ATLANTA - Each uptick in the price of gas will only reinforce the value of conveniently located branches, and could have some unforeseen consequences on other facilities, according to one analyst.
“Oil prices may have gone up so far so fast that the consumer reaction may still be in its formative stage,” said John Hyche, principal-strategic planning with LEVEL 5 here. “I think it’s easily conceivable that consumers will begin combining trips to save gas. No more ‘running up to the credit union’ to drop off that deposit or get cash from the ATM.”
Hyche said that those trips will most likely be combined with other errands, in order to save gas, putting a premium on convenient locations near other retail destinations.
One off-shoot of rising energy prices, observed Hyche, may be seen in other ways in the real estate market.
“In many markets, suburban sprawl has been enabled by relatively low gas prices,” he said. “This may polarize real estate values to some extent, putting premiums on property near consolidated centers of employment and retail and marginalizing values for properties that are more remote.”
Therefore if CUs intend to grow and expand their membership, they will be confronted with the need to pay premiums for the locations that consumers prefer, Hyche said. “This is true already, but may be amplified by higher gas prices.”
The Need To Visit
Hyche said that although member demand for branches is unlikely to wane, members will still “want branches on their terms.” “Most often, that means convenient locations, full-service amenities, and generous hours. There may be a decline in branch visits but that is unlikely to be significant. Most people visit the branch because they need to, although there is a very small group of folks who engage in recreational banking–visiting the branch to see friends and colleagues and making an event of the trip.”
Hyche said that it’s important for credit unions to realize that most new account relationships still are established at the branch, versus remote channels, meaning better leverage on the investment in branches. “This will require facilities that are conducive to a service and sales culture–and more importantly, a staff that is trained to make the most of every encounter.”(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
