Is The Branch Dead?

Credit unions are adapting to reduced foot traffic and increased mobile usage.


Branch transactions at credit unions are slowing as electronic channels become more popular. In fact, for every 100 mobile interactions, there’s an average decline of 16 branch interactions. That’s according to data released by Bain & Company regarding financial services in 2015.

So, are credit unions reducing their branch footprints in the face of advancing mobile services and decreasing branch foot traffic?

No. Quite the opposite is happening.

The average number of branches across the industry is expanding, and the total number of branches has increased year-over-year.

The average number of branches for all credit unions in the industry increased from three to four in the third quarter of 2016. As shown in the graph above, there is a positive correlation between asset size and average number of branches. Credit unions in the $500 million to $1 billion and credit unions in the more than $1 billion in assets classes increased their average number of branches by 57.1% and 64.3%, respectively, from the first quarter of 2005 to the first quarter of 2017.



The Great Recession had a minimal impact on branch growth across the industry. The total branch count during the financial downturn reached a record-high 21,504 in the third quarter of 2010. Branch count then remained steady until the third quarter of 2012, when the number of branches decreased by 536 quarter-over-quarter and the number of total credit unions decreased by 75.

Since then, branch numbers have hovered around 21,000.   

For the first time since 2005, credit union charters (5,859) outnumber bank charters (5,856) in the first quarter of 2017. Conversely, total institution counts for credit unions declined faster than banks.

The total number of credit unions has declined 35.3% since 2005 versus a decline of 33.7% at banks. This provides a different angle to the branching story. Perhaps credit union merger and acquisition activity is resulting in charter numbers declining faster than active branch numbers, in turn, raising the average number of branches per institution.

In any case, credit unions need to be ready to align their brick-and-mortar branches and overall operations with a future of financial services wherein customers choose mobile and online channels over branch visits. One way a credit union can do this is by establishing their contact centers as omni-channel hubs for customer interactions. Contact centers can be a powerful tool for digital transformation in the new era of financial services.

Bain & Company has highlighted multiple ways to transform contact centers into a mission-critical core of the institution. The company’s suggestions include:

  1. Consider the end-to-end customer experience. Contact centers are distinctly positioned to identify friction and failure points in the digital experience. Callers can provide valuable insights into how credit unions can improve the digital experience.
  2. Actively manage customers’ migration to digital. Contact center agents can help drive digital adoption by prompting members to do more of their routine transactions digitally. As members adopt the digital way, agents can devote more time to supporting complex interactions and advising on higher-value products.
  3. Train and reward agents. Agent scorecards should be less oriented around internal metrics and more aligned with customer outcomes such as call interaction or the Net Promoter Score. The NPS is a proxy for gauging the customer’s overall satisfaction with a company’s product or service and the customer’s loyalty to the brand.
  4. Take advantage of technology. Give members choices for interactions that go beyond phone, email, chat, and social media. Video and co-browsing, for example, provides a richer experience for members.
  5. Be agile. Take feedback from members and bounce ideas off front-line employees to improve and innovate products and services.

Building a dynamic, customer-focused contact center is not an overnight project but can be well worth the investment. As a central pillar of operations, the call center can improve the customer experience and promote the migration to digital for the credit union and its members.

Credit unions might be reducing their branch square footage and converting branches to technological hubs, but the notion that the branch is dead has been exaggerated.  


July 31, 2017


  • This is a very timely article Ian, as the subject of branch strategy, in relationship to technology offerings and the consumer/member relationship is top of mind with the majority of our clients. If there was a specific answer to the question of "what does one do with their branches and their branch network?", the question might be answered with the question of "what purpose do you want your branches to serve?". Digging a little deeper into the unique offerings of a Credit Union, using predictive analytics to validate market demand and understanding the competitive market and local needs, are but a few of the elements that need to researched when planning and designing the physical branch environment. This research of course spills over into the development of the branch network. With banking technology increasingly meeting the majority of the needs of the consumer/member, the branch function itself needs to be spot on in terms of supporting the work of the staff in their efforts to enhance the member relationship. At the end of the day, the physical branch itself is but a tool in the service offerings of a Credit Union and a branch should be viewed as a real estate investment in your retail network. If the investment is not generating the desired return, then a change must be made. With physical transactions continuing to decline, even legacy branch locations are being repositioned and transformed to adjust to market demands, but only when their locations are validated to be relevant to a Credit Union's overall retail strategy. The basic functions of a branch; cash handling, account management, loan origination to name a few, should not limit the performance of a specific location. For example, is an incubator space or community meeting space needed in your market? Why not offer it? Taking time in researching the specific needs of your consumer/member can be an eye opener, and will help to ensure that your branches are relevant and profitable.
    Bob Saunders
  • Bob - very valid points. Think you hit the nail on the head in regards to branching strategy and questions to consider as the dynamics of the market change. Thank you for reading and contributing to the conversation!
    Ian Melhorn