When Evansville Teachers Federal Credit Union ($630 million in assets, IN) had a chance to open an in-store branch in a community they had no presence in, they took advantage of the opportunity. The community credit union had few existing members in the area even though it was located 12 miles from their headquarters. The in-store branch provided the credit union with exposure to the more than 60,000 consumers entering the retail store each week. Growth opportunities are a major factor for credit unions when adding new branches.
According to a Callahan survey on a recent webinar, credit unions add branches to meet three primary organizational goals – (1) search for growth opportunities, (2) convenience for existing members, (3) alleviate pressure on existing facilities. Branching methods for attaining these goals can vary widely.
One of the most popular methods for meeting organizational goals through branching is via In-store branching. Using in-store branching is an effective method because of the growth opportunities that are available to credit unions due to the fact that thousands of consumers walk into a large retailer each day. In-store branching also allows a credit union to cost effectively alleviate one of the most common member complaints – lack of convenience.
Convenience through In-store Branching
Desert Schools Federal Credit Union ($3 billion, AZ) had a perception among their membership that the lack of locations meant lack of convenience. Traditional branch expansion was costly for the credit union and at times outpaced the member needs. The credit union's in-store strategy provided the ability to increase branch locations as a grocery store partner increased their own locations. Plus, the grocery store location provided the credit union with an immediate base of potential members and the opportunity for expanded hours. The credit union now has 37 in-store locations with multiple retailers.
Faster to Market
As part of Orange County 's Credit Union's strategic plan ($860 million, CA) they looked to get into several new markets within Orange County over the next several years. They planned to use traditional branches. In 2007 retail locations opened up in two of the markets that were on their strategic plan. Rather than waiting years for the new locations, they were able to open up in both markets via in-store branching locations in a matter of months.
Taking Advantage of a New Market Opportunity
After Evansville Teachers Federal Credit Union moved into their new in-store location, they made sure they were noticed in their new community. The manager of their in-store branch developed relationships with the executives of the local retailer. Plus, all senior managers at the credit union periodically worked in the aisles of the retailer to help get a feel for the in-store experience.
In-store Branching That Compliments Traditional Branching
America First Credit Union ($4.1 billion, UT) recognized that in-store branches gain new members, while traditional branches support a larger staff and provide the chance for a wider variety of credit union services. The credit union has 43 in-store locations. As these in-store branches mature and reach capacity, the credit union fills in the hubs of the “hub and spoke” approach with retail and traditional branches.
Branching through a retailer provides credit unions with the opportunities to move into new markets quicker, meet the branching needs of existing members and realize new ways to grow the credit union.