It’s unlikely all credit union branches of the future will be high-tech and low-touch.
But as consumer preferences and bottom-line pressures convince more credit unions to deploy member-facing technologies, it’s increasingly important for them to come up with branch strategies that meet members’ needs.
Credit union executives and vendors have their own ideas of what the branch of the not-too-distant future might look like. The challenge for credit unions, they say, will be to integrate technologies, increase efficiencies, and still deliver high-touch service when members want it.
Brick & mortar will never die
Teller transactions have decreased 4.4% annually in recent years, according to research firm Novantas. Online banking has become the primary channel for a variety of activities, such as product and service inquiries, balance verification, and funds transfer, according to Novantas.
But branches are still critical.
“Transaction activity might be dropping, but it’s wrong and dangerous to say we don’t need branches,” says Steve Reider, president of Bancography, which provides consulting services and software tools to financial institutions. “The account-opening event continues to be critically important. And for the foreseeable future, we want to embrace full-service branches.
“There are very few single-channel consumers out there,” he adds. “And the addition of a new channel doesn’t mean you eliminate something else—it just becomes part of the mix.”
“In the mid-1990s, people said brick and mortar was ‘dead,’ but it isn’t and never will be,” says Scott E. Carter, senior vice president of design for Consultants & Builders. “There will always be a need for personal, face-to-face connections.”
That said, the branch of tomorrow will look much different than the branch of today.
Each face-to-face branch transaction costs about $4, compared with $0.17 for an online transaction and $0.08 for a mobile transaction, according to a mobile banking white paper from Fiserv. Not surprisingly, the hunt is on for effective ways to reduce the branch staff role in basic transactions.
Many credit unions are encouraging members to handle routine transactions themselves—either outside the branch, via online banking or mobile channels, or with self-service options at the branch. The latter include:
“Recyclers let tellers interact with, and cross-sell to, members rather than using face-to-face time to count money,” says Linda Perconti, director of delivery channel solutions for Diebold.
One of the most cost-effective trends away from the teller line is remote deposit capture (RDC), which allows members to scan checks and see deposits reflected in their accounts immediately. Members can use RDC online, at image ATMs, or through mobile applications. This eliminates the leap of faith of putting a signed check into a deposit envelope and whisking it away.
The quick acknowledgment of the deposit is increasing member acceptance of RDC, which has a lower transaction cost than either branches or older envelope ATMs, says Bob Meara, senior analyst for Celent’s banking group.
Giving members superior rates through a low-cost model encourages credit unions to migrate high-cost teller transactions toward more efficient self-service channels, adds Rudy Pereira, immediate past chair of the CUNA Technology Council and CEO of $1.2 billion asset Royal Credit Union, Eau Claire, Wis.
In this paradigm, the branch becomes the place to assist members with lending and wealth management. “You want to drive lower costs, not lower service, and these are the areas where a branch adds value,” says Pereira.
But even high-touch services might not find a place in the branch of the future. It’s becoming more common to have staff in one location, connecting members to staff via videoconference.
Don’t be overly concerned that technology will alienate some of your older members. “All age segments are moving toward self-service for standard transactions, though they still prefer face-to-face to resolve problems or get advice,” says Perconti.
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