5 minutes
Branches remain an essential member service delivery channel—and thus should command attention during strategic planning. Here are questions for directors to consider in assessing the performance of their credit unions’ real estate assets today and over the next five to seven years.
Do we have a comprehensive branching strategy in place? If not, stop all planning or design work in progress and develop a plan that can be used to guide real estate acquisitions, closures, relocations and branch design. One-year tune ups and three-year updates for your strategic branch plan are required, given the pace of economic changes and service innovations.
Are we on strategy today? If not, why not, and how can we get back on track? The board and executive team should revisit the branching strategy, which should set out clear and measurable performance factors, at each annual planning session.
What data do we rely on to assess the psycho-demographics of our branch markets? As just one example, in analyzing household data on existing members to select future branch locations, it is helpful to consider data on indirect member households separately; this segment poses special challenges and opportunities in building wallet share. Business analytics at this level could lead to more effectively targeted member acquisition strategies.
What biases and preconceptions do you have about market locations? While board and management team input is essential, working with an outside consultant can help ensure an objective approach to location selection. In the hundreds of board presentations I’ve made, there have been some occasional tense discussions because a location favored by a board member was not recommended. Relying on careful data analysis of on-the-ground conditions can head off millions of dollars wasted on branches in the wrong locations, overbuilt branches and facilities built with the aim of prospecting when there are greater opportunities in existing markets.
Do we have a scoring model for our markets? It is useful to review the components and weighted values and consider whether different criteria should be applied in different markets. The scoring model must reflect the credit union’s business direction and brand.
Does our retail strategy consider the impact of remote delivery? Branch transaction volume is declining. Accurate projections are needed to plan for the number, size and staffing of branches as well as the delivery of such high value product lines as mortgages, investments and small-business services.
How does performance compare between branches? Identifying target performance and what might be causing the differences between branches can help pinpoint both potential problems and service models worth emulating. Look beyond branch location and design to assess branch management and staffing. Poor branch management can stagnate growth, just as a great coach can drive high performance.
Are we comparing our branch performance to market potential and competitors? By looking beyond the credit union’s performance, the board and executive team can better evaluate market potential and the need to work harder for growth, profitability and community development.
How can we right-size our branches? You don’t need to put up with oversized branches. There are many ways to reuse, repurpose or reposition branches to enhance performance per square foot. Strategic planning should include studying all the options: retaining, expanding, downsizing, relocating or closing branches using a zero-based market analysis. Where would you put branches today if you did not have any branches in the market? Branching is much more complex than developing a standard branch design and replicating it around the network. Consider what each market needs to generate the greatest benefit for members and the credit union. In some markets this may not be a branch, but a mortgage, wealth management or small business office.
How does our branching strategy impact our financials and fixed asset ratio? Weigh investments in facilities against other important business investments. This understanding could lead to changes in ownership strategies, such as moving from ownership to leasing so the credit union can invest in technologies and staffing required to grow the business.
Do we have a recent security audit? Branch design, cash handling and staff training have changed over the past few years at many credit unions. In terms of cost and safety, it pays to conduct a review to determine the effectiveness and currency of security strategies and their impact on member service.
How are we communicating our brand, culture, and community connections through our branches? Branches are the best place to develop member relationships as 80 percent of most accounts are opened in a branch. Presentation of the logo, tag line, graphic images and overall design should consistently and cohesively convey the brand. Every frontline employee should be able to share the credit union’s “elevator story.” Your brand renders the complex nature of a credit union into tangible and easy-to-digest symbols and ideas, making them clearly relevant to existing and prospective members and staff.
What experience do we want members to have in the branch, and are we delivering? Member service is often viewed as difficult to measure, but there are tools available from lobby tracking and feedback systems to secret shoppers. Some financial institutions monitor service interactions through their security systems. Membership growth, products per household, and member and staff satisfaction surveys can also add to the data to evaluate quality of service.
Paul Seibert is an independent consultant with Paul Seibert Consulting, Seattle, which offers strategic branch planning, site analysis, headquarters occupancy and real estate strategies, and branch prototype development to credit unions across North America.
