SAN DIMAS, Calif. — After months of anticipation, the latestsignificant expansion of nationwide shared branching has comeonline.

Starting last week, members of credit unions who participate inshared branching have been able to walk into 2,000 7-Eleven storesacross the country and have available all the shared branchtransactions that they would have had if they had walked into aparticipating credit union and stood in line for a teller.

In order to use the kiosks the members will have to initiallyanswer some security questions that validate their identity, aswell as choose a shared branching personal identification number touse in future transactions, but after this initial session just theuse of their ATM card and the PIN will be sufficient to let themin.

“This has been a long time coming but we are just thrilled withwhat this can mean for all credit unions in the whole country,”said Sarah Canepa Bang, CEO of Financial Services CentersCooperative, the shared branching network headquartered on the EastCoast who put the deal with 7-Eleven and Vcom together.

Even though the arrangement was just between FSCC and 7-Eleven,because of the cooperative nature of shared branching, members ofcredit unions who are not FSCC member institutions can use themachines as well.

The network first announced the deal in 2006 and has beenworking since on ironing out the kinks. The final stage was a betatest with nine locations that started in July of this year and hasrecently completed, Bang said.

A recent trip to a nearby 7-Eleven that has one of the newkiosks to check out whether the reality is able to stand up to thepromotion found that it largely can. The kiosk was easy to use andintuitive, starting out not even by asking for the ATM card butrather for the CU's name, which did not need to be typed in butwhich could be chosen from a series of screens based on the firstletters in its name. The security questions were not hard to answerand the one potential difficulty was that the member needed to knowtheir account number in order for the process to move forward.

“We are aware from our experience with shared branching thatmembers do not always know their account numbers,” Bangacknowledged. “But they would need to know their account number ata traditional shared branch as well.”

Bang agreed that the point highlights what may be FSCC's biggestchallenge over the coming months, helping shared branching creditunions explain the new machines and educate their members about howto use them. She acknowledged that the look of the machines can beintimidating and that convenience stores can seem an odd place toconduct financial business. But she also noted that that the7-Eleven convenience stores were hard to beat in terms ofconvenient locations and the move brings the ability to make easyfinancial transactions into members' daily lives.

“How many people stop every day at a 7-Eleven to pick up acoffee and a paper or get something else they need?” she asked,“Now they can easily make a loan payment, move money from accountto account, deposit a check among several different accounts orwhatever else they need to do as part of their daily affairs,without having to make a special trip or anything else.”

Low-Income Advantages

FSCC also said it had picked up on a line of thinking among someof its members that the kiosks may help them better reach out tolow-income communities, a development which Bang said she wouldwelcome.

Certainly shared branching will not give credit unions the samekind of impact of having their own standalone branches in a givenarea, she said, but this will allow them to more easily markettheir services to people who might not have been able to use thecredit union previously, she said.

Bang said that based on FSCC's experience with kiosks thenetwork expected that use of the machines would grow slowly butsteadily as more members got used to them and became more familiarwith how the technology could help them meet different challenges.Any new technology, she noted, will need to be adapted and put inthe context of the users' needs and life, she observed.

The point is notable because there are some who believe theaddition of the shared branching locations is not thatimportant.

“It's not significant at all,” said Stan Hollen, CEO of CO-OPFinancial Services, the parent CUSO of the nation's other, larger,shared branch network and a competitor of FSCC. “We believe thatmost people using machines in those areas are going to use themprimarily to withdraw cash from their accounts and they can alreadydo that more cheaply through a CO-OP Network ATM.”

Hollen observed that CO-OP already has a relationship with7-Eleven and already has surcharge-free ATM access available in thesame locations. Further, he also said CO-OP expected to be able totake deposits through those machines starting in the first quarterof 2008.

Using a CO-OP surcharge free ATM in those locations, at roughly$.75 per transaction, will be less expensive to the participatingCU than having members make withdrawals through the shared branchscreen which is going to cost significantly more money, heargued.

But Bang countered that if all a member wanted to do waswithdraw funds, he or she would likely choose the ATM option on themachine and not take the shared branch option with its additionalaccounts and screens. The market for the new shared branch outletswill be members who need to make more detailed transactions, shesaid.

“We believe the default will be for the easier screen and easiertransaction,” she said.

She also clarified that the pricing on using the machines willmirror pricing in place for shared branching generally in that FSCCmember CUs whose members use the kiosks will get a roughly 18%discount on the transaction fees just as if their members hadwalked into another FSCC participating CU.

Likewise CUs who participate in shared branching but who are notFSCC members will pay the same transaction rate, from FSCC's pointof view, as if their members walked into an FSCC participating CUto make a shared branching transaction.

“We are not charging any higher fee for these transactions thanthose at a credit union,” Bang said. “The rules allow other networkparticipants to charge higher fees on their end for out of networktransactions,” she added, “but we are not.”

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