LAKE JACKSON, Texas-Don't expect credit unions to go completely virtual and branchless, despite the prevalence of online and mobile transactions, according to a number of CUs.
Instead, the industry is shifting from "branch as transaction center" to "branch as engagement and sales center"-and only underperforming branches are being axed.
"Our mantra is 'technology is for transactions; people give advice,'" explained Stephanie Sherrodd, EVP and COO at $1.9-billion TDECU here, which is working to grow six branches it added during 2011.
Technology will take care of transactions at the branch, not just online and mobile. "We're changing our branch design to incorporate technology to process transactions," Sherrodd continued. Check-imaging ATMs are supplementing teller lines, for example.
TDECU staff takes care of sales and information. "The individuals working in the branch are trained to give situational advice for members rather than just process transactions," she said.
Meanwhile, pundits proclaim the death of the branch: brick and mortar is costlier than online, mobile and call center transactions, they say.
A Virtual Dream
Stanford FCU in Palo Alto, Calif., sometimes fantasizes about going completely virtual, said Jim Phillips, SVP, CIO, at the $1.4-billion CU. "We don't have a lot of branches because our members don't like to use them." As a result, "we have a very low employee-to-member ratio, and we are really lean."
More than 99% of transactions are electronic at Stanford FCU, whose members hail from high-tech Silicon Valley.
Regardless, "the lobby is important to members," according to Fred Siegel, business development manager at Eaton Family CU in Euclid, Ohio. KEMBA Financial CU in Gahanna, Ohio, recently found that a "large percentage" of new KEMBA members said a branch location was a driving force in determining where they opened their checking account, said Mark Decello, EVP/COO at KEMBA.
The $35-million Eaton Family CU saw branch transactions increase by 4% last year, Siegel said. "We find people living right around the corner who will download a member application online, but we still get others who fill it out by hand in the lobby."
"Members want convenience at their time of choosing, and I believe that branches will play a role in that for the foreseeable future," agreed Chad Graves, SVP-IT at $3.3-billion Ent FCU in Colorado Springs, Colo.
But branches need to be profitable, Graves stressed. "Credit unions will need to look closely at underperforming branches and may need to make tough decisions to either close or relocate branches as needed."
KEMBA Financial evidently has similar concerns. "Brick-and-mortar isn't cheap, and if traffic volumes decrease, we have to use our pricing and product offerings to encourage members to visit branches and deepen the relationship with everyone who visits a branch," said Decello. "We need to make each visit a memorable event."
Deeper Relationships
KEMBA seeks to "deepen the relationship" by selling more products in-branch, he explained. "Our associates have to establish more profitable relationships. I don't know how we accomplish the mission of 'enriching our members financial lives' if we don't effectively sell our very competitive products."
The $655-million CU plans to add branches next year, whether by building them or as a result of mergers and acquisitions, Decello said.
A sales atmosphere will continue to dominate BECU's branches, said Howie Wu, VP-virtual banking at the $10-billion CU in Tukwila, Wash. "The branch will still be very sales focused and continue to drive transactions to the self-service channels." Approximately 92% of BECU transactions are electronic and 6% are completed through the call center.
Like TDECU, BECU branches will evolve to promote more self-service, Wu continued. "Since our branches are already tellerless and focus primarily on member enrollment and account acquisition, the biggest change to our branches will most likely involve more technologies focusing on self-service."
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