union’s ($260 million, Wyandotte, Mich.) new retro branch with the ’50s diner layout and jukebox ATM. Branches are not only critical to growth – they’re an opportunity to showcase the personality of a credit union and its members, and allow members and employees to have a little fun. Because let’s face it, once we’re able to walk into a crowded public space worry-free again, that’s what we’re all going to want to do.

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