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Reports of the Death of Branching May Be Greatly Exaggerated, but a Transformation Is Underway…
Monday, October 31, 2016 6:45 AM

Dean Borland, SCMS, CUDE, VP Product Development, Credit Union Resources

Omni Channel Distribution NetworkA quick Google search of “the branch is dead” can help you with instructions on how to prune a dead/decaying tree limb, and you will also find that some people think financial institution branches are on track to follow the dinosaur into extinction. Read a little closer, though, and you'll find that many financial services pundits do not believe the branch is on life support; but rather that a transformation is needed to sustain viability and complement the move toward increasingly greater use of digital/mobile technology.

Over the past several months, Credit Union Resources’ Impact Group of credit union leaders and three premier business partners—LEVEL5, Diebold-Nixdorf, and CO-OP Financial Services—collaborated to explore the issues and opportunities of branch transformation. The study culminated at the 2016 Cornerstone Credit Union League’s Leadership Conference with an Impact Group review of how transformation can be leveraged into a variety of branch platforms.

Here are the major takeaways from the study…

  • Branches will continue to be an integral part of an omni-channel financial services distribution network where members will continue to perform transactions and interact with credit union staff, but in ways very different from the traditional branch. The branch of the future will be a redesigned mix of physical structure and automated transaction fulfillment supplemented by the expert human support provided by on-site staff or via video interface with a dedicated contact center.
  • The branch footprint will vary widely depending upon each credit union’s needs, membership demographics, and business model.
    • Large format facilities (5,000+ ft2) will host a staff of member-facing personnel including subject matter experts for mortgages, investments, commercial accounts, insurance, etc. Drive-thru service will likely continue to be available with delivery via conventional pneumatic systems or using interactive, two-way video-assist technology.
    • Smaller community branches (2,000-5,000 ft2) will mimic larger format deployments but within a smaller footprint. "Universal bankers" will focus primarily on member engagement. Semi-private and private “hotel offices” and two-way video will allow interaction with subject matter experts housed at other credit union facilities. Secure 24-hour vestibules offer around-the-clock access to services.
    • Further downsizing will create 800-1,500 ft2 micro branches (likely in retail storefront space) hosting service similar to a community branch, but in an even more compact environment. Drive-thru capabilities will be site-specific, but secure 24-hour vestibules will offer around-the-clock access to services.
    • Finally, credit unions may deploy fully self-service branches (footprints of less than 1,000 ft2) where members will have extended hour access to robust automated and two-way video-assisted transactions.
  • Modern branches will be retail centers leveraging digital signage to deliver standardized, flexible messaging and retail merchandising to reinforce the credit union brand. Nighttime LED lighting creates visual interest and awareness of the branch, making it stand out from its surroundings.
  • Fully automated or video assist self-service delivered through interactive teller machines (ITMs) may eventually replace traditional teller transactions. In the interim, automated cash dispensers and electronic journaling will simplify the mechanics of the teller transaction, freeing member-facing personnel to focus more on the member experience and less on the technical aspects of journaling transactions. Lobby automation manages walk-ins and guides members for quicker service delivery.
  • As branches transition from a transaction platform to sales and service platforms, the competency and skillsets of the member-facing employee will evolve. Electronic journaling of automated transaction fulfillment minimizes the need for member-facing employees to have accounting competencies, shifting focus to individuals with refined sales and service skills. Performance measures shift from “over-short and transactions per hour” to relationship measures like services per household and share of wallet.

After learning that a major newspaper had printed his obituary, Samuel Clemens (Mark Twain) reportedly quipped to a reporter, “The reports of my death are greatly exaggerated.” Projections of the death of credit union branches are probably exaggerated as well. But, it is true that the in-branch experience is in transition.

In the future, credit union branches may look, feel, and function much more like an Apple Genius Bar than a traditional paying and receiving transaction platform. The question may not be whether your credit union will make the transition, but rather when your evolution will begin.

Thank you to the members and guests of the Credit Union Resources Impact Group, and to our partners, LEVEL5, Diebold-Nixdorf, and CO-OP Financial Services, for providing us, and you, with a glimpse of the branch of the not-too-distant future.