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Are Branches Relevant?
Thursday, February 19, 2015 6:40 AM

Branch opening
Grand opening for a new branch in Kentucky.

By John W. Hyche

Three articles recently crossed my desk that tell an interesting story about branches. The articles convey how branches are relevant and point out some "musts."

Cornerstone Credit Union League dissected results from the American Customer Satisfaction Index (ACSI).  According to Cornerstone, banks "slid" 2.6 percent from the 2013 rank, with smaller banks falling 4 percent in satisfaction.

ACSI Director David VanAmburg told The Washington Post, "As banks try to get fees and aren't successful at doing so, they have to cut costs—reducing the number of branches, downsizing staff—which results in lower satisfaction scores."

Takeaway: Credit unions must focus on member satisfaction. There is plenty of competition looking for an opportunity to steal business.

SNL Financial's Ken McCarthy reported on the November 20 FDIC's Advisory Committee on Community Banking meeting. He quotes the FDIC Division of Insurance and Research Chief Economist, Richard Brown, "Community banks tend to rely very heavily on physical offices."

Brown's comments reveal a belief that there are substitutionary and complementary relationships between physical branches and technology. Citing that 79 percent of households use tellers to interact with their banks, Brown states, "So it really gives a sense that the physical banking office is a complement to these technological changes, especially in a world of 'who do you trust online.' Having that personal relationship with bankers . . . seems to be important."

Takeaway: A personal connection to the credit union is an important element in member satisfaction, so pay attention to them.

Mike Fotis, founder of asked: "Are All Banks the Same?" He surveyed three measures of bank performance: product leadership, operational excellence, and customer intimacy. Mr. Fotis used the following definitions in his analysis:

  1. Operational excellence – Great operations/execution focused on providing reasonable quality at a low price.
  2. Product leadership – Very strong innovation and marketing. Normally doesn't last long; competitors just copy what works well.
  3. Customer intimacy – Customer service and attention rock! Aim to match and exceed customer expectations.

Mr. Fotis found very little differentiation among the banks he reviewed.

Takeaway: Operational excellence and member intimacy are areas where success and differentiation are more influential.

Focusing on member satisfaction is a key imperative for credit unions. The retail branch remains an important tool to support member satisfaction. Member intimacy and operational excellence offer the most leverage for credit unions to stand out. Seizing and fully capitalizing on these opportunities require the credit union to:

  1. Define a strategy – Whether for a single branch or an entire market, a fact-based plan is imperative. Ultimately, the strategy must be defined by a business case—the dollars and cents of the proposed investment and its return to the credit union's members.
  2. Secure a location – As always, location matters. Whether it is owned or leased, the location must be visible and accessible to members and should be conveniently situated in their routine commuting pattern between home, work, and shopping.
  3. Design for the audience – Match the facility's "tone" to the audience it will serve. This will make your members feel comfortable and sense a connection between their personal values and those of the credit union.
  4. Get there quickly – In our "instantaneous" age, it is important to open the facility quickly and economically. This is best accomplished by integrating the design and construction management at the beginning of the process.
  5. Support your brand – Thoughtful branding woven into the design gives credit union employees the ability to point out products and services that benefit the member and reinforces the credit union's values in the members' minds.

John W. Hyche a senior vice president and principal at LEVEL5. He can be reached at

LEVEL5, LLC, is an endorsed business partner of Credit Union Resources, Inc. and an industry leader in developing and implementing growth strategies for credit unions. This is accomplished through a service offering that includes Strategic Consulting, Real Estate, Integrated Design, Construction Management, and Branding. To learn more visit