10 FOCUSREPORT /The State of Brick & MortarCredit unions, have, over the years, given banking services a physical home incommunities around the country. And although the fate of thebranch has been hotly debatedover the years, digital accelerationduring the coronavirus pandemichas added a new dimension to theconversation.
“Rightsizing” the branch footprint has become an increasinglyhigh priority in 2021. As memberbehaviors continue to shift, creditunion leaders are asking strategicquestions about how to allocatelimited resources: Though therole of the branch is certain toevolve, there are still plenty of reasons branches continue to retaina place in financial services. But,the balance between physical anddigital is being reimagined.
As credit unions contemplateweighty branch decisions, a da-ta-driven process can be a trustyguide through sensitive territory.Here’s how to apply it.
Understand the ‘BranchImportance’ Index
When analyzing member behaviors and branch activity, there aremany factors to consider beyondbranch assignment. A holistic approach requires looking at manythings, including member behaviors, channel migration, profitability by channel, market growthpotential and new member andnew account trends.
CU Rise Analytics developed aproprietary statistical model, theBranch Importance Index, to makea holistic assessment of the rolebranches play within the creditunion’s delivery channels. It analyzes which channels members useto meet their multitude of financialservices needs, when and how.
For example, do members pre-
fer to open accounts in-branch,
but then migrate primarily to
digital channels? Or, is a weak
digital presence inhibiting mem-
bers, pushing them to other chan-
nels for transactions that could
be more easily and conveniently
completed online? Do even highly
digitally-engaged members prefer
to conduct more complex trans-
actions in-branch, such as home
The Branch Importance Indexprovides credit union leaders witha more detailed, quantifiable understanding of the way membersuse branches in the larger context.
It’s more likely, when looking ata single branch in isolation, thatdecision-makers could draw thewrong conclusions. They shouldinstead be equipped with a complete understanding of how members interact with their branchesin order to anticipate how eachdecision affects the larger whole.
Model Attrition Risk
One of the biggest threats when
deciding to close a branch is the
risk that members
will leave the credit
union. It’s a source
of stress for many
leaders, and the an-
swer isn’t obvious
without more deeply
bers’ behaviors and
Part of assessing branch importance should includestudying and scoring the engagementbehaviors of each member. Thisconsiders how many productsthey use and which ones, thefrequency of engagement andhow high digital usage is. Then,members can be segmentedbased on important sharedcharacteristics.
Statistical models can use en-
gagement information, coupled
with historical attrition data, to
more accurately predict the best,
worst and most likely scenarios
when it comes to possible attri-
tion. Then, a credit union can
work to achieve the best-case
scenario by implementing a cus-
tomized communication strat-
egy tailored to each engagement
With a greater appreciation ofhow members use branches alongwith possible attrition and retention scenarios, credit unions canemploy models that estimate potential profitability outcomes.
Anticipating the impact on profitability involves modeling variousscenarios that account for:
• Members relocating to a different branch;
• Member adoption of differentchannels;
• Various attrition/retention lev-
• Changes in member engage-
There are many factors to consider in a branch decision, andwhenever possible, quantifica-tion can help credit union leaders grasp the facts and have betterclarity. But even data scientistslike us know that numbers aren’tthe entire story.
The fate of employees, historyand community presence havea strong emotional componentthat must be weighed alongsidethe data. But considering themtogether creates a fuller picture and equips a credit unionto make a balanced, informeddecision.
Even when making difficultbranch decisions, data insightsmake it more possible to provideexceptional service and ensuremembers feel valued. A memberrelationship can transcend location – and even deepen – whencredit unions truly understandmembers’ needs, find innovativeand personalized ways to meetthem, and most importantly,show they care. n
Making a Branch Decision? Here’s How Data Can Guide You
Karan Bhalla (left), CEO and Floyd Salamino,Vice President of AnalyticsCU Rise AnalyticsVienna, Va.
‘With a greaterappreciation of howmembers use branchesalong with possibleattrition and retentionscenarios, credit unionscan employ modelsthat estimate potentialprofitability outcomes.’