ATLANTA — Supermarket, storefront or free-standing–what's the best fit for your credit union's branch?
According to design and build firm LEVEL5, how credit unions decide which building to go with and why are vital decisions in the overall growth strategy. Generally, the most common factors are marketplace, members' consumer pattern and sales culture.
"The balancing act is the same. There's no right or wrong answer," said John Hyche, LEVEL5 principal, strategic consulting. "There's the financial performance (will the branch make money?) and the other is growth opportunity in the marketplace. And again it's that balancing act as part of the decision is the depth of opportunity and what the credit union's goals are."
For Enrichment Credit Union CEO Wayne Hope, his credit union has a mix of free-standing and storefront branches, but he said his latest free-standing Northshore branch is the future. The new retail, high-tech and high-touch facility replaces an existing storefront location and, with its dialogue towers, Hope said it provides great opportunities to deepen relationships through more personal member communications.
"We've used storefronts in the past, and they've done well. But for us we've found they've blended in and are limited as far as offering drive ups, and certain members won't consider us as a primary financial institution without drive-up services," said Hope. "Now with this particular Northshore branch, it is outstanding in the market, and member reaction over the past four months has just been very positive. They like the personal service from being greeted at the door to employees taking them in hand to help with their financial needs."
Hyche said one strategy that works is the hub and spoke arrangement where credit unions have a central branch that offers full-service amenities and supports other satellite, convenience branches by storefront. LEVEL5 has also found that, all factors being equal, storefront branches tend to grow to only 60% of those attained by a free-standing branch, and the advantage of quicker market entry may be offset by the stronger growth of a free-standing branch.
"Our storefronts were successful and in areas we felt we wanted to grow the business, so we replaced it with a free-standing branch, and it is doing really well," said Hope. "Our differentiator is our red carpet personal service–so more than the building or equipment, it is our staff that binds members to Enrichment Credit Union."
LEVEL5 Senior Vice President and Principal Mike Colvin said that about 95% of its client base are moving toward dialogue delivery as a way to set themselves apart from the competition.
"The one thing about the dialogue delivery system is that the technology and software takes care of the transactions, so the representative can focus more on the service without worrying about the accuracy of a transaction," said Colvin. "The relationship they have with members in a dialogue delivery retail environment is a natural choice that enables them to put their best foot forward."
For other credit unions, like SAC Federal Credit Union, Bellevue, Neb., and ORNL Federal Credit Union, Knoxville, Tenn., the in-store branch is the biggest growth factor. According to in-store branching solutions provider FSI President/CEO Roy Bell, credit unions shouldn't be too quick in dismissing the in-store branch as little more than a staffed ATM.
"I always tell a credit union that it is no different than any other branch. Determine what you want to do there and manage the branch accordingly to accomplish those goals and manage expectations," said Bell. "You cannot walk up to someone say 'Hi, I'm Roy with XYZ credit union and since we have a branch here you need to do business with us.' It doesn't work that way. You have to build that relationship first. It's not a miracle that the first time someone walks in they'll open an account that day. It is after you greet them when they come in daily or three times a week, and they have that comfort level with you, then they are open to deepening that relationship."
SAC FCU Senior Vice President of Operations Robin Larson added that it is about staffing the in-store branches with the right people.
"They are selling the credit union difference, so they can't be introverts afraid to talk and strike up conversations with people as they shop," said Larson. "Our first in-store branch has been doing so well, we've got another four set to open in the next few months."
Though a relative newcomer to in-store branching, Larson said SAC FCU has experienced high sales penetration for home equity loans and mortgages, and the branch is averaging also 85% savings to checking accounts.
ORNL FCU Senior Vice President Taylor Scott agreed that staffing is key and suggested providing a slight wage differential to retain top talent at those branches.
"Our reputation locally is very good, so this just works for us and having the right people in place doing in-store announcements, working the aisles and really doing all they can to help members only helps build our image," said Scott. "The in-store branches for us have been a major draw for new accounts."
ORNL FCU has seven in-store branches, with four more slated from now through April of 2009. Scott said it's not just transactional service offered; members can do everything except member business loans at their in-store branches, and ORNL FCU has experienced great loan success.
"These branches are in the black, and we're not afraid to put them within a mile of existing branches. Our members like the mix of branch types to choose from, extended hours and convenience," said Scott. "It is also a great fix for over-capacitated free-standing branches."
–mdigiovanni@cutimes.com
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