BIRMINGHAM, Ala. -
"The No. 1 way to grow deposits is through physical branch distribution," said Steven Reider, president of Bancography. "Consumers disproportionately reward those with more branches."
In other words, having twice as many branches doesn't simply mean twice as much business. That's why Reider suggests adopting a concentrated approach to branching. Let's say a credit union has four counties in its field of membership. The logical branching step, then, would be to have one in each county, right? Wrong, Reider said, suggesting a credit union needs to own the space in one area before moving into another, concentrating its branches in one county, first.
"Your members want you to be where they are-their home, their office, the mall, their kids' school," he said. "This is how the most successful retailer has done it. Just take one look at Starbucks, and you've got it."
Concentrating branches in one area also helps a credit union provide a consistent quality of service. "If you've got four branches in one city and then one branch all the way out in another city, and you've got to send a trainer to go work with employees, which branch do you think is the one that gets missed," Reider asked. "And sales training is so important. My company doesn't offer sales training, but I mention it because I am passionate about it. It's that important. Consumers maintain multiple relationships with multiple financial institutions, and over time, they fall into certain beliefs, perceptions and habits."
That works well, when a member needs, say a car loan, and perceives the credit union as a good place to get a car loan. It doesn't work so well if that member doesn't know about anything else the credit union has on tap.
"We've done research into attrition, and consumers frequently leave a financial institution for a particular product or service or feature-and it turns out the institution they left HAS that same thing, but the consumer didn't know it. 'You never told me so I just assumed you didn't have it,' they'll say. If your staff isn't telling them, they don't know it."
