Optimizing Your Credit Union Branch Network

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As a credit union executive, you read, see and hear it all the time. If you’re going to survive you need to grow, which means navigating two critical challenges: Keeping up with capital and with earnings. The urgency of this equation has been intensified by COVID-based market disruptions, notably in the way members interact with their credit union – behavioral changes that likely are here to stay. Here, we’ll focus on branch system rationalization and suggest a useful implementation tool for credit unions with the right facilities configuration.

Branch System Rationalization

In a recent article for CU Times, industry thought leader Tom Long of The Long Group explained how the branch system has gone quiet because of COVID-related shifts in member behavior, which has driven down branch-based transaction volume by 30% – a pattern that is expected to be more or less permanent. Long said: “Credit unions that successfully realign network delivery to traverse this challenge will emerge with the ability to capture an increasing share of present and future market opportunity.”

Reduced member usage and shifting market demographics are driving the need to rationalize your branch network. The process elements are straightforward: Marry a right-sized branch network footprint with enhanced technology and reduced but “upskilled” staff to better engage and attract members. Relocate and redesign branches to better align with shifting populations and key demographics such as life stage, housing and transportation preferences, financial needs and “touch point” habits. Transform cost savings from a reduced footprint and redeploy them as technology and marketing investments. All sound advice, as far as it goes, but the directive to reshape your branch footprint should integrate another key element – optimizing the associated capital investment.

Legacy Real Estate Considerations

Once you’ve decided what your rationalized branch network looks like, you need to determine how to get there. Unwanted owned properties must be sold or, if ­necessary and permitted by regulations, leased out on an interim basis. Unwanted leased properties must either be surrendered through negotiated lease terminations or, if permitted by the lease and regulations, subleased on an interim basis.