Larger Credit Unions Extend Their Branch Networks

Power 1 Credit Union's website boasts: We're not a bank. We're better. By the definition of a credit union as a non-profit financial institution owned by its members, that statement should be 100% true. But in a world where consumers often choose where to shop based on factors such as parking availability, proximity to home or work, or even the ease or difficulty of turning into the parking lot, convenience of location is an important factor in adding value for your members.

By Jill Richardson

Power 1 Credit Union's website boasts: ''We're not a bank. We're better.'' By the definition of a credit union as a non-profit financial institution owned by its members, that statement should be 100% true. But in a world where consumers often choose where to shop based on factors such as parking availability, proximity to home or work, or even the ease or difficulty of turning into the parking lot, convenience of location is an important factor in adding value for your members.

Here is a sobering comparison: the largest bank branch network is operated by Bank of America with 4,596 branches. Contrast this with State Employees (NC), the credit union with the most branches, which has 160. Despite the disparity, credit unions are succeeding in the financial services market with credit union assets growing by 12.3% over the past year.

It is also unrealistic to expect a credit union to expand its branch network to give Bank of America a run for its money (no pun intended). However, credit unions do not lack alternatives. With the growth of internet banking in recent years, credit unions are offering members the convenience to make transactions and find information 24 hours a day from their homes or offices. Many credit unions also provide for their members by participating in shared branch networks.

Currently, 11.4% of all credit unions (1111 credit unions) participate in shared branch networks. Overwhelmingly, as asset size increases, a higher percentage of credit unions participate in shared branch networks. This reflects on these credit unions' need to serve larger and more widely dispersed membership bases, but also is an indication of their commitment to cooperative efforts. Not surprisingly, credit union-owned branch networks increase as assets increase in size. Yet small and midsize credit unions, which can benefit the most from cost-effective branch strategies, are less likely to participate in a shared branch network. Many larger credit unions are realizing the value of an industry-wide solution to their own bricks and mortar limitations.