As the pandemic accelerates the changing role of branches, credit unions must assess where they uniquely fit in.
As we enter 2021, it’s widely understood that COVID-19 was a major accelerator for digital transformation in banking. Credit unions’ most highly engaged members didn’t need a pandemic to push them into digital channels, but for others, it was a clear impetus to increase their comfort with remote deposits, online banking and other digital services.
Now the question remains. Will the digital usage stick, and what does that mean for credit union branches?
Understanding the Role of the Branch
The demise of branches has been predicted for many years, but just like paper checks, they continue to retain a place in financial services. At least pre-pandemic, there were a couple of key reasons for this.
People need social interaction. Human beings are social by nature, and for some—particularly members of older generations—the desire for human interaction supersedes the convenience of digital channels. Some members view branch employees as key members of the community and form genuine relationships with them. These members are likely to return to branch banking post-pandemic, though the frequency may be impacted by the increased adoption of digital channels.
Branches are the preferred channel for new products. A February 2019 global survey by the Deloitte Center for Financial Services found that across all age groups, branches were the preferred channel for applying for new products. Particularly when it comes to more complex financial interactions, many consumers still prefer the human touch. Financial decisions like purchasing a home or investing for the future are personal and weighty, and even the digital native, tech-forward millennial and Gen Z consumers want in-person guidance from a trusted adviser.
Overall customer satisfaction is influenced more strongly by branch interactions. High customer satisfaction is what every institution is after, and the same Deloitte survey revealed that branch satisfaction had a greater impact on overall satisfaction than other channels. Even among consumers with the highest digital usage, branch satisfaction still had the strongest influence. The Deloitte analysts proposed three reasons for this:
- If many consumers are conducting their most important business in-branch, their favorable or unfavorable experiences make strong and lasting impressions.
- Branches are still a symbol of trust.
- Branches provide easy access to banking services.
Only time will tell if the pandemic has caused a significant change in these sentiments, but there still seems to be a place for branch banking. In the coming year, credit unions will be wise to revisit where branches strategically fit into the larger picture. Not sure where to start? We’ll look at that next.
Analyzing Where Branches Fit in Uniquely Into Your Credit Union’s Picture
Credit unions can obtain a clearer understanding of the role branches play within their unique institution with thorough data analysis. As the omnichannel banking trend grows, it becomes more important to enable your members to engage your services seamlessly across channels. To do that effectively, carefully examine:
- Which service delivery channels are members using?
- When are they using certain channels?
- Why are they using certain channels?
Members may have initially established their relationship at a specific branch, but that shouldn’t become the default channel they are assigned to. With the strong shift toward digital interactions, members use a mix of channels, and analysis can reveal the important patterns of behavior.
As members’ digital footprint continues to grow, every credit union should work to gain a better understanding of exactly how its members are engaging. This means knowing how different segments use branches and what the migration to and usage of other channels looks like.
Data analysis can reveal preferred delivery channels based on transaction type, account opening, problem resolution or other activity. Even further, an engagement analytics model can measure the level of engagement each member has with specific digital delivery channels. This information can drive messaging and other targeted strategies to increase awareness and use of digital channels. This puts credit unions in a position to optimize the branch experience in a way that truly aligns with member needs.
Empowering Branch Employees
Because in-branch experiences have a powerful influence on member loyalty, branch employees have an important role to play. They must be equipped to wear many hats that include teller, problem-solver, adviser, salesperson and relationship manager. Their ability to perform each role well can have a direct impact on branch profitability.
Data analytics can provide branch employees with the intelligence and insights they need to effectively deliver responsive member service. Branch employees who are tasked with cross-selling shouldn’t be pushing the “product of the day,” but knowing how and when to make timely and relevant offers, driven by data. Relationship management goes beyond a helpful smile; it requires the branch employee to have enough knowledge about an individual member to provide tailored support throughout the lifecycle.
Access to dashboards and reports that illustrate the impact of branch employees’ efforts will help them understand their contributions. The emphasis on empowerment often leads to improved performance, satisfaction and accountability.
There are many unknowns still on the horizon, but little doubt that digital transformation will continue to move rapidly in 2021. The role of branches among the mix of delivery channels will continue to evolve as we adjust our understanding of the new normal. In 2021, credit unions should ensure their branch service can both stand alone and also integrate seamlessly with digital channels to deliver a consistently great member experience.
Floyd Salamino is VP/analytics and Karan Bhalla is president/CEO at CUES Supplier member CU Rise Analytics, Vienna, Virginia. Salamino has been in the credit union industry for more than 35 years with about half that time working in credit unions and the other half with vendors serving credit unions and other financial institutions. Bhalla has two decades of financial services and data analytics experience, having worked and consulted for such leading corporations as Capital One, AmEx, BT and Fannie Mae. He now uses this experience to level the playing field for small and mid-size financial institutions.