No matter how painful, closing credit union branches is a reality in today’s economy. But there is an answer that can fill the void of an empty location to keep members engaged.
Credit unions closing branches over the past couple of years have, unfortunately, become less shocking. Even credit unions completely shuttering or merging has become almost expected these days as we sluggishly crawl from this troubled economy. As for branch closings, it has been a regular occurrence – even before the recession paralyzed the industry. So how can credit unions create a silver lining to this dark cloud of branch closings?
First, there are a myriad of reasons why credit unions close their branches. Here are a few:
- An SEG closing a factory where a branch is located; therefore, the membership won’t use the once-convenient location any longer.
- A branch can be closed due to the location not pulling its business weight anymore. In other words, it’s a costly anchor dragging down the rest of the organization.
- Online banking technology advancements have made some expensive credit union branches expendable.
- The recent economic woes everybody has experienced has been a headline grabbing reason to close a branch or two to curtail expenses for survival.
Overall, the reason to close a branch is essentially to cut costs. Especially in today’s economic environment, this means analyzing what’s working and what’s not working – ultimately, eliminating what’s not working to remain profitable, maintain the status quo, or stem the cash flow bleeding. Although branches are great for visibility and service within a designated community or place of business, they are costly to build and maintain.
Countering this argument, however, is the continuing need for branches. With the average age of today’s credit union member hovering around 47, there is still a large population of members who enjoy visiting a branch daily, weekly, monthly and talking to a human face to face. There’s a ton of value in personal service – and this is what credit unions are known for. Closing a branch for this established demographic would certainly result in losing members.
As a result, most branches still hold significant value for this sector of many credit unions’ memberships. So what happens when one of these credit unions closes a branch or two, jeopardizing the population of its membership? What fills that void? As stated above, there is a silver lining to this dark cloud. That silver lining is shared branching.
Shared branching is a network of credit unions nationwide that actually “share” their participating branches with each other. Members of participating credit unions can use another credit union’s branch to access and manage their accounts as if they were their credit union’s regular branch.
Members can conduct many financial transactions and obtain services at branch locations or other credit unions belonging to the network. Some of those transactions include:
- Cash/Check deposits
- Cash/Check withdrawals
- Loan payments
- Transfer between accounts
- Statement printouts
- Purchase money orders
- Purchase travelers checks
- Purchase official checks
By filling the closed branch void with shared branching, a member’s membership and accounts remain at their credit union. They can also access their accounts and conduct business with their credit union through any nearby network location.
Here are a couple more reasons how shared branching can fill the closed branch void:
- Financial partnership at the work place is one of many reasons people join credit unions. Convenient branches for members at work, however, probably don’t translate into convenience for their family members. In some cases, family members may not even have access to the credit union’s “factory” or “plant” branches because of security reasons. With a nearby shared branch, however, family members can experience easy access – finding their credit union more convenient and, thus, more valuable.
- With thousands of convenient locations nationwide, members can keep their credit union account even if they relocate hundreds of miles away from their current credit union branch or if their remote branch closes. With shared branching, members can retain their credit union membership nearly anywhere.
Credit union example
The result of implementing a shared branch strategy can mean avoiding a mass exodus of members at a particular closed branch location. For example, one credit union in Indiana manages to garner more than $100,000 deposits per month with shared branching, adjacent to where it had closed a branch due to its SEG’s factory plant being shut down several years earlier. If a shared branch wasn’t nearby, many of those members may have left the credit union for a more conveniently located financial institution.
Instead, the credit union only lost a small percentage of members – much less than it anticipated. It retained a vast majority in part because of the shared branching option provided to them, as well as its other services such as its call center, online banking, and bank-by-phone. Many of the other members actually enjoy the added convenience of doing their banking through shared branching.
With its thousands of locations nationwide, shared branching also made the credit union much more competitive with the large national and regional banks that boast about their thousands of branch locations.
Cost-effective, convenient silver lining
With credit unions continuing to feel the pinch of today’s challenging economy, closing a few branches as a result, shared branching can be a cost effective, convenient silver lining to this tough situation. Shared branching maintains that personal service credit unions are known for, allowing members to experience all the same services they would normally receive at their home credit union.