CINCINNATI - With the bursting housing bubble and the IndyMac debacle as a backdrop, investing in branch expansion may appear to be a shaky proposition. But several analysts say those factors could actually open a window of opportunity for credit unions that can brave the temptation to “sit tight.”
“In order to grow, they have to get out into the areas where their members live, not just where they work,” said Arp Trivedi, VP-strategic planning at DEI.
But a new location is not a strong investment unless the business processes are changed, with a high priority on leveraging technology, argues Mike Golebiowski, president of Integrated Bank Technology. “The physical building is there for no other reason [than] to get market recognition. If you are going to make that model successful, you have to invest in technology at the branch level to change the process.”
Golebiowski believes that many credit unions need to make a far greater leap by switching to image teller platforms on thin clients at their branch locations and pumping resources into Web 2.0 applications.
“If you recognize that what it is that is going to get you additional marketshare, organic growth and keeping your members from running off, your only alternative is to invest in technology,” Golebiowski said.
He also encouraged credit unions to keep their eyes on the latest trends in technology, especially those that change actual processes and allow for major changes in data and IT centers.
“What is going to make the facility profitable is innovation that is not yet completed in the marketplace,” said Golebiowski. “Up until now, most of the innovation has been based around the information age. The next five years of innovation are clearly going to be centered on business process change. That’s the only way (financial institutions) are going to increase their margins.”
The cost of investing in new account creation, online banking or related software, and training employees in the new systems, usually has less impact on the bottom line than the salary and benefits of one person, according to Dinesh Sheth, CEO of uMonitor.
Times like these are when leaders step up, Sheth maintains, and making the move on such a low-risk, high-reward investment is an absolute necessity the vendor CEO argued. Failing to do so in this environment “should almost be considered criminal.”
While products such as the company’s uOpen are used by credit unions to provide members with the opportunity to open new accounts without stepping foot in a branch, Sheth observed that “90% of the volume for account opening” with his firm’s products actually does occur at the branch. Opportunities to cross-sell are vitally important to the bottom line, and the best way to improve the prospect of deepening relationships with members so they accept new services is to utilize technology that cuts down on time wasted fetching forms or processing applications and increases face time between employee and member.
“There is so much focus on the online side, and people forget that real opportunities lie in the branch,” said Sheth.
Unless credit unions make technological investments now, before the economy rebounds and they must react to strong growth, “you’re not going to make it,” Golebiowski said. “It is clearly as simple as that.”
For More Information
www.digitalcheck.com
www.deicorp.net
www.ibanktech.net
www.umonitor.com
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