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As Digital Rises, Branches Still Reign. Why?
or years, there has beentalk within the creditunion industry thatphysical branches aregoing the way of the typewriteror telex as members increasinglyturn to digital tools to conducttheir daily banking.
Despite this clear push toward digitization, credit unionsnationwide continue to expandtheir physical footprint by making sizable investments in theacquisition/rental of retail properties, upgrades to architecturalaesthetics to create a pleasingbranch environment, and more.
The answer lies in the evolution of the changing relationshipthat consumers are beginning todevelop with brick-and-mortarretail, and how these patternswill shape our physical communities in the years to come.
As someone who studies howmarket trends are shaped bypolicy shifts in the land use area,I’ve tracked how retailers (andthe landlords who own commercial properties) who are reliantupon their conducting businessvia their physical storefronts, areprogressively adapting to the relatively new normal of the Amazons of the world.
Those that are the most suc-
cessful in today’s retail environ-
ment have physical spaces that
and supplement the
online experience –
not compete with it.
Think of using theTarget app to place areservation on youritems, and then visiting the store to pickthem up. Or going toBest Buy to view thelatest Sony televisionin person, and placing the order for delivery at the register.
The coronavirus pandemichas both amplified and accelerated the simmering trends thatwe have seen fermenting withinthe financial services industryfor years – a push toward digitization, but with physical touchesthat include the ability to makesingular dedicated appointments for more complex banking matters such as taking out afirst mortgage, getting financialand/or retirement advice, andmore.
Today, the role of a branch isless firmly mechanical to a credit union’s operations and morepeople-centric. But it is unlikelythe hulking branches of yesteryear will continue to dot thelandscape of our communities.
As fewer financial transactions
are being conducted in person
by the next generation of mem-
bers, branch footprints have
been shrinking – a trend that has
echoed across the retail sector
in general. The nation’s largest
shopping mall owners, which
have been losing their largest
anchor department stores en
masse, are now looking at ways
to transform the sites into live,
work and play environments
that successfully repurpose the
properties for more
These changespresent sizable opportunities for creditunions to right-sizetheir branch networks in key areas.
Banking is classified by urban plan-ners as a neighborhood service akinto the grocery store,These new smaller pocketbranches should be designed toaccommodate the top-of-the-line mobile solutions many institutions have invested in as wellas to supplement their onlineloan application processes. Plus,these pocket branches serve asthe physical manifestation of afriendly local credit union brand– a 24/7 advertisement that isvisible in the most dynamic areasof town.
The strategic positioning ofbranches, traditionally guided bythe internal mapping of membership populations and the identification of underserved geographical areas, must be supplementedby an understanding of not onlywhere exactly the communities served by a credit union aregrowing, but how. Strong partnerships with localities can helpbolster this knowledge, as cankeeping an eye on ever-shiftingdevelopmental norms.
In rural areas, where both
residential and commercial land
use patterns are significantly
less dense and more automo-
bile-centric, the trend of infill
redevelopment manifests with
the adaptation of older retail
properties into more relevant
and modern uses. This includes
rows of neighborhood store-
fronts, the type in which a credit
union would likely use for a lo-
cal branch, increasingly being
topped with rental apartments.
In the denser suburbs, local train
stations have become a focal
point of redevelopment efforts,
with municipalities and build-
ers working together to bring
more residents within walking
distance of these newly-minted
Forward-thinking creditunions must embrace thesedevelopmental patterns, andbuild smaller-scaled branches intransforming areas in order to bein close proximity to current andpotential members alike.
Credit unions of all sizes musttake a hard look at their physical branch network and reorient their branches to meet theexpectations of the 21st centuryconsumer. In addition, executive leadership must take a hardlook at prevalent real estatemarket trends to ensure thattheir branches are in dynamicareas that meet both the needsof membership and maximizethe potential of attracting newmembers.
Digitization is not to be fearedby retailers, but rather, must beembraced as one more tool touse in the provision of excellent member service. By strikingthe right balance, the industry’ssizable investments in physicalspace can be futureproofed – ascan a credit union’s role in thegreater community. n
Richard MurdoccoPresidentThe Foggiest Idea Inc.
Long Island, N. Y.
‘Those that are the mostsuccessful in today’sretail environmenthave physical spacesthat both complementand supplement theonline experience – notcompete with it.’
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