Shared branching is touted at the ultimate demonstration of credit unions’ willingness to cooperate. Opening doors and teller lines to serve non-members demonstrates the credit union difference. Beyond the symbolism, the benefits of shared branching are often tallied in terms of return to the credit union – achieving greater scale with lower expense and risk. But what about the member? The experience of one of the nation’s largest credit unions, American Airlines Federal Credit Union ($4.2 billion in DFW Airport, TX), confirms that shared branching meets a genuine member need.
43 Branches Not Enough
AAFCU’s longstanding branch strategy was to support the airport community and their family members through workplace convenience. As a result, the credit union has 43 branches in or around airports, making it the seventh-largest independent branching network among credit unions. This rank demonstrates AAFCU’s focus on creating convenience and serving members. However, as the airline industry continues to struggle, AAFCU needed to find ways to maintain that level of convenience for members that leave the airport community as well as for potential members.
Offering more access points in more diverse locations became a key component of AAFCU’s branching strategy. Therefore, even with one of the most expansive credit union branch networks, AAFCU joined the shared branching network in 1997 to reach the desired level of service and convenience.
The Important Numbers
By joining the more than 1,200 credit unions now part of the shared branch network, AAFCU expanded its ability to serve members with more than 2,200 service locations. But the real success measure came not from the credit union but from the members.
In June 2006 alone, 18%(11,300) of AAFCU members used 1,200 of the 2,200 shared branch locations. In total these members performed 21,400 transactions outside of AAFCU’s 43 branches. These usage numbers demonstrate that even for a credit union that is large in terms of both assets and branches, shared branching fulfills a clear member need. Through their actions, the members sent a message to the credit union.
Some credit unions might focus not on the member actions, but the cost to the credit union. With a base fee of $2.00 per transaction, having members take advantage of the free service over 21,000 times in just one month may seem cost-prohibitive. AAFCU does not agree. Looking again to the numbers, the credit union calculated that the cost of participation still averaged less than that of operating two branches and enabled them to serve many more members.
As the industry faces rising operation expenses and declining net member growth, credit unions must seek affordable avenues to deliver services to more members in more ways. AAFCU’s experience with shared branching demonstrates that even with an extensive branching network, shared branching provides a needed and used service to members while offering the credit union a low-cost distribution channel critical to retaining and attracting members. AAFCU is doing something right.
Other examples of the benefits of shared branching can be found on Shared Branching: Enhancing Credit Union Service and Efficiency, a webinar recording brought to you by Callahan and Associates and sponsored by CUSC.