Why credit union shared branching matters more than ever
The following op-ed was submitted in response to this story, which ran in Credit Union Journal on Sept. 11, 2020.
With the COVID-19 pandemic ushering in a new era of stay-at-home orders, masking up and social distancing, the question for credit unions remains: what does the future hold for branches?
How to rationalize branches – and when or if to close them – are huge decisions to make. Even with reduced foot traffic, members will be impacted when a credit union goes from, say, three branches to two.
But with members shifting from in-branch to digital transactions, many branches can no longer be financially justified. All of which can leave many members – and often a credit union’s longest-standing and most loyal members – without the live branch experience they still expect and often need.
For many credit unions, shared branching is the answer to this dilemma. With shared branching, the decision is not whether to go from three branches to two, but instead from 5,700 shared branches to 5,699 by virtue of a nationwide network. And that clearly is a better service model for members.
Here’s why branches matter more now than ever – and how the benefits of shared branching can position credit unions for a digitally transformed future.
What branches mean to members
For members, shared branching is all about convenience. Guest members can be served in any of more than 5,700 branches in the CO-OP Shared Branch network just as if they were transacting business at their own home credit union. This is made possible by a sophisticated proprietary network that connects credit unions participating in shared branching and enables complete visibility into guest member accounts. As a result, connected credit unions can retrieve and act onallthe member relationship data linked to a guest member’s account in real time.
Consider also that modern consumers expect choices. Even if they primarily transact across digital channels, they want to know they can go into a branch if needed.
In fact, research shows that most account opening decisions are made based on the proximity of branches to a member’s home or workplace. For members who travel, shared branching also offers a way for them to access accounts and stay connected to their credit union wherever they are around the country. CO-OP Shared Branch records show that approximately 35 percent of transactions are made out of the local network, indicating these transactions are made by branch visitors who have moved or are traveling.
There are other, more intangible benefits members receive in the branch as well. Beyond financial services, branch visits provide members with personalized interactions – which is proving particularly meaningful in today’s atmosphere of disruption.
Driving revenues and innovation
While members clearly benefit from expanded branch access, so do credit unions. When a credit union serves a guest member in its branch, that institution is paid for that transaction through the network’s interchange. This can help ensure full utilization of credit union personnel while boosting branch income as well.
Shared branching is also a technology enabler. Because of recent investments CO-OP Financial Services has made in the network, member transaction data can be aggregated and made available to shared branching credit unions. The insights from this data can to be used to plan strategically and strengthen member relationships.
The network is also foundational to CO-OP’s own digital strategy, allowing the company to deliver instant access to mobile deposit images, enable P2P transactions via Zelle and provide other services expected by today’s members.
While shared branching can help credit unions advance their growth and service strategies, the network also speaks to a mission that is deeply ingrained in the movement – people helping people. And, in this time of crisis, credit unions are answering the call via the network.
One example is Jefferson County FCU, based in Louisville, Kent. The credit union has assisted its own members as well as guest members with drive-thru service, coordinating with nearby credit unions whose branches have been temporarily shuttered due to the pandemic.
To provide the high levels of service members require while complying with public health mandates, Jefferson County FCU employees have been stationed outside in the branch parking lot, handling member transactions, making sure visitors know the lines are moving forward and wiping down equipment as protocol requires.
Another example is The Tennessee CU, based in Nashville. In 2020, this credit union has been tasked with responding not only to the pandemic, but also to devastating tornados that hit the region in March and damaged the branch of a nearby credit union. Without hesitation, TTCU reached out to the other institution to help as part of the shared branch network.
Clearly the world has changed this year. But people have not – and what members expect from credit unions has not.
Shared branching allows credit unions to support members in good times and bad – and can help them better navigate a world challenged by COVID-19 and transformed by new technological challenges and opportunities that are emerging all around us.