Physical Branch, Digital Service

Some credit unions debate heavily whether to prioritize brick-and-mortar branches or digital offerings. Affinity Plus Federal Credit Union ($4.2B, St. Paul, MN) weighs the two equally.

Like most credit unions, member experience is front and center at Affinity Plus. The cooperative’s 2024 strategy map emphasizes increased engagement with new and existing members, as well as easy-access banking across multiple channels and personalized offerings driven by analytics.

Branching is key to that member experience, and Affinity Plus continues to invest heavily in brick and mortar, opening one new branch per year for the past four years to bring its total to 30 branches at midyear. Whether it’s facilities in underserved communities or branches on college campuses, those locations are a major driver of growth for the credit union. When considering new location opportunities, leadership considers a variety of factors related to successful branches, including an area’s demographics, where existing members live, and commonalities with other locations that have proven successful.

“There’s no one magic formula,” says Brian Volkmann, chief financial officer at Affinity Plus. “It’s a bit of art and science combined.”

Because Affinity Plus has such a wide reach, it also views physical locations as a marketing opportunity to increase brand awareness. Although some members don’t actually use the branch, they still like seeing it in the community as a sign the credit union they trust is available if they need something, Volkmann says.

An aggressive branching strategy has been key to expanding how Affinity Plus reaches underserved communities. After multiple factors — including the pandemic and the aftermath of the riots following George Floyd’s murder by police in 2020 — forced the credit union to close a branch near the state capitol in St. Paul, leadership saw an opportunity to open a new location in 2023 in Minneapolis’s Midway neighborhood, which historically has not had access to banking services. Similarly, a 2022 merger with White Earth FCU — which primarily served native Americans in the Northern Minnesota city of Mahnomen, population 1,702 — expanded Affinity Plus’s footprint in some of the state’s further reaches. Even better, a White Earth employee took over the branch after the merger and enthusiastically represents the credit union with existing members and the wider community there.

CEO Dave Larson says Affinity Plus looks for “credit union towns,” where communities are still tight-knit and viable but banks have closed their branches. New Hope, MN — a Minneapolis suburb with a population of almost 22,000, where the credit union opened a new branch in 2017 — offers a perfect example.

“When we were at the grand opening, the mayor of New Hope said we were the first financial institution to come into that community in 15 years,” Larson says. “Too often, it’s just, ‘What does the data tell you? Where are the fastest-growing areas?’ We find they’re often over-saturated with financial institutions, so we’ve taken a different approach in the communities we serve.”

The new branches are smaller — less than 2,000 square feet with a single teller pod, a small lobby, and two offices — but they play an important role in membership growth. Affinity Plus has averaged approximately 6% annual member growth for many years, and people walking through the doors of the branch network account for 70% of the new memberships.

High Touch, High-Tech

Of course, branches alone aren’t enough in the 21st century. That’s why Affinity Plus also invests in its digital services to meet modern consumer banking expectations. The credit union launched a mobile banking app in 2018 with 15,628 users; by summer 2024, adoption had grown by more than 1,000% to nearly 175,000 users — that’s approximately 65% of its total membership.

Affinity Plus also replaced a whopping eight technology systems — including its core banking platform — between 2016 and 2018 and created a user experience team of UX researchers, designers, and writers all focused on “human-centered design” principles for webpages and app screens. The team receives feedback from branches and app stores as well as direct user testing.

“One of the most eye-opening experiences was meeting with one of our visually impaired members and having [team members] actually look at them using our app and notice how difficult it was for them to navigate,” says Maha Brauch, director of digital services. “We worked with our mobile app vendor to make accessibility improvements to greatly enhance their experience.”

More recently, Affinity Plus invested in an AI virtual assistant that employees named Addy as part of a companywide contest. And, along with USAlliance FCU, Service Credit Union, and others, Affinity Plus was a lead investor in Dora, a credit union-backed fintech that provides multi-lingual services for un- and under-banked consumers.

To foster relationships with younger members and teach good financial habits, Affinity Plus rolled out a youth banking app and has added a series of TikTok-inspired videos with a teenage presenter discussing smart money habits and banking concepts. Although only 300 young people are using the new app, approximately 72% of sessions have high engagement — meaning the child finishes a household chore connected with the app, requests money, or watches a video. About four in 10 youths watch at least one video per session, and nearly half of those watch a second video.

Investments in digital tools to improve members’ lives have been crucial to the credit union’s success, but staff members also need the right technology. To that end, Affinity Plus has implemented robotic process automation to speed up or eliminate routine, repeatable tasks at the office, linking back to the strategy map’s focus on operational effectiveness and using strong IT and automation to drive efficiency.

“We’re trying to continually have our employees working on things that make a bigger difference and removing some of those things they probably don’t enjoy doing every day, anyway,” Volkmann says. “It’s kind of a win-win.”

Additional reporting by E.C. Harrison.