DBSI+CFM Senior Integration Strategist Cody Willis

The modern branch and digital banking

Microbranches allow credit unions to serve members as advisory centers.

October 28, 2021

The COVID-19 pandemic has changed the way society thinks of physical spaces.

Cody Willis, senior integration strategist at DBSI+CFM, says the financial services industry doesn’t need to move away from physical branches, but must change how they set up and operate branches. 

“Branches are still relevant, but the old format is quickly becoming irrelevant for long-term growth,” Willis says. “Branches need to operate and serve members in a different way to serve market needs.”

While there are more digital options than ever, a Marqeta study found that only 14% of consumers have completely moved forward with digital banking. A 2020 J.D. Power study found that digital-only customers have the lowest levels of satisfaction. 

According to Deloitte, 60% of adults say they prefer branches for opening new accounts and considering complex products.

That means customers are still walking through branch doors. Credit unions that adapt to the changing financial landscape will update what customers see once they walk through those doors.

“There’s a lot of risk in operating large, low-traffic locations, so how do we fix that?” Willis says. “Using technology to enable more self-service will completely change how your branches are used in two to five years.”

He sees a future in microbranches, suggesting that financial institutions add branches within their current market until achieving at least 6% market share. 

“Adding a couple microbranches in your market could add trust and awareness,” Willis says. “The winners will be those who future-proof branch formats.” 

‘Branches are still relevant, but the old format is quickly becoming irrelevant for long-term growth.’
Cody Willis

Old, traditional branch formats are transactional, with large floorplans, a siloed approach, many employees, and high operating costs. Modern microbranches can operate as advisory centers by reducing their footprint and number of full-time employees while focusing on universal staff roles, flexible interactions, personal space, technology, and powerful brand connections.

Willis suggests employing a “rapid refresh” to branches. A typical remodel takes 24-28 months and costs $750,000, while a new building can cost $2.1 million.

A rapid refresh—featuring teller towers, digital signage, interactive kiosks, universal associates, and new interior finishes—takes 12-16 weeks and costs $300,000, meaning credit unions can update six branches for the same price of a new building.

The refresh should highlight the financial institution’s products and branding, Willis says, adding that the average consumer has 16 financial products total but only 2.5 products with their primary financial institution.

Credit unions can increase product use by boosting awareness through visual communication, such as a dynamic community board, tablets, a “wow wall,” and interactive kiosks. Willis suggests using content that drives action, including hyperlocal messaging that builds relationships, migrates members to digital channels, makes the brand come alive, and communicates the institution’s services.

Willis addressed the 2021 CUNA Operations & Member Experience Council and CUNA Technology Council Virtual Conference.