CHICAGO - Ten years from now, will all members be hunched over computer keyboards while weeds grow in the parking lots of former branches? Paul Seibert, principal at Emick, Howard & Seibert Inc. in Seattle, is betting on a clicks-and-mortar future. During a session at the 2000 CUES Annual Convention, Seibert predicted what branches will be like 10 years from now: * There will be a 30% increase in the number of credit union branches. * Retail strategies will be based on projected ROI and focus more on family convenience than work. * A hub-and-spoke strategy will drive market applications, with 25% of branches owned and 75% leased. * Every physical delivery location will sport a distinct branch image and be fully integrated with the virtual branch. * Most credit unions will offer commercial lending and investments in the branches. * A typical branch will offer only automated cash handling, with no tellers. * All branches and operations will be connected electronically for marketing, merchandising, sales, and staff and member training. Cabling will be eliminated. * Branch staff efficiency per member will increase by 25%. * Every branch will be designed to capture specific target markets. * Each branch will focus on PFI "stickiness," offering sophisticated information and counseling and a social and business center, while at the same time delivering on the promise of financial fitness for life. Seibert sees the growth of home offices, with about 20 million already in place today, as a strong opportunity for credit unions to partner with owners of small and home-based businesses. They'll want service with a personal touch, he suggested. "We're starting to see a backlash, with people looking for a relationship," Seibert said. "Future credit union success will be enhanced by the seamless integration of technology and the physical environment." Demographics will also play a role, he continued. The lending age is extending past 45 to 55 and up. Saving is beginning earlier. Many members may be working more years and into their 70s due to better health plus recent changes in Social Security regulations. The average credit union target market household has risen from low and middle income to middle and upper middle income. "What does the board and management team want the credit union to accomplish over the next 10 years?," Seibert asked. "What field of membership will provide the best theater? Your big gun is your MCIF file - make sure it is loaded. Determine what will drive growth and prosperity, then gather data and projections. "Ask what members want. What will cause them to do more business with you? What is their definition of convenience? What words would you like members to use when describing your credit union now and in the future? "You must know what members will accept. You must introduce the concept to the members convincingly. You must make it new, fun, informative and enticing." Seibert said credit unions should identify the purpose of each branch. One might be a transaction site. Another might focus on mortgage lending. Branch size and staffing will vary according to the functions handled. Members will want their PFI to provide lifetime financial information and advice. So Seibert advises designing lobbies so they can support seminars. A CUSO office can be located adjacent to the lobby with a separate after-hours entry. Display areas can be provided for guest companies whose services mesh with those of the credit union. Think ahead. If you're planning a branch and don't want cash dispensers - at least not right away - you'd be smart to allow space for them. Wealth Management The Journal of Accountancy figures about $4.2 trillion in the United States and $1 trillion in Canada will pass to the baby boom generation from their parents during roughly 20008 to 2018. Other estimates have put the figure at $10 trillion for the United States alone. In fact, "It has already started," Jim Estes, president/CEO of Arrowhead Financial Group, told an audience at the 2000 CUES annual conference. AFG is a CUSO of Arrowhead Credit Union, San Bernadino, Calif. One point for credit unions, Estes stressed, is those member boomers coming into an inheritance will need financial counseling - perhaps a good deal of it: * Only 38% know bond prices vary inversely with interest rates. * Only 29% itemize deductions. * 74% of households pay more in payroll taxes than income taxes. * 15% of households don't have bank accounts. * 38% of Americans believe investing profitably is effortless. "They're confusing a bull market with intelligence," Estes declared. * Less than half of American households are saving enough for retirement. "If we assume our first goal as a credit union is to help our members, what alternatives are available to do so?," Estes asked. "Will this allow us to get a fair share of this wealth transfer over the next two decades?" Assisting members in obtaining quality products at fair prices is critical, Estes stressed. Products may include long-term care insurance, term life insurance, Medicare supplement coverage, preparation of wills, trust services, investments, and credit counseling. In addition to linking members to quality products, credit unions must serve as a source of unbiased information. "We must become a portal to additional information. If we're perceived as selling something, we lose our credibility. The members must think of us first, because we do not know when this wealth transfer will take place. Banks can't compete with us on a level playing field. We can add to the value of credit union membership," Estes said. He cited seminars as an ideal way for a credit union to establish itself as an authority. Free, informative and unbiased seminars can be provided by faculty from local universities or community colleges. The credit union selects the topic, engages the speaker - and receives the credit for the service. "If you have a Web site, becoming a portal is easy. If you don't, you need to have brochures and information on contacting the Social Security Administration, AARP, various no-load and load mutual fund brochures, and investing and planning guides readily available in your branches," Estes said. The transfer of wealth is due to start soon, he repeated. In order for credit unions to take advantage of the opportunity it presents, they must be perceived differently than they are today. "We need to develop broader relationships with our members, or we will lose members," Estes warned. Car Buying on the Internet The alternatives keep ratcheting up for members interested in using the Internet to buy cars. The National Automobile Dealers Association has just launched DriversSeat.com, a site that will allow car buyers to check out whether a medium blue Belchfire Eight with tan leather is actually sitting in the lot at a nearby dealership. In effect, the site will allow a member to access the sites of all NADA members and their 550,000 new vehicle inventory. The automakers themselves are paying attention. In late May Doron Levin, Detroit Free Press automotive writer, reported Ford and General Motors had fired off letters "`reminding' franchised dealers to avoid transactions with `brokers', their euphemism for anyone without a franchise that participates in a sale. (If a broker just earns a fee for referring a customer to a dealer, that's usually okay.)" According to Neal Halperin, CEO of Digitalcars.com, there are 130 car buying services available on the Internet, plus competing financial institutions. As the number of such sites keeps growing, credit unions wonder whether members will do all their vehicle shopping online, then bypass the credit union when it comes time to arrange the financing. During a session at the CUES annual convention, Halperin suggested to compete in today's auto lending market, a credit union must: * Offer a Web site with car buying and financing information and loan applications. * Develop a dealer network to fulfill member car purchases. * Use database marketing that keeps members coming back to the site. Halperin acknowledged dealers have an edge. "When somebody is looking to buy a car, most people will go to a dealership. When they go to the dealership, they are in the arms of the dealer. The majority of financing gets done at the dealership," he said. However, Halperin estimates 40% of carbuyers already click onto the Internet for information before they head for the dealership. They're checking out both new and used car prices and comparing financing options. So credit union Web sites should provide the information members are seeking. "A technological transformation is occurring in the American automobile industry. It's fueled by the Internet. Can your members use the Internet to purchase and finance with your credit union?," he asked. -
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