WINNIPEG, Manitoba, Canada-While many credit unions are looking for ways to reduce the size of their branches, Steinbach CU here is wrapping up construction of a massive 42,000 square-foot branch, one of the largest in the entire province.
"It does make a statement when you drive by it," said CEO Glen Freisen.
The C$2.5-billion Steinbach CU is no stranger to large locations-back in 2003, the credit union converted a 35,500 square foot office building into a branch and its headquarters in Steinbach is about 36,000 square feet as well. In fact, despite its large asset size, the credit union has no other branches-only a small handful of standalone drive-through ATMs. Each branch provides the CU's full complement of products and services and includes a large centralized teller services location and dedicated space for all forms of lending from consumer and mortgage loans to agricultural and commercial lending.
Billion Dollar Success Story in Every Branch
"We've had very good success, these are billion-dollar branches," Freisen said, comparing the locations to big-box stores and other one-stop shops. "In many of the small branches that exist you wouldn't get all of those services under one roof."
The newest branch will not have any major back office functions, being solely dedicated to member service, but will feature teller "pods" to replace the traditional queue as well as a live drive-through teller that will be available even when the rest of the branch is closed. Freisen estimated its turnkey cost at about C$15 million and projects the location to break even in about three and a half years.
Even while many large Canadian banks are consolidating their physical footprints into "megabranches," they pale in comparison to the size of any of Steinbach CUs' locations, Freisen admitted, but the model has worked for Steinbach over the years. Prior to its expansion into Winnipeg, Steinbach CU operated out of just one location-the huge headquarters in the town for which it's named. Freisen credited the membership's embracing of electronic channels for the success of the credit union's unique branch model, noting that Steinbach CU boasts the highest percentage of electronic banking adoption in the entire province. The sheer size of the two Winnipeg branches likely catch the eyes of 100,000 motorists who drive by them on major thoroughfares on a daily basis, Freisen added, noting that the city's density and layout enable members anywhere in the city to be no more than a 15-minute drive away from one of the CU's two locations.
E-Channels Don't Deter Need for Big Facilities
And though Steinbach CU members use electronic channels for day-to-day use, those locations get a lot of traffic as the first expansion into Winnipeg ran out of space within five years. The new branch will take on about 25% to 30% of the existing assets at the original Linden Ridge location, giving it more operating capacity and starting the ball rolling at the new space. With 15,000 to 20,000 members in a tight radius around the new location, Freisen is confident it will quickly meet its profitability projections. "The success has been there in the past, and we think this will work," he said.
