Every day, I see another article about branch transformation, or the "branch of the future." Overall, branch traffic is dwindling and the mix of functions is shifting. More branches resemble retail stores or coffee shops, and floating tellers and universal employees are talked about—as if any employee could be a teller one minute and a loan officer the next. The news would have us believe this is a new trend, except that we can remember WAMU reinventing its branches a decade ago. And since one of every credit union's greatest assets is the personal loyalty of its members, concern about the right way to do efficient branching is natural.
At the same time, most of us are proactively building transaction-ready mobile and self-service channels as alternatives or extensions to branches. These external channels have lost their status as competitive differentiators. The younger members we all want to attract simply expect it. Millennials in particular are quickly reaching financial maturity; they need loans, savings, mortgages and other services, and according to the U.S. Chamber of Commerce will soon outspend the baby boomers. Since these 80 million millennials constitute 25% of the population, their choice of financial institutions is key.
Competition to capture and maintain the member base has never been more intense. Nontraditional providers are encroaching on credit unions by delivering convenient services, and not only to the underbanked. In its most recent survey, Accenture found that 72% of all North American retail bank customers said they would be likely to use at least one existing non-financial telecom, retail or technology provider, predicting that 35% of the industry is currently at risk for disruption by these companies.
Technology is key to both self-service and branching strategies. But what technology, and in what balance? IT spending will hit a record high by the end of 2015 - $131 billion, according to Ovum, most of it in mobile and digital channels. Your own members will continue to push the limits of what can be managed end-to-end from their mobile devices. But you also need to find a healthy balance in technology investments that streamline your teller functions and back office processing.
We are so bombarded with information that it's easy to forget our primary goal. We need to ask the right questions to find the right answers. And the right first question must be, "How do I make banking more convenient for my existing and potential members?" With that in mind, the right question about branches becomes, "What blend of branch changes and self-service options will best serve my members, wherever they are?"
Let's methodically build our internal foundation to support whatever that most convenient-to-members mix is. CUs are recovering from the post-2008 suspension of technology and facilities investment, but this gap has placed CUs in a catch-up position. As we look forward to 2016, here are some action trends I want to call to your attention:
- Moving new membership applications and processing online
- Originating and processing loans online
- Equipping tellers with tablets and freeing them of teller lines so they can serve members outside the branch, at community events, car dealerships, you name it
- Developing and delivering more and more self-service transaction options
- Shifting to smaller branches, built to accommodate live lending services, and equipped with self-service video kiosks for transactions
- Offering more value-added services, such as payments, personal financial management, electronic strongboxes and electronic bill pay
With the proper framework of supportive back-end technology solutions in place, credit unions will be able to stand on solid ground with any new frontline mobile and online services they roll out. Then we can run at full speed alongside the competition, vie for the attention of tech-savvy younger members, and earn their business.
Hal Tilbury is president and CEO of Bluepoint Solutions.
