Print Preview: Will We Soon See the Last Branch Standing?
- Some insist that branches are strangling the industry’s profitability.
- Others say that personalization is what makes credit unions different.
- Commercial real estate firms take a keen interest in the debate.
The one clear fact in the raging debate about the role of branches for credit unions is that the voices are getting louder on both sides, with some insisting that clinging to branches is strangling the industry’s profitability while others say that the personalization is what makes credit unions different.
“Banks need to think more like retailers,” said Brady. He also urged financial institution leadership to pursue flexibility in their real estate portfolio, eschewing long-term leases where possible and coming up with scenarios for disposing of locations that may no longer be needed as yet more banking shifts to DIY high-tech channels. These shifts may happen very rapidly and no institution wants to be saddled with high cost real estate it does not need but that it can’t dispose of.
Will Weidman, a vice president with Applied Predictive Technologies, stressed that it is not just the rise of new technologies that is driving the flight from branches, it’s also that the institutions themselves are faced with constrained margins that don’t allow a lot of give to cover high operating expenses. This is pushing financial institutions to try to route more traffic to lower cost channels, such as mobile and online banking, and that cost efficiency trend is unlikely to soften because, if anything, most experts see competition in financial markets toughening as pressures erode fee income without any significant growth in interest income.