Branches Are Here to Stay, But the Tree Is Now Digital

With 85% of Americans now using a mobile device to check their bank balance, branches are clearly being used less for daily interactions. However, with some credit unions actually opening new branches, the question about branch strategy still looms large. Here, we’ll discuss why some credit unions are reducing branches while others, like Navy Federal Credit Union, are actually expanding.

In addition, we will look at how a hybrid branch that places an emphasis on consulting-type roles, such as mortgages or investment transactions, is what credit unions should be considering for the future of the branch.

Are Branch Closures the Norm? Not for Many CUs

Last year, 2,927 bank branches closed their doors. Concerns about the transmission of the coronavirus, branch closures and a switch to remote communication meant bank customers grew accustomed to digital banking as the default. And banks grew accustomed to the cost savings associated with the switch.

Like most financial institutions, Navy Federal began to de-emphasize its branches at the height of the coronavirus crisis. But now that we are solidly in the “new normal” phase of the pandemic, the credit union decided to change course and open additional branches close to its members.

What’s going on here? Despite banks and credit unions sharing a common mission of taking care of their customers’ or members’ financial needs, the similarities end there. Credit union members expect additional support and personalized services. They are united by a common criteria, by which they were accepted as members in the first place. In the case of Navy Federal, like many other credit unions, the criteria is living in a certain geographic location. The ability for members to stop by their credit union whenever they need or want to is a critical added value, allowing employees to really get to know members – and therefore, provide tailored help.

But not all credit union services require members to visit a branch. Many tasks are better served digitally – just not all. We need to parse it out.

Sometimes, Only In-Branch Will Do

When credit union members onboard, it’s best to offer a memorable in-person onboarding experience – not because of technical or compliance limitations, but because it’s the ideal way to give members a warm welcome. During that first visit, staff can introduce themselves and get to know their new member.

When it comes to high-stakes, complex or sensitive issues, nothing beats a visit to a trusted credit union advisor. For example, taking out a mortgage is rarely straightforward and often stressful for members. Sitting face-to-face with that familiar advisor can be stress-reducing and more conducive to creative problem-solving.

Similarly, setting up a foolproof investment strategy based on the member’s financial goals may be better handled from within the branch.

Of course, in all these cases where in-branch service provides real added value, it should always be presented to the member as a choice. A member should rarely, if ever, be forced to show up at a branch. And when they choose not to, a strong digital alternative should always exist.

When Digital Is Best

Once the credit union/member relationship is established and trust is there, most members will prefer to manage their day-to-day finances digitally. It’s important that the same digital service be offered on both desktop and mobile so members can benefit from a unified and predictable experience.

From working with different financial institutions, I’ve found that the following transactions are best served remotely and digitally (either through self-service or with an agent guiding over the phone):

• Applying for personal loans and student loans
• Taking out a line of credit
• Updating name, address or other personal details
• Filing a dispute
• Reporting a lost or stolen credit card
• Consenting to terms and conditions
• Completing SCRA processes
• Transferring accounts and dealing with assumptions

All of these services and many others have a straightforward procedure, and do not require complex discussions or nuanced advice. In the event that they do, the credit union should still maintain a branch that can handle them. But it needn’t be the default as long as the credit union has a customer-facing technological platform in place that can provide a frictionless member journey.

A Hybrid Future

As credit unions debate the role of their branches, and how to balance in-person services with digital experiences, the member’s needs of the moment should always be kept top of mind. Each interaction is unique, and the circumstances determine whether a member is better served in-person or remotely.

In many cases, digital has supplanted in-person – and with good reason. But a hybrid branch/digital model can ensure members get access to the best of both worlds, and always feel the credit union is equipped to anticipate their needs.

Gilad Komorov is Chief Revenue Officer at Lightico, a provider of a digital customer interaction platform based in New York City.