LAKE JACKSON, Texas -
That's pretty much the way some credit unions select sites for new branches, claimed Max Villaronga, vice president, retail delivery, at Texas Dow Employees Credit Union (TDECU) here.
"Many credit unions throw a dart at the map or go with a board member's gut feeling," Villaronga explained.
TDECU, however, prefers to take the well-analyzed path, using a predictive modeling tool called WinSITE, Villaronga continued. WinSITE is a collection of mapping capabilities and models offered by Pitney Bowes MapInfo, which provides location intelligence solutions across industries.
"WinSITE models a new location and translates it into a business case for us, such as how long it might take us to break even with a new branch," Villaronga said.
The software can forecast loan and deposit volume as well as pinpoint competitors or cannibalization-areas where the CU might take business away from itself, according to Steve Rymers, senior client manager, Pitney Bowes MapInfo.
WinSITE considers a host of data sets, including consumer behavior and preferences, projected changes in consumer preferences, demand for products and services, demographics, business barriers, capital requirements and operating costs for expansions, consolidations and renovations.
These factors are especially important to larger CUs in metropolitan areas that don't know their communities as well as smaller or rural CUs do, Villaronga said.
"Smaller credit unions can kind of go by gut," he said.
Whereas Texas Dow Employees CU used to make up to 15 physical site visits over a period of "months and months" and scour the Internet for intelligence for new locations, the $1.1-billion CU can now query WinSITE for the data in four days or less, said Villaronga. The CU then only visits sites that the software says are promising.
"MapInfo gives us a quick way to make good locations decisions and shorten the timeline for bringing a retail facility to market," Villaronga said. "With the Internet resources and other branch deployment services, we could only get deposit data and limited mapping features. We couldn't find loan data anywhere."
MapInfo helps take the power out of the hands of real estate brokers, Rymers added.
"Our experience is that real estate brokers will bombard credit unions with possibilities for new sites," Villaronga explained. "Our model allows credit unions to prioritize their best opportunities so they can focus on getting the real estate they should be getting rather than responding to brokers."
WinSITE is an "extremely powerful model," so TDECU only uses the software with proper supervision, Villaronga continued.
"We're on a retainer relationship so that we can lean on MapInfo's expertise," he said. "When we're looking at a new site, we may spend about five hours per week delivering the necessary information to MapInfo. MapInfo then processes the query and gives us the business case."
The 11-branch CU will grow to 13 branches by the end of the year, Villaronga said. Though TDECU had already committed to the two new locations before it partnered with MapInfo 10 months ago, the CU nevertheless queried WinSITE to support its decision and "prepare us for what we should expect in those new locations."
TDECU won't stop at 13 branches, Villaronga said.
"We recently had the opportunity for a free parcel, so MapInfo drew up a one-, two-, and three-square mile model and gave us income demographics and possible loans and deposits, and our CEO liked it. We may draw up a real business case and present it to the board for the 2008 budget."
Villaronga estimated that it costs TDECU anywhere from $400,000 to $1.5 million to build a new branch, depending on the price of the land.
The average CU or bank spends between $2 million and $2.5 million, Rymers said.
For More Resources
Read more about expansion technology and strategies at cujournal.com and search the following bolded terms in the archive:
Beware Of Cannibals: Are CUs Pillaging Their Own Branch Networks? for how to avoid undermining the CU brand.
As Community Charters Grow, So Do Applications For Finding Branch Sites, for more on MapInfo's data and tools.
For more info on this story:
* TDECU, www.tdecu.org
* MapInfo, www.mapinfo.com
