SAN ANTONIO — Credit union branches are less likely to be a "destination" for members, so the key is to be where the members already are. That's why progressive CUs are exploring and expanding in-store branch opportunities.
"Members are visiting branches less, but the vast majority still go to their grocery store two or three times per week," said Paul Seibert, vice president of financial design at the Seattle-based firm, EHS Design. "Grocery stores or mega stores are a physical point of contact that will remain important to consumers."
Seibert explained that the firm has designed more than 85 in-store branches for both credit unions and banks, which are typically a hybrid of advanced branch prototypes created for specific and general market application. "A highly trafficked grocery story can drive 20,000 to 30,000 shoppers past a credit union branch per month and significantly help build business."
It is for similar reasons — mainly convenience and changing member banking behavior — that Generations Federal Credit Union began a partnership with the San Antonio-based supermarket chain, H-E-B, in 2011. "H-E-B expressed their interest in partnering with the credit union, which allowed us to evaluate and choose those branches that would prove most profitable and align with our overall growth strategy," said Generations FCU Retail Manager Tanya Conway. "H-E-B is an established, reputable and profitable retail store with brand recognition that would lend to greater exposure and an expanded footprint for the credit union."
With 49,000 members in 12 branches, the $519 million credit union is in the process of building two new in-store branches slated for a June opening. This will bring the total of H-E-B in-store branch locations to seven, explained Conway.
"Each location was chosen based on its alignment with the credit union's branch expansion strategy. Opening these branches has allowed the credit union to continue to expand our footprint in our chartered area, Bexar County, and establish a presence in areas that the credit union currently did not have a full-service location," said Conway.
Part of this strategy includes offering convenient locations to its members. An ancillary benefit has been foregoing the higher expenses associated with building new traditional stand-alone branches. However, CIO Wes Barnett noted, some hurdles exist.
"One of the biggest challenges is taking everything that you would normally fit into a 3,000 to 5,000 square foot branch and squeezing it into a 600 to 800 square foot location, without sacrificing our product and service offerings," said Barnett.
As is the case with any significant undertaking, Theo Moumtzidis, managing vice president with First Manhattan Consulting Group, said market research is the first step all credit unions should take.
"The most important piece of advice is to consider the overlap between the credit union's field of membership and the customers of the store or supermarket inside, which the branch will operate," says Moumtzidis. "If the overlap is low then the in-store location might be at a disadvantage for the credit union."
Due to the success over the last two years, it has been determined that Generations FCU members are frequenting H-E-B locations. To ensure the membership experience is streamlined from traditional branch to in-store branch, Barnett said the credit union has been working with a local architect experienced in this niche field.
"The architect understands banking transformation challenges and opportunities. We have a lot of dialog about our vision and requirements," said Barnett. "We try and take the best features and elements of our hub branches and incorporate them into the new space."
While subjective to the credit union and the location, it typically takes about six months from signing the lease to launch, Seibert said, which includes design, value engineering, pricing, permitting and construction.
"A credit union typically works with one of two designers: an independent designer who specializes in branch prototypes or a third-party vendor who controls the space, which is often a design/build firm," said Seibert.
A truncated version of its standard branch, Generations FCU in-store branches offer members "standard product line and convenient services," said Conway. These include savings and checking account opening and transactions, check cashing services, consumer and business loans, convenience services such as money orders, official checks, wire transfers, online banking services and CO-OP Shared Branching.
"Due to the space constraints associated with being inside of a supermarket and banking regulatory compliance, we will not offer safe boxes, traveler's checks, debit and credit instance issuance and bond redemption at our in-store branches," said Conway.
According to Barnett, the investment is paying dividends. To date, the number of members who currently access the credit union's five off-site branches range from 3,000 per month to more than 6,000. "We expect the new branches to experience traffic in upwards of 6,000 members per month."
In-Store Branch Reality
For Generations FCU's new locations opening in June, new additions will include incorporated cash recyclers and cash dispensers, which Conway said will help from an efficiency standpoint and will also cut down on the size of vault required.
"We are also planning on using iPads in a few locations to replace our traditional 'Computer Café' PC," she said.
Each in-store branch will be staffed with four to five employees, including a manager, who are selected for having exceptional interpersonal and communication skills, a strong sales drive and have previous experience in a financial institution, Conway explained.
Aside from utilizing digital signage in the supermarket to help capture members' attention, a proactive marketing campaign launches 60 to 90 days prior to each branch opening. "In order to reach new members, there are a variety of tactics to include direct mail, small business in-person visits by our sales team, email marketing, billboard advertising, branch sweepstakes giveaways and digital signage at the branch before opening," said Generations FCU Chief Marketing Officer Wendy Bryant-Beswick.
"Being a community partner is also extremely important to us," Bryant-Beswick continued. "We'll be sending branch staff to local elementary schools to volunteer as well as providing financial education for adults and students who live in the communities near each branch."
And while Conway said that in-store branches require "doing more with less," if executed correctly, such satellite branches can be opened quickly with less funds.
"Over the past two years, we have penetrated untouched markets, which have led to increased brand recognition. This will eliminate the former challenges of educating non-members on who we are," said Conway. "Going into these new locations, we can spend more time sharing the benefits of our products and services."
