Reports of the death of branching have been greatly exaggerated. But failing to heed the lessons of the Great Recession — including the danger of overbuilding siloed, one-size-fits-all locations — could easily put a credit union on the endangered species list.
For small- and medium-size institutions in particular, dire times resulted in a wave of branch closures, stagnated construction, and a giant question mark for where the development of member relationships and new business should be housed.
While there is now some initial evidence that this trend may finally be slowing or even reversing among cooperatives of a certain asset size, a corresponding uptick in the industry’s efficiency ratio proves equally worrisome.
Branch Activity And Credit Union Efficiency
As business picks up, so have the costs for constructing and operating a branch.
Source: Callahan & Associates’ Peer-to-Peer Analytics
As a result, many credit unions are choosing to redefine or supplement their traditional branch structure and operations with alternative models that are more compact and nimble than earlier renditions.
By increasingly relying on self-service and remote technology, these locations are not only connecting with membership more often and in more ways than could be accomplished in the past but are also forging more effective ties to their centralized leadership and one another.
Unmanned Branches, Unlimited Potential
If an ATM and a full-service branch had a baby, it might look a little like one of the six unmanned Express Electronic Service Centers currently deployed by Tinker Federal Credit Union ($3.2B, Tinker Air Force Base, OK).
The credit union’s experiments with a staff-free branch date back to 1996, when the first of these facilities debuted. Featuring an ATM, a phone, and a self-service Internet cafe (as well as signage and brochures highlighting credit union products, services, or educational resources), these early locations originally had a decidedly transactional bent.
“We have been moving in the direction of a smaller footprint for years,” says Lisa Leeper, the credit union’s senior vice president of operations. “Investing in our online and mobile capabilities was a part of that. But there was still a segment of our membership in remote areas that we needed to physically reach and we couldn’t afford a full-sized, multimillion dollar branch and 10 to 15 employees in each of those scenarios.”
To connect express locations with the larger scope of services and relationship-building opportunities typically found at a branch, many of these centers now come equipped with a kiosk for live video conversations with the credit union’s member service department.
“We can already open new accounts from these unmanned locations, but in 2014 and 2015, we’re looking to introduce a full virtual branch experience,” Leeper says. “That means you could connect on video with consumer loan officers or the mortgage department, apply for, and close a loan right then and there. Or, you could talk face to face with a financial advisor to discuss your investment strategy.”
Tinker also plans to extend the hours of these locations beyond their current 6 a.m. to 8 p.m. schedules.
“Right now, these are supplements for our full-size branches, not replacements, and we still have some members who are not comfortable using anything but those more traditional channels, ” Leeper says. “However, with some of our planned capabilities, we are looking to finally take that virtual branch concept to the next level.”
These express centers plus the credit union’s more traditional locations put the full branch count at 29, but Tinker has also taken a different slant on mobility by using a mobile branch for public events, SEG presentations, and other large, temporary gatherings.
Tinker recently decided to sunset the large RV-style mobile branch previously used for these gatherings in favor of a branded, ATM- and computer-equipped SUV.
“This allows us to get into tighter areas than we could with a bulkier vehicle,” Leeper says.
So far, Tinker’s strategy of self-service, blended with personalized interactions for more complex activities, is paying off. As of 1Q 2014, Callahan & Associates FirstLook data confirms that the credit union has a nearly 5% lower efficiency ratio than average for comparable cooperatives and has also experienced a substantial annual increase in its average member relationship (2.2% versus a peer average of -1%).
A Reservation For Two At 3:30
A true pioneer of leading-edge technology, Redstone Federal Credit Union ($3.7B, Huntsville, AL) has created more than 30 custom, in-house-developed applications through its CUSO — Redstone Consulting Group — and even sells some of them to other institutions using the same core system.
This D.I.Y philosophy also manifests itself in the credit union’s brick-and-mortar presence, including a new mobile check-in system that is already proving more efficient and successful at connecting members with loan officers and other staff.
“You can always track branch transactions,” says Terri Bentley, the credit union’s vice president of technology. “But those reports alone won’t show the time spent on activities that aren’t transactions and that help you grow the relationship and provide trusted advice. We wanted to build a solution to address that.”
Today, Redstone has a single interface that every employee, from tellers to executives, can use to compare performance throughout the organization by individual staff member, branch, or even type of transaction.
For example, branch managers and executives can see exactly how long it takes from the arrival of a member seeking, say, a mortgage to the time that individual is helped, which allows them to identify training opportunities, staffing or deployment shortfalls, and other issues. At the same time, in-demand employees can see how long they’ve been involved in certain interactions and how many people are still waiting to be seen.
But to get to this point, Redstone first needed a way to collect branch data in real time without burdening the staff or members.
The first step came in late 2012, when Bentley’s team created a sophisticated check-in kiosk system that was eventually dispersed throughout the institution’s 24 branches.
This technology quickly proved to be invaluable for aggregating advanced data while simultaneously improving service.
“We used to have greeters at some locations who could check people in electronically,” Bentley says. “But at those locations without, members had to write down their names on paper.”
From there, staff would have to call out visitors' names and sometimes get more information from them before finally connecting them with the right person.
Once the kiosks were installed, branch visitors could simply swipe their debit or credit card or, if they were already members, enter their identifying information on a touch-screen LCD panel and indicate the reason for their visit. As an added bonus, targeted marketing messages and educational information also appears on the bottom of the screen during this process.
In January of this year, the credit union also added a new feature within its mobile app that allows members to set up appointments right from a mobile device and be placed in a queue before arriving at the branch.
“For us, the ultimate goal is to have all relevant features and functions available in every channel and on any device,” Bentley says. “The desktop PC or ‘grandpa box’ as we like to call it is going away, so focusing on ways to maximize the mobile channel is a big piece of our strategy.”
Using the mobile app, members can see which locations are nearby as well as the number of members already there. More importantly, the credit union has built a blueprint of each location, based on the number of staff and type of expertise available (for example, IRAs or mortgages), right into the back end of the system, which ensures members are guided to the best location for their needs.
If a member chooses to join the branch queue from a mobile device, the system sends the person an email confirmation and a code that, when entered on arrival, alerts the staff on site.
Each mobile appointment includes a 35-minutes window for the member to physically check in via a branch kiosk. If 30 minutes goes by with no check-in, the system also sends a reminder text.
If the window is missed completely, the member loses their spot in line and will have to start the process over when they arrive. An email is also sent notifying them the reservation has expired.
“We made both the mobile and branch check-in easy and quick, without requiring any authentication, because we didn’t want to deter potential members from using this channel,” Bentley explains.
Eventually, the credit union is also looking at deploying additional features within this app to include interactions at the teller line.
“We have some ideas about how to gather analytics efficiently while the member is waiting in line, but the specifics are still being developed,” Bentley says.
Making Remote Connections
With so many credit unions today having multicounty or even multistate footprints, the electronic resources required to interview and train remote employees are practically an operational necessity.
And even credit unions with smaller footprints stand to gain from technology that connects their staff to business opportunities and educational resources elsewhere around the nation.
Advancial ($1.2B, Dallas, TX,) is no stranger to long-distance relationships. The cooperative currently has 16 proprietary branches in five states — Texas, Alaska, Oklahoma, Louisiana, and New Jersey — as well as 190 employees, more than half of whom work remotely either occasionally or permanently. Even the credit union’s board is dispersed, with roughly half of its members living more than 200 miles away in Houston, TX.
“We were formed when two oil and gas companies, Atlantic and Richfield, came together to form ARCO, and wherever that industry went, we went too, “ says CEO Brent Sheffield. “At one point there were 18 different ARCO credit unions, with ours being the largest, and we initially grew by acquiring these smaller regional institutions.”
BP’s later acquisition of ARCO had a big impact on the credit union’s charter and triggered a calculated pullback from some states like Colorado in order to focus on the markets and demographics that were a better fit. But the lessons of operating within a diversified, geographically disjointed footprint still remain.
With Advancial juggling so many individuals in different states at any given time, the shortest distance between these points isn’t actually a straight line. It’s a DSL connection.
Advancial has been a heavy user of teleconferencing technology such as WebEx for more than a decade, even hosting its annual member-facing meeting via this channel.
“We have lots of oil and gas engineers as our members, and they may be working in countries like Nigeria, Venezuela, or Russia, so it’s important they have a way to attend,” Sheffield says.
But in 2010, the credit union ramped up its capabilities to include not just videoconferencing but also high-resolution screens and the ability to share documents or interact with other employees using virtual, hands-on tools.
The ability to do, rather than just see, has also had a huge impact on what the credit union can accomplish with this technology, says Laurelle Campbell, director of employee development.
“For example, we can now train new hires remotely, as the technology allows them to control our desktops and gain firsthand experience working within those systems,” she says.
Campbell’s Dallas-based, three-person team handles the vast majority of these training sessions, which can take up to two weeks for member-facing individuals like member service representatives and loan officers. However, the credit union will also rotate in its various subject matter experts for refresher courses and updates on more nuanced areas of the business.
Three Must-Haves For Effective Teleconferencing
Laurelle Campbell, director of employee development for Advancial, explains how to avoid those dreaded "Can you hear me now?" scenarios.
You're only as good as your connection, Campbell says, so the most important requirement for teleconferencing is a seamless computer network with plenty of bandwidth and an IT department willing to assist with and support these sessions as needed.
Another must-have is a video monitor large enough to display both the speaker and attendees. "For example, if we are training a class, we want those people online to see that everyone is in the same boat," Campbell says.
Campbell's last requirement is the use of high-quality, echo-canceling microphones. "Conversations on a computer speaker can get a little fuzzy, so having that direct connection creates cleaner, more audible conversations," she says.
“We don’t really care where you work, but we do want competent people who can match our values. This model has really allowed us to use and deploy our internal resources as needed,” Sheffield says.
In an operational capacity, the credit union’s board and leadership often use the interactive technology for their meetings, and the credit union also holds a once-a- month all-employee meeting over this channel for light training, story-sharing, awards, and other team-building exercises.
Even the credit union’s Houston-based investment broker makes good use of the technology as a way to connect with and advise members in various branches in other states.
According to Callahan & Associates’ Peer-to-Peer analytics, Advancial’s operating expense ratio as of 4Q 2013 was considerably lower than other comparable peers with between 12 and 20 branches — at 2.84% versus an average of 3.19% — despite its unique footprint and operational structure.
And videoconferencing alone saved the institution over $30,000 in travel-related costs the first year it was adopted, with closer to $60,000 in savings every year since.
“Face-to-face interactions are always best, but there’s a lot of expense getting someone up to Alaska, for example,” he explains.
As mobile technology continues to improve, the credit union also sees a lot of potential for more direct member-facing service and support through videoconferencing.
“Currently, our technology is not like an email or text that you can initiate, receive, or respond to at any time. You have to plan it out in advance,” Sheffield says. “But if a member who was having an issue had the ability to call us and initiate a video chat right from a mobile device, that channel would become a lot more valuable for that person.”