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The idea that “credit unions are evolving” is an understatement. Not all that long ago, member service was limited to person-to-person encounters in a branch. Then came ATMs and, finally, remote delivery. Still, many credit unions maintain a fairly consistent approach to branching across their networks.
BECU has done things a bit differently while growing to be Washington state’s largest credit union. The $15 billion CU began adding “neighborhood financial centers,” originally called express service centers, in 1999. These small, in-store locations have no tellers, cash services or drive-throughs; all routine transactions are handled through onsite ATMs. The primary role of NFC staff is to build relationships by opening new accounts, responding to inquiriesd and solving members’ problems.
In 2002, BECU took advantage of a change in state regulations to expand its field of membership statewide and grow its branch network as well. Today the credit union operates 40-plus branches, including its two original locations. About four years ago, BECU managers realized that the NFCs provided convenient access for members and a physical brand connection, but were too small to support business, investment and mortgage service delivery. As a result, BECU began developing and testing a hybrid model, starting with a 6,000-square-foot, teller-less branch in Bellevue, Wash. This model was tested and refined and has been applied across the branch network, with two recent applications in the Spokane market.
Another evolution of BECU branch service has been the introduction of specialists serving multiple NFCs. CUES memer Tom Berquist, SVP/marketing and cooperative affairs, explains that business, investment and mortgage services are provided by specialists who meet with members in consultation spaces set aside in NFCs. They might travel to two to four branches on a regular basis.
The NFCs are equipped with imaging ATMs to accept deposits, which streamlines branch size requirements. For example, the newest NFCs in Spokane are 2,500 and 3,800 square feet, respectively. Each is staffed by a manager and four member consultants, and these locations share a three-specialist business team and two-specialist mortgage team.
All of the credit union’s NFCs are in leased space, which is more expensive over the long term than owning the facilities but provides more flexibility, Berquist says.
“The NFCs play a key role in our delivery strategy, as each channel has its highest and best use. Their primary functions are to build relationships, deliver more complex products and services, provide channel education—given that we do not have tellers—and problem resolution,” he says.
Research shows that, regardless of age, a majority of consumers want to know that their primary financial institution is close by, even if they never come in. The specialist model gives members the option of an in-person consultation at the location of their choice, and the availability of business specialists/relationship managers across the branch network “has made a positive impact on the growth of our business efforts,” Berquist notes.
Overall, member transactions with BECU are increasing across all channels, including mobile, online, ATM, and branch, with the volume of branch transactions remaining relatively steady, he reports. “We know that our engaged members are omnichannel users and do not rely on just one channel. BECU is probably not unique in this regard.”
Despite the predictions by financial industry observers, including the likes of Bill Gates and Brett King, the branch has not faded away. As BECU’s experience demonstrates, the future of financial delivery is more than bits and bytes.
“Now and most likely for the foreseeable future, the branch will play a key role in a financial institution’s delivery channel strategy,” Berquist says. “But branches will continue to evolve, with smaller footprints and more defined activities. Financial institutions only need to look at how Microsoft, Apple and Amazon—all formerly digital-only companies—now all have physical stores, but the experience is very different from a traditional retail store. I think there will be a place for branches. It’s just figuring out the branch channel’s highest and best use in the digital age.”
BECU’s unique branching strategy and continual evolution offers a useful example for financial cooperatives across the country. While each credit union’s brand and path may be different, an ongoing commitment to respond to members’ changing service preferences remains an essential driver toward success.
Paul Seibert is an independent consultant under Paul Seibert Consulting, Seattle.
