Four Ways that Retail Outlets Benefit CU Branching Strategies

Retail outlets provide credit unions with an opportunity to counter slow member growth as well as create added value to current members.

 
 

Developing and managing partnerships has been a historical strength for credit unions given their long-term relationships with SEG-based groups and employers. As credit unions expand their charters, developing new partnerships will be key to increasing their exposure in the broader communities they are now serving. One type of new partnership that some credit unions are pursuing is partnering with retailers for new branch outlets. An example is CommunityAmerica Credit Union ($1.5B, Lenexa, MO). Expanding their branching network through retail outlets has created success in each of the following four areas:

New Member Potential: A retail outlet’s greatest advantage is exposure. These branches allow credit unions access to thousands of retail customers each week. Whereas a traditional branch has to rely on members coming into the branch, a retail outlet is right in front of potential members on a regular basis.

  • CommunityAmerica: Currently, the credit union’s retail outlets are so successful at attracting new members that for the month of December 2006, one in-store branch opened more checking accounts than any of the traditional branches.

Strategic Partnership: Deciding on the right partnership is essential. In an ideal situation retail customers can connect credit union values with that of the retail establishment.

  • CommunityAmerica: Partnered with Hy-Vee grocery stores has created a perfect match, says Linda Boring, VP Administrative Services, who manages the partnership. “Hy-Vee is an employee-owned organization that promotes high service levels just like the credit union,” says Boring. Also, both entities are focused on community involvement.  

Cost Effectiveness: Expanding a branching network can be very costly with the addition of not only new staff, but an entire new facility. Retail outlets allow a credit union to add a new branch without the high overhead costs. An in-store branch can cost 1/5 that of a new brick and mortar branch.

  • CommunityAmerica: The credit union is able to staff the retail outlets with half the number of employees as a full branch, yet the branches are turning out comparable transactions to traditional brick and mortar branches, says Diane Stockard, a regional manager for two of the in-store branches.

Convenience: Members are continually demanding greater convenience as more banking options emerge into the financial marketplace. Retail outlets allow credit unions to add the benefit of one-stop shopping for their members.

  • CommunityAmerica: The partnership has increased convenience by creating a one-stop shopping experience.  Because Hy-Vee already provides groceries, dry-cleaning and a food court, adding financial services further increases the convenience factor for the credit union’s members.

CommunityAmerica is just one credit union using retail outlets and reaping the benefits. Overall retail outlet growth has risen during the past five years. According to the FDIC, retail branches have grown almost three times as fast as traditional branches between June 2001 and June 2006. Also, with member growth at less than 1% over the past year, credit unions can use this vehicle to drive in new members and increase the satisfaction of current members.

To hear how other credit unions are using retail branches and benefiting, attend the “Increasing Visibility: Using Retail Outlets to Relay the Credit Union Advantage” brought to you by Callahan & Associates.

 

 

 

Jan. 8, 2007


Comments

 
 
 
  • When you’re opening a credit union inside a supermarket or department store, it’s almost as if you’re another department within it – deli meats, electronics, cleaning supplies, and cooperative financial services. There’s a blending of identities and customer base – and some of this is what the credit union is trying to capture. The key is to be able to retain enough individual identity so that the credit union is not co-opted by the retail partner. As this trend grows, this is going to be an issue.
    Anonymous
     
     
     
  • While it was a good read, your article, like so many other articles, webinars, seminars, etc., are primarily relevant only to community chartered credit unions (of which, by the way, the large and more aggressive variety with no real interest in serving underserved and/or people of modest means will ultimately cause us to lose the taxation battle). It's unfortunate that we SEG based credit unions are exposed to fewer and fewer topics of relevance to our operations and fields of membership.
    Anonymous