The branch and the branch staff are the most visible parts of a credit union. Most members consider branches and their staff as the face of the organization. And many credit unions continue to invest in branching. Total investment in land and buildings in credit unions increased 12.8% in 2008. The industry added 600 more branches during the year. According to the 2008 call report, two thirds of credit unions over $100 million in assets are planning to add at least one new branch in 2009.
With branch investment growing, how are credit unions measuring the success of this important delivery channel? For many credit unions, both internal and external metrics are used to understand the success of branches.
Internal Branch Metrics
Internal metrics are the most common measures of branch performance in credit unions. For many credit unions, branch performance starts with specific training. Measurement looks at a combination of sales, service, efficiency and accuracy related metrics. Coaching and feedback – and additional training – are the final piece of internal branch performance measures.
Sales performance metrics often measure the branch's ability to increase member product relationships. An example of member relationship measures is the number of new checking accounts that carry direct deposit after 90 days. Another measure is credit card utilization. How many cards sold 90 days ago at a branch now carry a balance? Below is a sample of this report.
Almost every credit union considers member service to be a competitive advantage over other financial institutions. In fact, according to a study from Bain and Company, 80% of companies believe they provide a superior experience for their customers. Customers agree with this 8% of the time. Credit unions use a combination of mystery shopping, call quality, and member surveys to measure service. Below is a sample report for service performance in credit unions. The report provides a guideline for member service managers in credit unions to direct training programs.
Internal metrics focused on accuracy and efficiency can have the greatest impact on controlling branch costs. Some credit unions create accuracy reports based on data provided by audit or regulatory compliance departments within a credit union. Credit unions should balance other measurements against their accuracy data. You want to strive for 100% accuracy without having supervisors berate front line tellers for every mistake. A focus on training and process is important but efficiency data can be challenging and expensive to gather. There are organizations in the credit union industry that can help develop tools for this measurement (Additional information can be found in the creditunions.com buyer’s guide). Therefore, it is prudent to also incorporate external branch metrics in any evaluation of branch performance.
External Branch Metrics
At many credit unions, branch measurement is based on the performance of other branches within the credit union. External measurement of branch performance can help credit unions analyze a branch’s performance based on the rest of a local market. This measurement can help answer questions such as:
- Is the local market growing faster than my credit union's branch?
- What is the size of the market?
- What share of a micro-market does my credit union branch have?
- Which bank branches are shrinking? Is this an opportunity for my branch?
With credit unions continuing to expand their collective branch network, it is more important than ever to make sure that we are measuring our branch performance effectively.
For more information on measuring branch performance Callahan & Associates is hosting a webinar, "Measuring Branch Performance to Increase Efficiency."
Also, if you would like to have more information on credit union and bank branch deposits please contact me at firstname.lastname@example.org to learn more about Branch Analyzer and how it can help your credit union's branching strategies.