Members are visiting brick-and-mortar credit union branches for different reasons than they did in the past, but they are utilizing those offices enough that credit unions continue to build.
The credit union industry added a net 16 branches during the third quarter of 2017, bringing the total credit union branch count to 21,252 as of Sept. 30.
Idaho Central CU opened two new branches in the quarter and has opened three in the past year. President and CEO Kent Oram said in an interview the Chubbuck, Idaho-based credit union is still a believer in branches but is working hard to offer its members a great digital experience. He said Idaho Central adheres to the "bricks and clicks" philosophy, and so far the model is working.
"I suspect the day will come when branches aren't as important. It appears that day has already come for quite a few financial institutions," he said. "That isn't true for us yet."
At the state level, Colorado topped the list with five net openings during the third quarter, followed by Oregon and California with four net openings each. Texas had five net closures in the quarter, and the state has now seen 16 net closures in the past four quarters.
Glenn Grau, vice president for Pittsburgh-based branching consultant PWCampbell, said in an interview that members' needs are changing with traditional branch transactions including deposits, withdrawals and transfers continuing to decrease each year. "Members are coming into the branches for very different reasons," he said. "They include education, information and consultation."
As a result, the branch environment is adapting, Grau said. Teller pods are taking the place of traditional teller lines, and technology is allowing routine member transactions to be performed on a self-serve basis. "This allows the credit union employee to spend more time with each member, understanding their individual needs and recommending products and services to meet those needs," he said.
Grau said credit unions will continue to evaluate their memberships to determine how to effectively serve them electronically as well as in the branches, and the net effect will be more branches opening than closing. But new branch facilities that are springing up are generally much smaller in size than they have been in the past. With credit unions converting over to the universal employee model, where one employee can take care of all of a member's needs, staffing has been reduced and member services increased, Grau said.
In some cases a branch can be run with as few as four to five FTEs, whereas 10 years ago the staff may have consisted of twice as many FTEs. "There is no longer a need to have a retail facility of 3,000 to 4,000 square feet," he said. "Some full service facilities can be 1,500 square feet or smaller."
Navy FCU, the nation's largest credit union, opened seven branches in the third quarter, more than any other credit union in the country. Navy FCU has opened a net 15 branches in the past four quarters, bringing its branch count to 283.
PWCampbell is actively designing and building credit union facilities in mid-Atlantic and northeastern states, and Grau said Pennsylvania, New York, Ohio and Virginia in particular continue to be very active in terms of credit union branch expansion. "Historically these have been very active areas in terms of credit unions expanding, and this trend is continuing," he said.
So how are digital offerings impacting the way credit unions are planning their branch strategy for five years down the road? Grau said technology plays a "huge role" in credit unions serving their members today, and that will continue into the future. Mobile banking and internet banking continue to grow in popularity, while digital technology is becoming more prevalent in the physical branches as well.
Interactive Teller Machines, interactive touch screens, digital kiosks and cash recyclers allow credit unions to operate more efficiently while serving members more effectively, Grau said. And as the cost of technology continues to decrease, more credit unions will be adapting their retail facilities to incorporate technology and serve members' needs more effectively, he added.
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