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BRANCH BUSINESS: Making the Case for Branch Transformation

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BY DAVID PETERSON

Has the rise in virtual banking left your credit union wondering what to do about too many branches that are too big for the functions they serve? It might be time for a shift in your perception of a branch’spurpose. These components can help transform your CU branches into vibrant branches of the future.

Over the past 40 years, the U.S. population grew approximately 1.5 percent.Over that same period of time, the number of financial institution branches increased by 3.4 percent.Why would we need twice as many new retail branches as potential new consumers  who would visit them?Well, to answer that question, you need to understand the purpose of a branch.Branches were created:

  • To conduct transactions
  • To allow financial products and services to be explained and sold
  • To be marketing beacons to the communities they served

Branches were built big, both to hold the largely paper-based processing systems and the crowds of people who were required to go to a branch to conduct transactions.People went to the branch because they HAD to.

Over the past 10 years, advancements in online banking, which I will collectively call the virtual branch, have allowed people to access their financial institution at a time and place of their choosing with whatever device they have in their hand.The explosion of smartphones and tablets and the general increase in virtual access innearly every aspect of our lives have dramatically decreased branch visits.This tendency corresponds with a rise in the number of Millennials who are accessing primary financial services and a decrease in the number of Baby Boomer customers.This demographic shift is occurring everywhere, but in some areas, the shift is more dramatic.

This leaves financial institutions in a position where their branches are:

  • Too large
  • Too numerous
  • Too empty
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