Weekly Update

How CUs are Keeping Branch Banking Alive

(From Credit Union Journal) – With fewer people visiting branches, credit unions are looking for ways to make their locations more relevant.

Members are now completing more transactions online and through mobile devices and visiting branches less frequently. That means branch designs and how employees interact with members need to evolve as well, experts said.

“Mobile channels will take care of transactions, but branch visits will be driven when there is a need for another human being to get involved for deeper-level financial insights, guidance, expertise and coaching,” said James Robert Lay, CEO of Digital Growth Institute, a digital marketing firm.

Branch transactions at banks and credit unions have dropped by more than 45% since 1992, according to Lay. A study by CACI, an information technology company, predicts branch visits will drop to four times per year by 2022.

Members no longer visit branches to complete transactions they can do online and instead stop by for help with more complex issues, such as applying for a loan, opening or closing an account, seeking financial advice or dealing with a problem.

“The world has changed and has been disrupted by mobile convenience,” Winter said. “This is now causing a change in our behavior across all channels of the buying experience.”

Because of that, how branches are designed need to change to better suit these interactions, though some credit unions maybe lagging. Winter said, on average, financial retail institutions are upgrading their branches once every seven years. That may not be soon enough to keep up with current trends.

Additionally, since fewer members are visiting branches, how employees interact with them needs to evolve as well. When members do stop by the branch then the interaction must be “dead on” from an experience standpoint, Winter said. Such interactions need to be more meaningful and consultative.

Summit Credit Union in Madison, Wis., is one credit union that has been at the forefront of revamping its branches. The credit union has created a unique design with lots of windows to make the exterior and interior warm and inviting.

It also recently opened its second “inspiration” branch in Cottage Grove, Wis., that is designed to create an “immersive experience” for its members. The space includes massive models of things like a home under construction or an RV trailer to encourage members to think about pursuing their life’s dream.

The $3.3 billion-asset Summit opened its first inspiration branch six years ago in Fitchburg, Wis., which included a model of a sailboat, a European beach scene, an airplane and a college, among other things.

Jeff Winter, senior vice president of business development at NewGround, a firm that helps design and build new branches, expects visits to financial institutions to fall by 30% between 2017 and 2022, as the options for online and mobile banking continue to rise.

That first branch created a lot of “buzz” and led to increased business because it became a “great draw for community events because of its unique atmosphere,” said Kim Sponem, president and CEO of Summit. Over the last six years, the location has averaged about 11% annually in loan growth, versus less than 3% prior to the new branch opening. Membership has grown at an annual rate of 4% since the branch opened, compared with its previous 0.6%.

Out of Summit’s 38 locations, the Fitchburg branch is now the seventh busiest in terms of transactions, Sponem said.

“People want to be in this space,” Sponem added.

Summit won’t convert all of its branches to the inspiration model since it requires “the right type of structure and space to accommodate the different themes” and to ensure it remains a novelty, Sponem said. But a third location is being considered for an existing location that needs to be remodeled.

Not all credit unions are likely to adopt such a unique branch model but more are turning to other more modern designs. Branches are becoming smaller, which allows for a credit union to improve efficiency and reduce staffing and costs, said Ron Reilly, design director at ReillyDesign, an architectural and interior design collaborator and consulting firm that works with financial institutions.

Reilly said credit unions are also embracing self-service technologies like full service ATMs and ITMs to allow members to choose the channel they prefer to utilize. This also allows members to get help beyond typical “banker hours,” he added.

Credit unions are also adopting more staff-assisted self-service kiosks and universal banker pods.

“Pods also invite members to engage more closely with their service provider and provides better opportunities for a deeper engagement,” Reilly said.

Still, credit unions should cater their branches to their members’ needs, said Tim Klatt, director of planning and real estate at La Macchia Group, which also designs and constructs branches. They need to research how members want to be interacted with, and the environments that appeal to them.