Branches Are Here to Stay, and They're Better Than Ever

By Natasha Chilingerian  September 21, 2017

I’m not the first to argue that technology has put the social skills of American consumers on life support.

Take a look around, and you’ll notice people spending their days hiding behind their mobile devices, using them to order toiletries and groceries, communicate with their friends and coworkers, line up a date for the weekend and book a hair appointment. All without speaking a word. Some of these individuals are not even visible to the public eye – thanks to the rise of e-commerce, any product or service can be delivered to one’s door. Why even leave the house?

When it comes to banking, cowering behind a mobile device is an acceptable option as well. Mobile banking apps, remote deposit capture, chatbots, text alerts and other forms of self-service functionality have lessened the need for human contact. And that means credit union branches are destined to suffer the same sad fate as old Blockbuster and Sears stores, right?

Wrong.

Those social skills may have a fighting chance after all, because the branch is alive and well, and it’s getting a major facelift. Gone are the days of the stale, sterile-looking branch with the Disneyland-like line leading up to a row of teller counters. Today’s branch is warm, welcoming, high-tech, interactive and helps foster a sense of community. And it’s time for more credit union members to change out of their sweats, come out of hiding, join other real, live people and take part in it.

Of course, no one should have to leave the house to deposit a check. Online and mobile banking were game-changing inventions that bought people valuable time. But for those bigger plans and decisions – buying a home, investing, saving for retirement – a Google search can’t replace an in-person meeting.

Speaking of community, since arriving in Portland, Ore., earlier this year, I’ve taken the time to meet and get to know a number of credit union people in the area, most recently Danette LaChapelle and Evan Strandburg, SVP of marketing/CCO and business development manager for IQ Credit Union. IQ is expanding its footprint from Washington State into Portland by opening a branch in the hip North Williams neighborhood to serve its growing number of members who live, work and do business on both sides of the Columbia River, which divides the two states. After meeting for coffee and donuts, they took me by the under-construction branch, and I asked them why their members value a physical location.

It turns out 60% of IQ members still conduct transactions in a branch, and their branch-goers are multigenerational, as boomers only make up a 2% to 4% larger chunk of the group compared to other generations, according to LaChapelle. Millennials are even coming in for basic transactions – she noted those who work part-time or freelance jobs, or don’t receive direct deposit, often come in to cash checks because they can’t afford to wait out a check hold period to use the funds. (This, of course, doesn’t give millennials points in the financial stability department, but it at least shows they’re not averse to face-to-face help.) She added while the number of in-branch transactions is not going down, membership is growing, meaning members are still coming in but not as much as they used to.

“The branch is important for the consultation and advice piece, and they tend to come in more around life events,” she said. “Some like to do all their research online and others want to talk about what’s best for them. But we find people continue to use all the channels.”

Branch visits often lead to pleasant surprises, too. “People come in and think they know what they want, or will talk about something without knowing that there’s a solution,” LaChapelle said. “By having staff who can ask questions and find out what’s going on in the member’s life, they can say, ‘Oh, we can fix that.’”

She described IQ’s newest branch, set to open in December, as smaller in size, designed to house “pods” as opposed to a big teller wall, friendly, easy to get around, consultative and community-focused. IQ’s efforts to connect with members face-to-face also spill outside the branch – its staff members have been meeting with local business owners and holding events like Budget & Brews in local brewpubs, where members can enjoy a free drink while discussing budgeting (where can I sign up?!)

“We’re bringing people into local businesses while promoting financial education,” LaChapelle explained.

Other credit unions are recognizing the value of the branch as well. For example, Nutmeg State Financial CU in Connecticut announced in July the opening of two new branches and many others in the works; its CEO, John Holt, commented in a news release, “While we promote the fact that our customers can do everything from their computer or mobile app 24/7, we still believe in the human element.”

And branch transformation is a hot topic industry-wide – in a recent news release announcing the Branch Transformation 2017 conference, scheduled for Nov. 28 and 29 in London, research and consulting firm RBR said financial institutions must think of branch transformation not as a one-off upgrade, but an ongoing, evolutionary process. It also described four trends that define the “branch of the future”:

A new survey says that personal contact in the branch still matters greatly to credit union members.

It wasn’t that long ago — the first quarter of 2015 — that the number of total credit union members first eclipsed 100 million. Since then, the number of credit union members has continued to climb, to more than 107 million as of third quarter 2016, according to data from Callahan & Associates. Clearly, credit unions have become a popular alternative to retail banks.

Why? In December, TimeTrade, a provider of appointment-driven personalization, released the results of its 2016 Credit Union Consumer Survey. In it, more than 1,000 members answered questions about their experience with their credit union.

“We were looking to identify the most important things for members when choosing a credit union and how those institutions are doing matching those expectations,” says TimeTrade vice president Lauren Mead in an interview with CreditUnions.com.

According to Mead, respondents were broken down evenly by generation, with roughly a quarter of respondents fitting into either Gen Z (ages 18-20), Millennial (ages 21-35), Gen X (ages 36-54), or Baby Boomer (ages 55-71).

When asked what the most important factors are when choosing a credit union, 70% of respondents chose rates, 65% chose products and services, 62% chose location/hours, 56% chose reputation, and 15% chose size. Yet, despite the fact that the initial attraction between consumer and credit union is based on price, it’s the personalized service credit unions offer that keeps members around and engaged.

HOW DO YOU LIKE TO INTERACT WITH YOUR CREDIT UNION?

Source: 2016 Credit Union Consumer Survey.

So while 68% of respondents indicated they like to interact with their credit union through online banking, 62% said they like to interact in person at a branch. In addition, 43% of respondents said they visited their credit union more than 10 times in the past year, while 30% and 21% said they visited more than five and less than five times, respectively. Only 6% said they did not visit their credit union at all in the past year.

When they do make it in the branch, respondents felt as though their experiences were well met. That’s good, because 41% of respondents indicated they desire personalized service — compared to 35% for bank customers, according to TimeTrade’s 2016 State of Retail Banking survey. The survey found that 85% of credit union survey respondents feel as though they have a personalized experience when visiting their branch — compared to 79% of bank consumers who feel the same — and 63% feel the credit union employees they interact with are always knowledgeable and helpful.

DO YOU FEEL THE CREDIT UNION EMPLOYEES YOU MEET WITH ARE KNOWLEDGABLE AND HELPFUL?

 Source: 2016 Credit Union Consumer Survey.

It seems reasonable to assume that it’s this competent service that allows members to feel comfortable waiting longer times at branches and preferring teller interactions over automated transactions. Per the survey, 46% of respondents are willing to wait between five and 10 minutes to complete a transaction, while 38% are willing to wait 10 minutes or more. In addition, 67% of respondents, when asked how they felt about experimental branches without tellers where every transaction is automated, said they would rather speak with a teller.

“I think consumers are going to credit unions because they value that service and credit unions are doing a great job delivering on it,” Mead says. “There’s always room to improve across the board but they’re really standing up, especially when compared to banks. That’s why I think they’re continuing to succeed.”

Nowhere is this success more apparent than with the millennial generation. The survey offers several key data points:

• Millennials are more likely to visit a credit union branch (57%) than a bank branch (48%).
• 49% of millennials visit a credit union to open an account.
• 43% of millennials value personalized service from a credit union more than a bank (34%).
• 77% of millennials would be willing to schedule an appointment to come into a credit union.
• 88% of millennials would visit their credit union during the week if they were guaranteed a specific appointment time.

According to Mead, these data points show that while millennials are willing to embrace technology, they still value personal, face-to-face conversations before making financial decisions.

“Everyone thinks they want to do everything online and they are opposed to that personal conversation,” Mead says. “But the data says the opposite. At certain times they do need that expert advice and that human connection. So in some ways they are a little bit of a throwback demographic.”