CUs May Rethink Their Approach to Branching

By Ray Birch06.29.2020

The coronavirus pandemic should have credit unions rethinking their approach to branching—not only in numbers but in design as well, says one expert.

“Constriction in the economy is typically when you see shifts in construction thinking,” said Michael Carter, EVP of Strategic Resource Management (SRM), whose company recently completed a study on how FIs are addressing the effects of COVID-19 on their operations.

But unlike changes in branch strategies that evolved coming out of the Great Recession, this downturn may bring about some very different kinds of thinking, according to Carter, largely due to the emphasis on digital to keep people safe.

“We asked respondents what kind of role digital had played in their operations so far into the pandemic, and overwhelming 84% said digital has been vital, and 16% said important,” said Carter.

Moreover, the study found 79% of institutions have provided further education on the use of remote channels to consumers unfamiliar or uncomfortable with digital channel access to their money.

“Everybody is going to need to find ways to save money after this and credit unions have been doing more with less for a while because they're member-based and they want to return as much to members as they can,” noted Carter.

The Real Number to Watch

But the real number to pay attention to is 84% of respondents stating digital has been vital, emphasized Carter.

“When the pandemic has passed, there will be real carryover from what has been practiced during this crisis,” he said. “Once people who hadn’t been using digital much before the pandemic see the ease of using it and all its benefits, they will continue to use these remote channels. If I were a credit union, I’d be rethinking facilities at this point.”

The number of offices and office size will be the first signs of a shift, said Carter, who believes it is no secret which way those numbers are headed.

“Going forward will you see many companies will become more comfortable with a partial remote workforce, so their needs for office space will be reduced,” said Carter.

Carter contends one reason financial institutions have been slow or even resistant to allowing a significant number of staff to work remotely is concerns about accessing sensitive consumer data from home.

“It's always been the thinking that in financial services you have got to have your team all on site to have effective privacy and security,” Carter said. “But the pandemic, I believe, will change that thinking with all the staff now working remotely.”

The Need to Cut Costs

Not only will FIs rely on more staff working from home in the future, they will shift more of the manual work to cost-effective and speedy digital solutions to drive greater efficiencies, said Carter.

“I just spoke with a financial institution that moved its entire mortgage department to digital, a big team,” said Carter. “And when you look at the cost of commercial space these days…”

Carter also pointed to how credit unions are now eliminating and reducing fees, issuing loan forbearance in large numbers, which is going to put even more pressure on margins.

“This pandemic is asking financial institutions to cut costs,” said Carter. “Some credit unions are going to have to cut branches. I think a number will look to have smaller branches. And those that had been thinking about expansion, well…”

Carter further believes credit unions are becoming much more “sensitive” to how they design and build offices, including new designs that might lead to less contact between staff and members. He expects more use of cash machines and interactive teller machines to reduce in-person transactions.

“I think going to a branch will feel similar to going to see a physician specialist—just for very specific needs,” he said.

Role Already Evolving

Kevin Blair, president and CEO of NewGround, told that during the early weeks of the pandemic the company’s projects across the U.S. have continued full speed ahead.

“Construction projects are exempt from the current stay-in-place orders in effect. They are considered essential to continue,” Blair explained.

But Blair said did speak to how COVID-19 crisis could affect CU offices in the future.

“The branch designs being created today already are implementing new member service methodologies, which integrate technology, self-service and the utilization of remote member service through tech like ITMs,” he said. “The role of the branch has been evolving for the past decade, away from transactions and more toward onboarding new members and complex sales and service. New branch designs have adapted already to the new normal for member service.”

The biggest challenge for FIs today isn’t new branches, it’s their legacy sites, contends Blair.

“Over 75% of the existing branches are inadequate in meeting the current member service demands,” he said. “These branches pose the greatest challenge for credit unions. Before any credit union executive makes a knee-jerk reaction as a result of the crisis, they need to pause to see what consumer behavioral changes result from the pandemic.”

Thinking a Decade Out

Blair said CU executives also need to thoroughly analyze their retail delivery strategy to carefully develop a 10-year strategy.

“Included in this strategy is a branch audit to accurately understand the current state of member experience,” he said. “Included in this survey should be a technology and staff assessment—the assessment should identify current gaps as well as identify functions within the branch that can be automated to adjust to new paradigm shift.”

Reprinted with permission from, a leading source of news and resources for credit union decision-makers.