Why 1 Large State Employee CU Sees Every Reason To Branch
With $13 billion in assets, more than 1.2 million members and 185 branches, State Employees CU sees its branch strategy as being something akin to the Army of One: everything revolves around the member.
"Most of our members don't realize the size of their credit union, and they don't care, as long as each one knows he's being served well, that's all they care about," SECU CEO Jim Blaine told The Credit Union Journal.
The credit union began branching in 1969, and there's no end in sight. "We opened 15 last year, we'll open 15 next year," Blaine commented. "There are 45 more on our long-range plan that will either go into new areas or as in-fill in higher-populated areas. It's an expensive strategy that you have to roll out over time. You start with the areas with the most concentrated population of membership and work out from there."
But even with all those branches-every one of which has a local advisory board-SECU also employs remote strategies, such as its 850 ATMs, web banking, automated-response telephony, and a call center.
"This isn't an either/or strategy," Blaine related. "Branching is the defining strategy of our organization, but you have to be in every delivery channel. In our view, if you are physically and visibly in the local community, you have a decided, sustainable competitive advantage. Not being in the local community is a barrier to entry. Having a local, face-to-face presence is important."
It especially comes into play when a credit union gets into new products and services, like trust and investment services. "When I'm old, I'm going to walk down to the credit union branch every month to check on my Social Security," he added. "We offer Nordstrom-like service. Let's face it, you can't get to know a person electronically. And getting personal is the key."
It's not just the elderly who want that personal touch. "We are becoming the financial advisor for our members. Financial counseling, trust services. These are personal issues, and people want a personal, local provider for all of that," Blaine suggested. "Think about mortgages. Think about the first time you bought a home. You wanted someone to hold your hand through all that paperwork, you wanted someone you could trust."
It's also political.
"We want to be able to show politicians that we have a local constituency, that we are in all of these neighborhoods," he observed. "Plus, we're providing jobs, which is huge."
Keeping it personal means keeping it local-and that means affording branch managers broad discretion over how they run their local branches, Blaine said.
"It's the reverse of what most people think. We set broad general principles, like rates and rules, and then we just try to get out of (local branch managers') way," he related. "We design the products and services, but then it's up to the local branch manager how to deliver them. Members walk into a branch, wherever it may be, and they believe it's their hometown credit union. They see the employees there, and they see them at church, they coach the local softball team. Members see our employees as neighbors."
While granting such broad discretion can mean some "horrible surprises" every now and again, Blaine said that is far outweighed by the innovations developed by local branches, especially when it comes to serving members.
To keep costs down, SECU has taken something of a fast-food approach to opening new branches. "With this kind of network, you have to have a standard building design; it's sort of like McDonalds. We're using the same colors, the same furniture, the same layout. When we go to build a new branch, all our vendors know exactly what to bring," Blaine remarked. "This allows us to transfer managers around without a problem, and it means members know what to expect no matter what branch they walk into. Ours, unfortunately, look like a dentist's office, but it becomes a benchmark, a recognizable location."
The extensive branch network has created another important resource for SECU: a pool of experienced, trained managers.
Over the years, SECU has been able to refine how it determines where to put a new branch.
"Years ago, we said if an area had 10,000 potential members in it, that would support a branch," Blaine related. "Now, we've got that down to about 2,500. Our goal is to be in every community in North Carolina."
The CU still has a ways to go to make that happen, but it's gaining on it. SECU has an ATM in all 100 counties in North Carolina, and it has branches in 92 of them.
"It's a matter of testing the envelope," he suggested. "We'll go into an area and get a short-term lease in a storefront, and see how it does. If it's successful we go ahead and build a branch."
The credit union also makes a point of letting communities know that if they want a branch, they just need to let SECU know about it.
"When someone asks why we don't have a branch near them, we tell them 'if you petition the board, we'll come on in,'" he said. "When someone petitions the board, it keeps people from giving you the 'my hair's wet' excuse for why they're not doing business with you. We get that petition out and we check to see if the people who petitioned us are coming, and if they aren't, we call 'em up and say, 'Hey, you said you'd move your accounts if we built you a branch. Well, we built you a branch, time to move your accounts!' "
Blaine said there aren't many major crossroads in North Carolina where SECU hasn't got a location, and once the CU can say it's in every single town in the state, then it still won't be done building branches-it'll turn to "in-fill" in more populated areas.
While Blaine applauds credit unions that have made an artform of using remote technology to serve their members-calling PSECU CEO Greg Smith a "wizard" (see related story)-the veteran CEO of SECU maintains that being a tangible, physical, visible part of the local landscape is just as important as offering remote services, and he points to the big banks as examples of the strategy.
"You know, Wachovia and Bank of America are headquartered in North Carolina, and let me tell you, I'm more concerned that they finally get it," he said. "They finally understand the need and advantage of personal service, and now that they get it, they are frightening. They sort of left the personal, consumer side of banking by the wayside for a while, but they are back into it now with a vengeance. They are back into it, and they are local, and we had better watch out."