ST. LOUIS-Credit unions should avoid closing branches and find other ways to rein in their costs because they could end up paying for the negative message branch closures send members, say several industry experts.
Delaying future expansion plans, making small investments in existing facilities to improve branch performance and looking to future prospects should all help make today's bottom line look better - all better alternatives to shuttering branches. In fact, one expert said, the best time to close branches is when things are good, not bad.
"That should have been done when times are good and when the market would not have noticed it as much," said NewGround CEO Kevin Blair. "This industry, specifically in retail delivery, requires a long-term vision. You can't align a short-term operational focus with long-term vision. They are contrary to each other." As big banks consolidate and continue to lose strength in the market, credit unions will still be afforded one of the best opportunities to expand that they will ever see, Blair pointed out. But closing down branches, even if it is simply to reorganize the marketplace, sends a traumatic message to an already shellshocked public. Competition, even from other local credit unions, will seize upon the closure news and leverage it to their advantage.
"Today when I close a branch the first thing the public is going to do is think something is wrong. It's better to buckle down and become more efficient with what you have got," Blair urged.
DEI VP-strategic planning Arp Trivedi suggested cutting hours at some facilities to pare back operating and compensation expenses. For CUs that can afford to do so, he also urged credit unions to make re-branding investments that could attract more business and to closely examine staff to ensure the right personnel - those that can help capture additional wallet share - are on the front line.
Blair noted CUs biggest competitors may be pulling back on their expansion plans but are still putting a "heavy focus on the revitalizing and refurbishing of existing branches." Of the top 10 banks in the country, two-thirds of them have initiatives in place for upgrading their branch networks. An investment as little as $25,000 to $50,000 can go a long way to boosting the bottom line now and positioning the CU for future growth, he contended.
"The mindset out there is that we're going to improve performance by cutting costs. The opposite side of that is improving the bottom line by improving performance. We think it is a smarter direction to say, 'How can we strategically improve revenue rather than cutting costs?'" Blair added. "It's those institutions that make those tough decisions that are the ones that are going to come out ahead of the pack in the long run."
