Transforming Spaces to Meet Evolving Member Needs

A well-designed credit union branch can certainly evoke awe among visitors, but investing in brick and mortar is about much more than aesthetics. The physical branch impacts brand development, member growth and loyalty, operational efficiency and revenue – and more credit unions are finding that to stay competitive, they must deliver exceptional in-person experiences that demonstrate their ability to stay on top of cutting-edge technology while continuing to provide the personal touch they’re known for.

One recent example of the industry’s effort to upgrade its spaces is a partnership between LEVERAGE (the League of Southeastern Credit Unions’ for-profit service corporation) and The Element Group, a Portsmouth, N.H.-based firm that designs and implements retail branches and headquarters facilities for financial institutions. As a result of the partnership, credit unions nationwide can work with LEVERAGE’s business development consultants and Element to bring their branch modernization visions to life.

Mary Jaap, LEVERAGE’s ­director of product development, said LEVERAGE identified a need for credit unions to transform their branches due to shifting member expectations, and was impressed by Element’s ability to seamlessly pair the physical branch with digital channels for credit unions of all sizes.

“The advancement of technology and growing member expectations makes being proactive in aligning digital services and physical spaces helpful in providing member service now and in the future,” Jaap said.

According to Element Co-Founder Nate Baldasaro, nearly everything about the credit union branch looks different compared to 20 years ago, when credit unions typically vied for large corner lots with ample parking space, where they could build 3,000- to 5,000-square-foot branches containing the traditional wall of teller windows. Now, teller walls have been replaced with inviting teller pods and branch sizes have shrunk overall. This has opened up opportunities for credit unions to present themselves in a variety of high-traffic areas, with smaller locations being cheaper and more abundant, he pointed out.

However, credit unions have been challenged to make their reduced square footage work – hence why many of them look to design firms for their expertise. In designing a branch, key considerations include enabling retail employees to work the space in a manner that lets them easily provide top-notch service, in addition to pairing great technology with great human capital – the latter of which represents a competitive advantage for credit unions over banks, Baldasaro said.

“The big banks want to move everything to technology, and eventually they’ll eliminate locations and force customers to do business the way they want to do it. So credit unions are saying, ‘You know what, we have great technology too, whether it’s ITMs, smart ITMs or video banking, but the big difference is we’re going to have member specialists there to help you on your financial journey,’” he said.

Baldasaro added, “What credit unions need help with is how can they take their brand, while understanding that the need for space has been downsized, and put those things together so that they work harmoniously within the organization. The good news is credit unions have a smaller footprint in most cases, so they can implement things more quickly than the big, big organizations.”

Some current retail branch trends include installing self-service modules such as ITMs, and carving out minimal space for transactions and reserving the rest for things like financial counseling and community events, according to Baldasaro.

Element Executive Director of Sales and Marketing Marc Healy, a 20-year credit union industry veteran who previously held leadership roles at BECU ($30 billion, Tukwila, Wash.) and Desert Financial Credit Union ($8.2 billion, Phoenix), noted that many banks closed their in-store branches when the pandemic began, which opened new doors for credit unions.

“The large banks pulled out of grocery stores as a way for FTE [full-time-equivalent employee] savings, because they had a full-service branch right on the street corner or out in the parking lot,” Healy said.

He gave one Oregon credit union’s post-pandemic move into 20 locations of a local grocery chain as an example. “Why did they do that? Because it was a very cost-effective entry point into new markets, and they were able to expand their presence – not only to service their existing members, but it was literally an acquisition strategy.”

Element recently completed a branch transformation project for the $2.2 billion, Honolulu-based Hawaii State Federal Credit Union, which currently operates 12 branches on the Hawaiian islands. During the design process, Hawaii State staff met with Element at its Portsmouth headquarters to test potential configurations using true-to-size foam core models and virtual reality headsets to ensure their new branch layouts would work – all the way down to the square inch. Baldasaro noted that in smaller branches (as tight as 250 square feet in Hawaii State’s case), there is little room for error.

Hawaii State built a new standalone location in Honolulu reflecting the new design in 2019, and opened its first of four new in-store branches in a Honolulu Safeway in July 2021. Key elements of the transformed Hawaii State branches included ITMs with palm vein authentication technology; digital “touch tables” – giant tablets that double as tabletops and allow members to browse credit union offerings; a digital check-in system for members entering a branch; private consultation rooms; and a fresh design palate featuring wood panels and a bold red hue.

The transformation helped position Hawaii State as a leader in branch technology and member service on the islands; in addition, its branch network overhaul, including its move into Safeway, led to expanded hours and more selling opportunities, according to the Element executives.

“Culturally in Hawaii, they are very transaction-oriented,” Healy said. “So if you think of the credit union industry as moving slow, [Hawaii credit unions] move very slow. But [Hawaii State] moved to ITM technology, looked at it from a member’s point of view, and became very consultative in nature instead of routine transaction-based. And the skillset of the personnel they were looking to hire wasn’t about cash handling, but, how can I talk to people? How can I find solutions for members when they may not even know they have a problem?”

Over on the mainland U.S., one credit union that has been performing a major upgrade to its branch network is the $952 million, Austin, Texas-based Greater Texas Credit Union. Greater Texas also operates subsidiary Aggieland Credit Union to serve members in Texas’ Brazos Valley, which includes College Station, the home of Texas A&M University.

In the last five years, Greater Texas has built three new branches, completed one branch renovation and currently has three locations under renovation with others in the planning phase, according to COO Jason Goodman. In addition, the credit union completed the planning, design and construction of a 50,575-square-foot headquarters amid the pandemic; the new facility opened in December 2021. Goodman said Greater Texas worked with the St. Louis-based architecture, design and project management firm NewGround for the new headquarters and a new branch in Arlington, Texas that opened in October 2019.

The credit union’s latest branch renovation phase began in 2016 and required the addition of new positions. Goodman said the three in-progress renovations – in Edinburg, College Station and Bastrop, Texas – are expected to be completed by the end of 2022’s first quarter. “Like many businesses we have seen challenges with suppliers, staffing and shipment delays, but our team and members have been great in working through the challenges and look forward to the refreshed experience,” he noted.

Features of the new Greater Texas branches included updated fixtures and furnishings, and digital displays and design elements that reinforced its brand. “We also looked at how the experience in a branch can be impacted by the physical layout,” Goodman added. “In some locations we removed dated remote teller stations, and where we could we de-emphasized the teller line altogether to nurture more consultative approaches. We incorporated visual design elements relevant to the local communities and listened to our team members about challenges with previous layouts.”

When asked why the physical branch is still important despite the rise of digital banking, especially during the pandemic, Goodman noted the branch represents the foundational relationship between the credit union and its members.

“Members look for branches to be solution centers with a human touch,” he said. “While the transactions have changed, the opportunity for interaction is still important. Digital convenience and self-service are not the adversaries of branches; they instead serve as a complement to each other.”

What’s more, a branch not only places a credit union into a community physically, but offers a credit union an opportunity to strengthen members’ connections to their communities, Element’s Baldasaro explained.

“If I have an in-store credit union branch and people are coming into the grocery store, if they don’t have to do banking, why would they ever step foot in here? Well, imagine if I had the ability to go to local businesses within a mile or two of the branch and say, we would like to offer our members additional savings at your pizza place, supermarket or drycleaner, and the only place they can get them is to go into our branch, go to the touchscreen and download a two-for-one shirt savings at the drycleaner or whatever it is,” he said, noting that those types of business partnerships can lead to member loyalty. “It’s not just the fact that, hey, these are nice people, they’re educating me and I like them, their products are competitive and their technology is competitive, but now they’re showing me that if I’m putting my money into this organization, it might be going right back into my neighborhood, which is wonderful.”