As digital branch technologies continue to grow in popularity, credit union physical branch strategies will undoubtedly evolve as well. The unique promise of credit unions to prioritize member needs serves as a major differentiator in the financial industry. This member-first philosophy can also lead to a different posture toward physical branches, as witnessed in recent years with the annual growth of the number of credit union branches while the number of bank branches steadily decline.
It may be intriguing for banks to close physical branches due to projected positive outcomes on profit and loss statements. Prematurely closing physical branches may leave large numbers of bank customers who rely on access to a physical branch feeling abandoned and even result in them moving to a different financial institution. This opens interesting opportunities for credit unions to further leverage their core competencies of prioritizing member needs, and there may be a direct correlation between the recent growth of credit union branches and the decline of bank branches.
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As digital transformation continues as a top priority for most financial institutions, a balanced strategy toward serving member preferences and shifting behaviors is an absolute must. Credit unions should be in a position to address the needs of all existing members – from baby boomers to Gen Z – and equip their organization to move in tandem with the evolving needs of both existing and new members as behaviors shift.
Understand the Credit Union Member Base
Credit unions need to use any means possible to ensure they understand their existing members concerning demographic categories, segmentation by product, behaviors by segment and so on. This information offers key guidance on how to best serve the needs of current members, identify gaps in services and create appropriate growth plans. Some credit unions may assume they should prioritize acquiring new members in the early stages of their financial journey. While it may seem unnatural to consider attracting new members as a risk, this can result in underestimating the opportunities of existing members. For example, attracting new members can be as much as 25 times more expensive than promoting and converting existing members to additional services, and this is just one risk worth considering. The better a credit union understands its members and respective opportunities, the better decisions it will make regarding member growth and member retention.
A Multi-Channel Approach Is Essential
The best way for credit unions to balance member needs is to offer multiple channels for members to conduct business through. By providing a digital branch for online needs, easy-to-use apps for mobile transactions and physical branches for face-to-face interactions, credit unions can cater to the needs of all members, regardless of preferences.
To effectively adapt to the future desires of members, credit unions cannot be in a situation where they are only reacting. This is why an all-encompassing, multi-channel approach is now essential. To adjust as members' needs and preferences evolve, a credit union must be active within each major channel and ready to execute on needs as they emerge. This allows it to effectively serve early adopters of digital tools and educate legacy members to become more comfortable with online tools over time.
Interconnecting Physical and Digital Branches
Credit unions can provide targeted education and support to members who are less familiar with digital branch services. This support can include training sessions, webinars and personalized assistance to help members feel confident using online tools. By offering these resources, credit unions can begin bridging knowledge gaps between generations and ensure that all members can access the services they need.
Technology can also be used to link generational gaps and enhance the physical branch experience. Tools such as digital signage, interactive kiosks and tablets can provide members with a more engaging and interactive physical branch experience while reinforcing the use of the digital branch. These technologies can help credit unions cater to younger generations' preferences for digital experiences while also providing value to older members who may be less familiar with using digital branch tools.
A digital branch with online appointment scheduling can add further convenience for online visitors and significantly reduce wait times for physical branch visits, improving overall member satisfaction. Credit unions can also stay ahead of the curve by engaging with members through online chat, social media and other digital channels. These channels offer endless opportunities for gaining member feedback and real-time engagement. Data and feedback collected through a multi-channel strategy will equip credit unions with valuable insights into the needs and preferences of their members.
Carefully Evaluate Branch Closures
It's important to note that the popularity of physical branches can vary widely depending on the local needs of an area. In small rural towns, for example, there may be a greater need for physical branches due to limited access to technology and internet services. Rural members may also prefer face-to-face interactions with credit union staff and be more hesitant to adopt digital branch services. In contrast, large urban areas may have more online and mobile service options, and members in these areas may be more comfortable conducting their transactions digitally. Additionally, the cost of maintaining branches in urban areas can be significantly higher due to higher real estate and labor costs, which may make physical branch closures more financially viable.
Overall, the decision to close a physical branch should be influenced by a variety of factors, including member preferences, local economic conditions and the competitive landscape of the local area. While the trend toward digital branch services is likely to continue, the role of physical branches in meeting the needs of local communities cannot be ignored. As such, it is essential for credit unions to carefully evaluate the needs of each market before deciding to close physical branches. This includes considering the local demographics, access to technology and the potential impact of physical branch closures on the broader community.
Forging Ahead
Credit unions must balance the needs of their members across a broad demographic range to remain relevant in an increasingly digital world. By implementing a multi-channel strategy, providing targeted education, leveraging technology to enhance the physical branch experience and staying ahead of emerging technologies, credit unions can meet the needs of all generations and continue to adapt as needs evolve in the years to come.
By striking a balance between physical branches and the digital branch, credit unions can position themselves as more responsive to their members' needs and preferences. This approach leads to more success in the long term, as credit unions can adapt to changing market conditions and stay ahead of the curve in terms of technology and customer service.
Overall, credit unions are uniquely positioned to navigate the ongoing digital transformation of the industry by offering a more personalized and community-focused experience for which they are so well known. As a result, credit unions can continue to grow and evolve in the coming years, adapting to the needs and preferences of their members and remaining a relevant and important part of the financial services landscape.
John Pennycuff John Pennycuff SVP of Marketing OMNICOMMANDER Miramar Beach, Fla.
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