What's In-Store for the Future of Branching

If you build it, will they come? Many credit unions are building branches in retail stores to guarantee more exposure to members and potential members.


Branches in retail stores are an increasingly popular and efficient means of growing membership and strengthening relationships with members. Though the number of financial institutions is shrinking, across the board the total number of branches is rising.

The Community Bank Competitiveness Survey 2005 from the ABA Banking Journal/ABA Community Bankers Council recently revealed that nearly 79% of banks surveyed believe that branching will be their main avenue of future growth. The survey also revealed one in five community banks is growing its branch network.

However, credit unions are outpacing banks in growth, according to the Credit Union National Association's 2004-2005 Credit Union E-Scan report. One course many credit unions are pursuing is expanding their branch network is partnering with retailers to construct in-store branches.

Matching Member Needs

Undeniably, in-store branches are more convenient for some members. Many of the members of Silver State Schools in Las Vegas, NV, with $701 million in assets are school teachers and visit Wal-Mart to purchase school supplies. Silver State Schools already had a few branches in Albertsons grocery stores and expanded their network in Wal-Marts to better serve their members.

Since many places are open 24-hours in Las Vegas, by partnering with establishments with different hours than the traditional branches Silver State can cater to members shopping habits. Its membership and assets have increased through both member acquisition and members using more services.

CommunityAmerica in Lenexa, MO, with $1.4 billion in assets has a partnership with HyVee grocery stores and also has chosen extended hours and remains open on Sunday.

Benefits of In-Store Branches

Branches located in retail stores are a cost effective way to add an additional branch and reach a wider audience. Overhead costs are often lower and the in-store branches typically demand a smaller staff.

The dynamics of a smaller staff lend themselves to different employee rols than in a traditional branch. In-store branches commonly have a concierge, often the branch manager, who can help guide customers.

The creation of a concierge position is a growing trend among financial institutions. The community bank survey revealed 27.5% banks added a concierge position to direct branch traffic. Over the past two years, Bank of America launched a "Leading from the Lobby" initiative in its 6,000 branches. Branch managers are greeting customers and directing them, performing transactions if needed.

There is also a greater opportunity for cross selling through increased customer interaction. "We are trying to get more of a sales culture in the traditional branches," said Marc Healy, director of member solutions at BECU in Seattle, WA, with $5 billion in assets. BECU is migrating similar practices into its brick and mortar, traditional branches.

More information on branching is available in executive brief, Branching: A Brave New Brick-and-Mortar World and the streaming webinar recording Growing Members, Cutting Costs, and Building Partnerships through In-Store Branching




April 4, 2005



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