Credit unions have seen quite a bit of membership growth over the last year–much of it due to the consumers' disdain over the poor reputation commercial banks have earned lately. Credit unions, to their credit, have profited from this consumer windfall and are now showing many of these new-found members how beneficial they really are by providing equal if not better service, equal if not better technology products and much better rates.

The one area most credit unions cannot compete, however, is the vast number of branch locations banks host nationwide, and that's a big issue with many new members used to big banks branches planted virtually on every corner. Without this Starbucks-like coverage, how can credit unions retain its latest wave of new members who still demand traditional in-branch services?

Branches are here to stay for the time being, just not as many of them. Yes, they are expensive to build, maintain and staff, but there's a handy cooperative service that only credit unions have in the financial services world that is one of the keys to retaining members who like visiting their branches. Shared branching provides a massive opportunity for credit unions to retain their members by cost effectively expanding their footprints without the added cost of building, maintaining or staffing a brick and mortar locale. Using another credit union's branches, along with an entire branch network of thousands of locations nationwide, is simply a smarter way to do business, which will ultimately help attract new members but also keep the ones they already have.

For example, the $87 million Midwest Carpenters & Millwrights Federal Credit Union based in Hobart, Ind., serves more than 15,000 members residing in 15 states with just 13 employees working in its original location. Midwest Carpenters serves its growing membership across multiple states via its shared branch network, which provides the infrastructure needed to accommodate its growth without the costly expense of building and maintaining its own branches and adding scores of employees to its payroll.

Another example is the $746 million Purdue Federal Credit Union. Since incorporating shared branching into its service offering, Purdue FCU based in West Lafayette, Ind., successfully retain members who find it easy and convenient to manage their accounts with the credit union by using shared branches.  Based on the continually increasing numbers of transactions the credit union experiences through this service channel, it clearly provides a needed service for its members. 

In 2012, members of the credit union deposited more than $31 million into their accounts at the credit union. Ordinarily, this is a number that wouldn't raise eyebrows, but more than 2,300 different branches from 789 credit unions across 49 states were used to make these deposits along with other member transaction activity. 

Not only does shared branching make sense to increase member retention among its student members, but the credit union also felt it would benefit the entire industry as a means of competing with large financial institutions through its nationwide branch services. The shared branching network has helped Purdue improve its member retention by 25% since 2007, as the credit union continues to promote shared branching very heavily to student-members, aiming to retain them as future members when they enter their prime earning years.

With these two examples, two of many by the way, branches remain a standard for member service with shared branching leveraging that mainstay. This service, unique to the credit union industry, allows credit unions to compete with the larger financial institutions providing comparable brick and mortar accessibility. As a result of this access, coupled with the tidal wave of online and mobile solutions currently flooding the industry, members are more inclined to stay with a credit union. 

But there's one caveat. Credit unions need to enhance their messaging about the benefits of this still largely unknown shared branching service to consumers. so there never is a second thought of switching to another financial institution for lack of convenient branch locations. The coverage is there. Credit unions simply need to educate the influx of new members along with the established members to retain them for continued growth and success. 

Dan Davis is executive vice president, chief financial officer at Credit Union Centers.
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