When it comes to branch foot traffic, it's possible to have too much of a good thing. For Boeing Employees’ Credit Union ($10.6B, Seattle, WA), the space limitations of its prized in-store branches had to be addressed if the credit union wanted to maximize its market potential.
With around 180 proprietary ATMs, a carefully cr
afted physical footprint, and a significant online suite, BECU has worked hard to develop a standard of convenience for its members. The credit union is the fourth-largest credit union in terms of assets in the U.S. and the fifth-largest institution in terms of market share in Seattle, according to Callahan & Associates’ Branch Analyzer data.
“We were one of the first institutions who had a presence in grocery stores, dating back to the late 90s,” says Stacie Wyss-Schoenborn, vice president of member solutions. In 2003, a bank failure offered BECU an opportunity to enhance its 10 existing in-store branches with 24 new locations in Safeway, further solidifying the approach as BECU’s primary branching model at the time.
But as traffic picked up, the limited space in these branches had a cloistering effect on members and employees, which drove a shift in strategy toward standalone brick-and-mortar.
As of 1Q 2012, BECU has transitioned all but 11 of their in-store locations to independent retail sites, and those in-stores remaining will likely be transferred eventually. Unlike many circumstances where branches are closed or relocated, the move has nothing to do with underperformance, but with better managing the surplus of activity the branches currently handle.
“It’s not about moving members out of branches,” says senior program manager Nancy Sternitzky. “It’s about giving them a better experience and more options when they are in them.”
BECU’s in-store branches, which were the majority of the credit union’s locations in 2003, are a reflection of their operating model, which BECU calls a “teller-less” layout. They typically feature two ATMs, two online kiosks, an express drop box for after-hour deposits, three member consultants, and a manager.
“For years, we’ve been educating our members on how to leverage a self-serve operating model,” says Wyss-Schoenborn. “We’ve been using remote services for quick tractions but still preserving the in-person touch points needed to develop the relationship.” Yet over time, even the economic and efficient design of the cashless branches couldn’t fully relieve the constriction.
"In-stores can be a great opportunity for credit unions," says Wyss-Schoenborn. But it is possible to grow out of that footprint, especially when transaction volume exceeds the capability to serve members, or other factors like privacy concerns create a damper on the member experience.
“When people are lined up down the frozen food isle versus seated comfortably in a chair, things like wait time becomes a real issue,” she says. Untidy carts in the parking lot, annoying announcements on the PA system, and other store-related issues also limit a credit union’s ability to brand locations and create consistency in the member experience.
BECU planned the sequence of branch transitions using various internal and external sources of analysis, focusing especially on those branches most overwhelmed with transactional volume or those with the least amount of space. “Some were operating with as much as 1,200 square feet, which is practically a mansion for an in-store, and some were operating at 500 square feet, so those small spaces took priority,” says Wyss-Schoenborn.
The relocated branches were set up with all of the same features and functionality of the traditional cashless branch but staffed by at least one additional member consultant. More importantly, they feature additional waiting and interaction spaces and provide future opportunities for members to use new types of self-serve, assisted self-serve, and full-service options.
“In the future, we may even have virtual assistant right as they walk in the door, which members could then opt for over a traditional member consultant,” says Sternitzky.
Stand-alone locations provide better visibility and accessibility, are on major transportation routes for commuting members, and have other retailers conveniently located nearby. The move even has implications for employees’ well-being, granting a dedicated space for breaks and meetings, employee restroom facilities, and other benefits.
While operations, rent, and other costs do increase with stand-alones versus in-stores, BECU sees these costs as an investment with a clear ROI.
“On average, we’ve grown the volume of loans, deposits, and new members in these new stand-alone locations by at least 20%,” says Wyss-Schoenborn.