HILTON WAIKOLOA VILLAGE, Hawaii – If there were any attendees at the Hawaii Credit Union League's recent annual convention who doubted that shared branching has caught on among credit unions, Sarah Canepa Bang, president of Financial Service Centers Corp. (FSCC), quickly set them straight. Shared branching is here and now and credit unions are embracing it with open arms, said Bang who spoke at a session on "Debunking the Myths of Shared Branching." With that out of the way, Bang launched into a short history of shared branching in the U.S., spiced with some market statistics. For starters, she said, members who conduct business at shared branches complete a variety of transactions – 50% make deposits, 30% make withdrawals, and 11% make payments. For every dollar withdrawn, three dollars are deposited. The average deposit is $975. Shared branching, she explained, started about 25 years ago in Michigan with Service Centers Corp. SCC currently has 25 branches, mainly in Michigan and a couple on the east coast. FSCC was next on the scene. It started out in California with four branches, and within two years, "we were hemorrhaging money," said Bang. "There was no way that our company could continue to maintain standalone branches. A couple of courageous CEOs said that if you trust that I won't steal your members, we will open our doors and allow your members to come in, stand in our line, and we will serve your members. The rest is history." FSCC now has hundreds of standalone branches. It is currently in discussions with Puerto Rico. Add to the mix The Credit Union Service Corporation (CUSC), an umbrella network of about 19 different league networks. SCC, FSCC and CUSC are connected at the national level. Eleven CUs throughout Hawaii have their own shared branch network. Excluding these CUs, there are 748 credit unions in 35 states and four countries – U.S., Guam, Japan and South Korea – involved in shared branching with a total of 786 branches. Just a year ago, Bang pointed out, only 27 states were involved with a total of 528 branches, and only one country. "Credit unions today are seeing the benefits of shared branching," Bang said. "We're serving relocated members, we're serving family members outside of the credit union area, and everything we've heard from CUNA has been positive." Bang said FSCC has a number of credit unions that survey their closed accounts. The credit unions told these members they didn't know that they didn't have to close their accounts, and that shared branching provides them with an opportunity to keep their accounts active. FSCC found that the average shared branch user tends to have more accounts at the credit union than people who don't use shared branching. Since September 11, many credit unions are looking at FSCC for contingency plans. Case in point: Honda Federal Credit Union in California has been involved in shared branching for a number of years. Honda had 500 employees around the country who were not Honda FCU members and who did not have direct deposits. After September 11, when Fedex planes in Los Angeles were grounded, Honda employees were left stranded with no pay checks. Desperate to retrieve the checks, Honda contacted Honda FCU. The credit union set up temporary accounts for the 500 employees, so they could conduct transactions at shared branches. Honda gave the checks to Honda FCU for deposit in employees' accounts. The employees are now members of Honda FCU. "What's interesting is that about 73%of members say they prefer to transact business near their home," Bang said. "We predict those with checking accounts, direct deposit and members in their 30s will use shared branching." -

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