Spurred by a wave of mergers and acquisitions, retail banks are building new branches at a breakneck pace and challenging markets traditionally owned by credit unions. To cut the competition off at the pass and save money on construction, many credit unions are turning more and more to a design/build technique called "component building."
Component building can trim months off the standard branch construction project, often going from conception to completion in 180 days or less. The traditional project is built on the property from the ground up in a year or more. By constructing the core and shell of the building off site in a factory, trucking the components in, assembling the components and applying the finishing touches on site, credit unions save an estimated $40,000 to $80,000.
The "just-add-water" branch is really popular right now because both credit unions and banks feel they need it to compete. However, not all of the credit-union building is a reaction to banks muscling into their markets. At a time when so many national banks are changing brands, long-time customers often become disenchanted with the new look and feel of their traditional financial provider. Those bank customers are back up for grabs, and credit unions can take advantage if they are in the right place at the right time.
Component building gives you that speed to market. By moving your ribbon-cutting up six months, you can get the jump on the competition, which may be building a branch across the street. While they're still wearing hard hats, you're opening up accounts for everyone in the neighborhood.
In addition, the shorter lead time to market can increase a credit union's return-on-investment for a component building project by up to $70,000, based on establishing a relationship with the neighborhood before the competition can. Unlike the standard building project, a component-built branch can often open its doors fewer than four months from the date the building permit is issued.
Beyond the need for speed, credit unions are turning to component building for its reduce-and-control construction costs. Because a component project derives from a pre-set list of award-winning designs, credit unions save on fees to architects, engineers, and contractors.
Cost overruns, typical of any building project, are more unlikely in a component scenario since it has been built before. For example, traditional delays caused by design changes at the subcontractor level disappear.
Custom-built, one-of-a-kind branches will always carry great importance for flagship structures, but many credit union leaders are seeing for the first time how valuable component-built branches can be. Instead of putting all the pressure on their marketing team to push the brand, they are accelerating the credit union's presence on the ground.
Kevin Blair is president of NewGround a design/build branding firm for the financial services industry. He can be reached at 888-613-0001 or visit www.newground.com.
Note: Readers can submit questions to The Credit Union Journal's panel of technology experts by contacting Associate Editor Lisa Freeman at lfreeman
