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Micro Branches—The Next Big Thing?
Friday, November 10, 2017 6:35 AM

Anthony Burnett, Customer Experience Director, LEVEL5, LLC

Are you looking for flexible solutions to your branch strategy? Look no further. You can enhance your strategy with the most flexible option yet:  the micro branch.

Branch density is the goal; space to build is the challenge.
What makes a financial institution’s branching strategy successful? Many experts point to density: “more locations and brand.” Agreed! However, what if the target community doesn’t have any suitably sized site options within the desired market? Or, what if there is not a lease space available in this market?

Is having more branches an opportunity or a risk? 
This begs a follow-up question: What about branch network density? Should a financial institution continue to invest in branch density given the advent of new technologies that may lead to a decreasing need for branches? On the other hand, what if digital and mobile channels, video tellers, and smart cash equipment don’t decrease the number of branches, but rather enhance the capability of the branch to better serve consumers? Is it possible the micro branch can be a solution for these facility questions?

What is a micro branch?

Essentially, a micro branch can be whatever you dream up. As long as it has a small footprint, is heavily branded, and uses smart technology. For instance, it can be a shipping container converted into a permanent freestanding branch, equipped with an ATM and a universal banker office. Or it could be a 1,000 to 1,500 square foot freestanding branch equipped with video tellers, assisted self-service, or ATMs and staffed with a few universal bankers.

All kinds of possibilities.

These imaginative facilities can contribute to branch density through a downsized, refined package while still offering similar services at larger branches. We have the technology; let’s use it.

The micro branching movement is putting the spotlight on a new way of thinking about service facilities. Here’s how:

  1. Speed to market. Micro branches provide financial institutions the opportunity to enter the market quicker because design and construction durations are much shorter.
  2. Cost does matter. Because of the reduced branch size, these facilities require less real estate, and the cost to build and maintain is lower compared to a more conventional cornerstone (hub office) or community branch.
  3. Staffing. Micro branches typically have reduced staff. The staff is focused on high-value customer interactions while technology handles the more mundane transactional components.
  4. Resiliency. Micro branches provide agility in decision making for financial institutions needing to quickly adapt to the market. For example, a container facility can be converted to a cashless ­location, or, due to a shift in market dynamics, the micro branch can be converted to a loan or mortgage facility.
  5. Dream big with less. Micro branches give financial institutions the opportunity to venture into markets that previously were not considered a possibility due to lack of site options. For example, in a dense retail area, where room is snug and will not accommodate a community-size branch, a permanent container facility or small pre­fabricated facility may be a quicker and more effective solution for the market.
  6. Deliver the deliverables. Micro branches are outfitted to deliver the intended service solutions for targeted communities. In fact, these facilities give greater flexibility for branch density strategies by providing the financial institution greater access for entry into specific markets of interest.
  7. It’s on the menu. Micro branches can have full-service capabilities, such as cash handling technology (ATMs or ITMs), and even drive up lanes. Furthermore, micro branches can be constructed “your way” with the same high-quality construction and architectural brand identity, as seen with a traditional facility.

Customized for the community.
The beauty of the micro branch, besides its lower cost, is that it can meet the desired financial needs of a community, creating better opportunity for consumer loyalty and satisfaction. As is the case with all branches, micro facilities are targeted for specific market and community conditions and have the ability to enhance the product and service offerings to a community while contributing to branch density. The micro branch is an option that gives financial institutions greater flexibility to enrich its intended branching goals and improve its presence in communities once thought to be out of reach!

See more examples of micro branches.

LEVEL5 is an endorsed business partner of Credit Union Resources, Inc., a wholly owned subsidiary of the Cornerstone Credit Union League.