In an increasingly competitive industry, multiple touch-points for members provide access, convenience, and a connection with the financial institution. Credit unions have increased their branch footprint by 923 branches year over year for a total of 20,695 as of September 30th. Yet with narrowing margins and an uncertain economy, many credit unions are looking for ways to expand without using large amounts of capital. What are some different ways that credit unions are expanding without the cost of a traditional branch?
America First Credit Union ($4.1B in Ogden , UT ) estimates they see 50% of transactions (in volume) through drive-ups. To counteract traffic build-up with maturing branch locations, they stack drive-up lanes, improving teller efficiency and providing additional bays for members. Yet the credit union also realizes how to effectively consider their market when building new branches. A new urban area branch will not have a drive-up and be in a walkable, downtown area. America First's branching strategy in urban areas includes having branches within two miles of each other. As the credit union's in-store branches mature and reach capacity, they fill in the hubs of the “hub and spoke” approach with retail and traditional branches. Randy Halley, SVP of Branch Delivery at America First, recognizes that in-store branches gain new members, while retail locations and brick and mortars increase member penetration and build deeper relationships.
Shared Branching Networks
Long a credit union staple, shared branching provides additional convenience for the member. As of June 30, 2007, 1,455 credit unions, representing 44% of total industry assets, participate in shared branching. Shared branching provides credit unions with a solution for retaining members when they move or change jobs. Additionally, shared branching shows the true accessibility of credit unions. One of the most common reasons a member starts or ends a credit union relationship is convenience. For example, a Virginia based credit union with four of its own branches actually has 378 locations in the state when shared branches and kiosks are considered.
Service Credit Union ($1.1B in Portsmouth , NH ) used in-store branches to double their footprint in New Hampshire at approximately one-fifth the building and operating costs of a traditional branch. The typical staffing model includes six employees with one manager, on supervisor, and a mix of full-time and part-time full service representatives. The credit unions' tagline “For People on the Move” fits well with its current and planned in-store branching strategy. In-store branches often have the additional convenience of being open on the weekends and holidays, in tandem with the store they are located in.
Delivery channels do not guarantee that your credit union will be successful, yet by providing multiple access points for you to connect with you members, the battle may be a bit easier. As of September 30, 2007 those credit unions that opened at least one branch in the past year experienced 10.5% share growth and 5.4% member growth year over year. The industry as a whole had 5.2% share growth and 1.25% member growth.