Five Strategies for Predictable Core Deposit Growth

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This article originally appeared on CUInsight.com.

In today’s financial landscape, core deposits are the lifeblood of your credit union.

Interest rates seem to have stabilized, but the combination of the rise of interest rates and inflationary pressures in the last few years has returned us to a place where the best way to grow your credit union is by growing core deposits.

While you may have embraced that reality in theory, many credit union leadership teams struggle to find and implement practical strategies that will help you compete and win in your market.

Strategy 1: Focus on advisory services over transactional.

Focus on building relationships and providing thoughtful financial advice to members. Big bank conglomerates may beat you on digital tools, but there’s no reason they should beat you on delivering advisory services that increase your members’ financial wellness.

To do this well, you need to build trust, provide excellent customer service, and give members solutions to the practical financial problems they face.

In some ways, “advisory over transactional” could be the category that all of the strategies below fall underneath, but it’s important enough that it needs to be at the top of the list.

Strategy 2: Target Gen Z.

Gen Z was born into a world with digital advancement in hyper-speed, but also a world of financial turbulence. The result is a generation that may seem like something of a paradox—digital natives who are more financially conservative.

By providing financial education and enablement, you have the chance to bring this generation into their fold as loyal members and low-cost depositors.

Consider offering educational classes for the community about topics like living on a budget, getting your first mortgage, and understanding different saving and investing options. You’ll build trust and give members the tools they need to thrive financially.

Strategy 3: Reinvent branches.

Have you noticed how often restaurants update and remodel their locations? Usually about every 5-7 years. And it’s not a waste of an investment, either. Studies show that remodeled restaurant locations usually see sales increases between 15-40%.

If updating the space where people go for a chicken sandwich makes that much of a difference, how do you think people view a branch that hasn’t been updated in 10+ years?

Make the strategic investment to update your spaces—not just with a coat of fresh paint and new carpet (although you probably need those as well). Reimagine your space to facilitate a more advisory approach instead of putting your staff behind a huge teller wall.

You’ll be surprised at how a refreshed and reinvented space attracts new members.

Strategy 4: Highlight local connections.

Here’s another area where credit unions can run circles around the big bank conglomerates. Make strategic investments in your community and don’t be shy about spreading the word about the good work you’re doing.

Many people don’t understand that credit unions are fundamentally different from banks in that they don’t exist to benefit a group of unknown shareholders. As nonprofits, credit unions should invest time, energy, and resources to help people understand how they make communities better by keeping revenues in the community.

Strategy 5: Gather and share member testimonials.

Putting systems in place to consistently gather and share member testimonials is one of the most important things you can do from a marketing perspective.

People are bombarded everyday with literally thousands of marketing messages. Online reviews play a shocking role in the decisions people make every day about which products and services they choose.

In fact, partially due to the overwhelming amount of marketing messages consumers receive, they overwhelmingly trust what others say about you over what you say about you.

You can regularly request that satisfied members post a Google review of your credit union (there are automated services that will make this fairly easy that are surprisingly affordable).

And, you should consistently ask members for their feedback so you can both improve the services you offer and share their positive testimonials through all of your communication channels.

Far too many credit union executives drastically underestimate the power of member reviews and testimonials. Many of your members will be happy to give a review or testimonial—they just need to be asked.

More Intense Competition for Core Deposits is On the Horizon. Are You Ready?

It may go without saying, but we feel the need to say it anyway. Greater competition for core deposits is coming soon—in fact, it’s already here!

If you’re not feeling a sense of urgency to find and implement effective strategies to grow your core deposits in a predictable way in the future, you haven’t been paying attention the last few years.

Now is the time to take bold action. Even if you can’t do all of the strategies we’ve articulated here, choose one or two and get going now. Then, over time, implement as many as you can. That’s a plan for predictable long-term growth.

Contact Us for Credit Union Growth Strategy

Reach out to our expert credit union consulting and branch optimization team today for help with targeting and reaching new members – we’ve guided credit unions for more than 20 years with a reliable data-driven approach to identify member demographics and optimal ways to foster their engagement.

Three Common Mistakes Credit Unions Make When Looking to Grow Core Deposits

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Artistic image of a close-up of a 100 dollar bill to symbolize growing core deposits

This article was first posted on CUInsight.com.

How are we going to grow core deposits?

This is the question many credit union executives have recently been wrestling with. With zero percent interest rates a thing of the past, the only real option credit unions have is to expand their reach—attracting new members who make new deposits. How can you avoid mistakes credit unions make to grow core deposits?

The unfortunate reality is that many executive teams had been lulled into an uneasy sleep over the last 15 years, thinking that the low interest rate environment would never end. Now, finally facing the fact that we won’t be going back to that any time soon, they’re scrambling for a silver bullet to find new members, open new accounts, and bring in those new deposits.

In that scramble, we’re seeing credit union executives oftentimes making three big mistakes. If you want to cultivate a growth strategy that yields consistent, predictable long-term growth, you’ll need to avoid all three.

MISTAKE #1: Putting all your eggs in the digital basket.

Do you need a good solution for online banking? Of course. Are you going to create an online banking experience that differentiates you in your market to the degree that it will be your primary growth engine? Probably not.

Community based credit unions will almost always struggle to compete on a digital solution alone when compared with enormous banks that can invest tens of millions into their online tools. You need digital banking solutions that work, yes, but you’ll never grow solely based on your app or your online bill pay.

To compete and win the online banking battle will take more than you will ever be able to spend. If you’re putting all your hopes for growing core deposits into attracting new members through your slick mobile app, think again. The online experience is one factor—and not even the most important one—for people (no matter their age) who are evaluating banking options.

Digital alone won’t grow your core deposits.

MISTAKE #2: Believing the “branching is dead” myth.

Branching as a growth strategy is far from dead. If you’ve been paying attention lately, both PNC and JP Morgan Chase recently announced enormous investments in their branches.

They’re planning to open new branches, close under-performing branches, and remodel existing branches, investing billions of dollars in making sure that they’ve got up-to-date locations in the communities where their potential customers live and work.

At LEVEL5, we’ve seen insight-based branching strategies predictably grow core deposits no matter the economic landscape. Digital transactions don’t build trust. And trust is what ultimately drives where people put their money.

When you’re on a road trip, you’ve got to decide which gas station and convenience store you’ll use. How do you decide? You look for indicators of the other businesses nearby, if the exterior looks clean and well-maintained, and the ease of access to get in and get out.

If you consider all those factors when you’re going to spend 10 minutes there to fill up your car and get a snack, how much more important are those factors when people are considering where to put their money? Branching is still the best strategy to build trust and attract new members.

MISTAKE #3: Thinking data is the same thing as insight.

Do you remember when everyone started talking about the power of big data? The conversation was all about how advances in technology would allow smaller entities to gain the same access to enormous amounts of data to better understand their companies and their customers.

Big data by itself won’t help you grow your credit union. Everyone has data these days. You don’t need more data. You need more insight.

When you can sift through the mountains of data and draw conclusions that matter, that’s insight. When you can see and take advantage of real estate opportunities when the best locations aren’t even on the market, that’s insight. Insight comes from combining data from many sources—including boots-on-the-ground research—and leveraging both experience and expertise to understand what the data means … and how it can guide your growth strategy.

If you don’t avoid these mistakes credit unions make to grow core deposits, you’ll be taking enormous risks and miss key opportunities while your competitors—including the big banks like PNC and JP Morgan Chase—gobble up the best locations and new deposits.

But if you can resist and avoid these three mistakes, you’ll be on your way to developing a predictable growth strategy that will attract new members and increase your core deposits and get a jump on the competition.

To learn more about how you can set your credit union on a predictable growth path, download LEVEL5’s latest white paper, Core Deposit Growth Trends →.

mock up of the white paper about core deposit growth trends

How to Choose the Perfect Location for Your Credit Union or Bank Branch

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Sun Community Federal Credit Union exterior

a data-driven branch strategy approach

Selecting the ideal site for your credit union’s or bank’s next branch is a critical decision that can significantly impact your institution’s long-term success. Gone are the days of relying on intuition alone; today, financial institutions need to use data-driven strategies to make informed choices.

At LEVEL5, we understand the importance of coupling data with our Branch Site Selection services to provide well-informed, actionable recommendations. In this article, we’ll explore why it’s crucial to let the data dictate the right location in your trade area and how partnering with a developer-minded firm like LEVEL5 can lead to the best results.

Bird's eye view of of a town with roads and trees

Data-Informed Branch Site Selection: More Than Drawing a Circle on a Map

Simply drawing a circle around a location on a map based on gut feelings won’t guarantee the best site for your next credit union or bank branch. Accurately assessing growth markets requires a comprehensive analysis of multiple data points that leads to a quantifiable recommendation.

However, while having data pointing to a specific site is essential, it doesn’t guarantee the availability of suitable locations in that area. That’s why LEVEL5 synthesizes our data strategy with our vast real estate acquisition experience and capabilities.

Aligning Strategy with Actionable Branch Site Recommendations

Data without a clear strategy is meaningless. Paying for data analysis is only valuable if it leads to actionable insights. We combine our Site Selection services with the data obtained during our Branch Market Analysis Strategy sessions so that we only recommend prime sites which can be acquired.

This integration ensures that the locations we recommend not only meet the data criteria but also align with your defined business strategy. By fusing data and strategy, we present you with workable options that truly support your long-term growth goals.

People in suits seated around a table discussing business

The Benefits of a Developer-Minded Branch Network Partner

Choosing a site is about understanding how the chosen location fits into your long-term plan. That’s why we think of ourselves as developers with your overarching plans as the goal, not mere brokers. Our approach involves a thorough assessment of the geographies and available options within a given trade area.

Moreover, we overlay the Credit Union or Bank Branch Design types that best suit the specific location, directly aligning with your 10-Year Branch Pro forma developed during the Strategy phase. This approach ensures that the site chosen will indeed support your long-term objectives.

Construction worker and project manager on an unfinished job site wearing hard hats, looking at blueprints. Surveyor in the background.

Edwards Federal Credit Union branch exterior, three-quarters view

Location, Location, Data-Driven Action: Partner with LEVEL5 for the Perfect Credit Union or Bank Branch Site

Selecting the right site for your branch or headquarters is a critical process that requires more than just intuition or simple mapping. A data-driven approach, coupled with a clear strategy, is essential to making informed and actionable decisions to grow your branch network.

At LEVEL5, we bring you the expertise of a developer, not a broker, as we assess geographies, identify suitable options, and align them with your long-term goals.

Let the data guide you to an optimal site and work with a partner who understands your unique needs. Contact LEVEL5 today to ensure that your financial institution makes the best location choices for sustainable growth and success.

Don’t Let Your Data Go to Waste: Maximizing Growth Opportunities in Credit Union Banking

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apples for metaphor within Level 5 blog text

The Perishable Nature of Data in Credit Union Growth Strategy

Credit union growth strategy is like apples. When you go to the grocery store, and you see those ripe, crisp apples at their peak of freshness, you buy a bunch with every intention to consume them over the next day or so. You put them in a bowl, on the counter, but if they go unattended, they begin to stale, go past their peak freshness, eventually going rotten.

In the world of credit union banking, data and apples are one and the same. When delivered, they are fresh. If left alone, they begin to stale with each passing day. If you are a financial institution executive looking to grow and you are given fresh data, do you intend to do something with it, or will you just watch it rot?

When you hire a firm like LEVEL5 to assess your current and potential growth markets, we give you irrefutable data points and a 10-year pro forma back-tested at 96% accuracy. When looking to de-risk decisions, you have confidence in the black and white, binary numbers to help support your decisions.

But that data has a shelf life, and you need to strike while the iron is hot. Otherwise, you may miss out on real growth potential because as time ticks on, your data becomes stale, all the while, your competition will likely be making their moves.

Let’s say you receive the data and you don’t act on it for 6 months…that’s 6 months you could’ve been making progress, now lost. Can your institution really afford to be behind for so long?

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3 Ways Current & Valid Data Assist Your Overall Growth strategy For your credit union

Change is the only constant, and how you fare rests on your ability to adapt accordingly. That goes for branch networks too, one of your major avenues for gaining and maintaining your desired membership.

Visualize your branch network as an ever-adapting entity, acclimating to the winds of change in market viability and member demographics.

You need to play this strategy correctly and decisively to win out. Accurate analysis for fruitful future steps can certainly be made in this state of flux. However, lingering on data longer and longer places your organization further and further behind in making highly effective moves for your network’s viability.

There are 3 pivotal ways to optimize your network, but acting on your current data analysis is highly time-sensitive in order to reap the rewards.

Opening New Branches in the Right Areas

With accurate market and demographic analysis aligned with your specific goals, you understand the logic and purpose behind opening up new branches in high-quality locations.

You don’t want to let solid direction pass you by here, as you’ll be missing out on prime locations that will be building up your member portfolio and holdings.

Worse yet, a savvy competitor may beat you to saturating a market before you can. Watch our video on Northeast Credit Union where we helped them grow into new places with informed market analysis.

Closing Under-performing Branches

Branches that are repeatedly in the negative need to be closed and waiting too long means they’ll keep pulling valuable resources from your organization, resources that could be reutilized elsewhere for growth.

Don’t worry, closing a branch is not the end of the world, in fact, it’s just par for the course. Similar to retail environments, it is part of the evolution of your institution. Their absence can be made up for in spades with your new locations that are primed for future performance.

Do you act soon and save resources based on your valid data? Or do you wait to see what happens while running a real risk of detriment to your institution?

Crafting Your New Branch Prototype

Your prototype works on so many levels to drive your institution into the future and holding back in its implementation sets you back even further. A world-class prototype design accounts for everything needed to make a success including, but not limited to:

A floor plan to facilitate employee and member interaction
A modern appearance that solidifies you as a leader in your market
Branding consistent with your culture and values
An easily repeatable and malleable design for effective, rapid deployment

When you meticulously create a new branch prototype, you’re laying the foundation for attracting new members and offering excellent quality experiences for years to come. This design is carefully crafted and tailored to meet the needs of your members’ unique demographics as well as to accommodate the future needs of your financial institution. Consider the following if you’re hesitant to put your prototype into action: Why go through all that upfront work creating the next generation of your institution, just to never use it? You’re truly doing yourself a disservice by waiting too long to act on quality data, plain and simple.

Data Crunch Time: Take a Bite of Growth Opportunities Before They Spoil

In the fast-paced world of credit union banking, data is a valuable asset that can drive growth and help you stay ahead of the competition. By acting on current and valid data, you can make strategic decisions about opening new branches, closing underperforming ones, and crafting innovative branch prototypes for the future. Don’t let success pass your organization by waiting too long to act on quality data.

Embrace actionable data and partner with experts who can guide you through the process of utilizing it for meaningful and lasting expansion.

Contact our team today to unlock your credit union’s or bank’s growth potential before time runs out. The clock is ticking, and your institution’s future success relies on your ability to adapt, make informed decisions, and leverage the power of fresh data.

Core Deposit Growth Strategy: Part 2

What are the growing performance trends for Credit Unions?

Analyzing Credit Union Performance Trends: A Decade in Review

Previously in this article series, Core Deposit Growth Strategy: Part 1, we looked back over a period of 20 plus years to learn the history of what led the financial services industry to today’s environment. Now, we’ll zoom our lens further in to the past 10 years in particular, focusing on key credit union performance trends, and how recent large-scale change in the world affects your institution’s next stage of growth.

Peer Group Analysis: How Credit Union Asset Size Influences Growth

Furthermore, for a comprehensive comparison, let’s start by breaking down credit unions into six peer groups based on asset size:

Assets < $2 million

Assets $2 million – $10 million
Assets $10 million – $50 million
Assets $50 million – $100 million
Assets $100 million – $500 million
Assets > $500 million

The Impact of the Great Recession and COVID-19 on Credit Union Assets

informational credit union performance trend chart made by level 5

informational credit union growth performance trend chart made by level 5

By 2013, the Great Recession was a fading memory, but its influence is still evident.

As of then, things are moving along pretty well, rates are low, and we’ve never heard of covid.

That’s our point of origin for this discussion.

Asset growth was pretty consistent through about 2018, and then the ride got bumpy. Once the pandemic is underway, we see assets in a near-vertical climb.

Also, asset growth within a peer group correlates to the asset size of the peer group, resulting in bigger institutions growing faster.

Deposit growth trends

Of course, deposit growth was the real driver of asset growth at that time, fueled by various forms of government stimulus being pumped into the economy during COVID as well consumers playing it safe by stockpiling savings as the stock market looked like a scary place to park one’s hard-earned money.

This trend peaked in 2020, and deposit growth returned to something close to normal by 2022.

chart displaying information about deposit growth trends

Loan growth trends

Loan growth tells a similar story with a couple of plot twists along the way. As with assets and deposits, the loan growth rates are almost perfectly correlated with asset size.

Prior to the pandemic, loan growth rates were stable (or declining a bit for the largest credit unions). The pandemic’s impact on loan growth is almost a mirror image of deposit growth. During the pandemic, consumer uncertainty and rising interest rates combined to quash loan demand.

Post-pandemic, pent-up demand and lower interest rates drove more loan demand, which continued even as rates began rising in mid-2021 (perhaps with some borrowers rushing to close loans before rates rose even higher).

Loan-to-Deposit Ratio: A Key Indicator of Credit Union Performance

loan/share credit union ratio growth trend

The nature of the banking industry is a balancing act between deposit acquisition and loan dispersal. Accordingly, the loan to deposit ratio is one of the fundamental measures of any institution’s performance. The loan to deposit ratio gradually grew 2013 – 2018, and then things got interesting.

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Exploring Net Interest Margin Trends in the Credit Union Sector

As you know, similar to the loan to deposit ratio, net interest margin is a key metric that tracks the combined effectiveness of the institution’s deposit-gathering and loan-granting activities.

Loan and deposit rates are both set by the individual institution but are also constrained by the Federal Reserve’s activity too as competitive response. But, as you also know, loan and deposit volumes are influenced not only by pricing, but also by an institution’s strategic day-to-day and long-term performance in marketing, reputation, member service, and convenience.

With this in mind, this is a great place to reflect and ask yourself “what can my institution do next to achieve our net interest margin goals?”

Navigating the “New Normal”: Challenges and Strategies for Credit Unions

The takeaway from of all this is that it’s too soon to tell exactly what the “new normal” will look like, but we can certainly use our experience and assessment to confidently project:

>Higher rates will raise the cost of funds, putting the spotlight on core deposits and other low-cost deposits.

>Higher rates may also dampen loan demand, at least in the short to intermediate term (sooner or later, cars have to be replaced, families need to move, and unexpected life events happen!).

Previously, some institutions have created high performance lending teams over the low-interest rate era, but diminished loan demand in the present and near future may constitute a refocusing of your strategy.

So, what can be done?

Our next and final post in this series will examine some strategies to pursue core deposits as one way of managing the “new normal” and boosting your net interest margin.

Leveraging Technology and Strategic Planning for Credit Union Success

In this dynamic landscape, credit unions must adapt to changing member expectations and leverage technology to deliver exceptional retail bank customer experiences. Embracing data-driven retail credit union consulting and strategic planning can position your credit union to thrive in the evolving market.

At LEVEL5, we understand the unique challenges faced by credit unions and offer expert guidance in credit union strategy and planning. Our 20 years of experience as pioneers in modern bank design and retail bank consulting, enables us to deliver innovative solutions tailored to your institution’s needs.

Whether you’re exploring credit union or bank branch construction, credit union or bank branch design, or branch transformation, our national design build services ensure a seamless process from start to finish. We specialize in strategic planning for credit unions, market analysis, and designing the branch of the future.

Check out the other posts in this series

Growing Core Deposits Blog Series Part 3 ➝

Growing Core Deposits Blog Series Part 1 ➝

Contact Level5 For Help with Your Core Deposit Growth Strategy

Contact us today to learn more about how LEVEL5 can help you navigate the changing landscape of the financial industry and achieve your growth objectives. Let’s build the future together.

Core Deposit Growth Strategy: Part 1

Understanding Historic Trends is Critical for developing & executing strategy for core deposits growth

stock image to portray historic trends for core deposits growth

This is part 1 of a 3-part series to help credit unions develop effective, long-term strategies to grow core deposits.

What Was the Financial Industry seeing in historic trends for core deposits in January 2000 and How Has it Affected Today?

Let’s set the stage by thinking back to January 1, 2000. We all awoke with a wary eye. Had our efforts to ensure all our electronics were Y2K compliant succeeded? Or had civilization imploded at the stroke of midnight due to a glitch that the earliest programmers never envisioned? The glow from our bedside alarm clocks gave us a glimmer of hope. When our trusty coffee makers bubbled to life, we began to rest assured that life would go on indeed.

When we were in our “just glad to be alive” moment, we couldn’t imagine the changes that the next twenty-plus years held for our economy and the financial services industry.

Strategies for the Future of Financial Services Should be Informed by the Past

Although the economic shifts in the last 2-3 years have appropriately created a growing level of concern for credit unions, additionally considering the past two decades puts today’s financial landscape in clearer perspective.

A review of the prime and Fed Funds rates will give us insight into the challenges we’re facing today.

Following the dotcom boom and Y2K was the dotcom bust. Then the horror of 9/11 weighed in and rates headed for the cellar.

The economy regained its strength, largely led by a housing boom, and rates went up.

chart made by level 5 depicting key rates for historic trends

Then, like a lightning strike, the housing bubble burst, and we found ourselves in the “Great Recession.”

This resulted in a protracted period of unbelievably low rates. Again (and predictably) home prices started to rise, and rates were adjusted upward. Then came COVID, and the rates were pushed back down to their historic lows.

Eventually and thankfully, the pandemic subsided, but we were faced with “new normal” conditions—just to name a few examples, remote work became more of the norm, retirement/resignations spiked, and a blistering housing market ensued. In response to this “new normal” the Federal Reserve instituted fast-paced, significant rate hikes to the point that nothing about our economy seems certain.

How Did We Get Here?

It’s clear that the season of very low rates resulted in a readjustment in personal and corporate budgets. Low rates made everything more affordable and we adjusted our sails to take advantage of the favorable breeze.

For the financial services industry, there is a renewed focus on core deposits. Why? The low-interest rate days are gone and unlikely to return. Borrowing to fund lending is significantly more expensive.

Further, borrowing of any sort is more expensive, which threatens loan demand. Highly-driven lending teams are constrained by the institution’s ability to fund loans and maintain adequate spreads.

This is all brought up to make this point…There are banking professionals in the industry who have 15 years of experience on their resumes but have never experienced a “normal” rate environment. It’s not their fault—they couldn’t choose the year they were born!

stock image of financial information to track historic trends in core deposits

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Our Team Helps You with Core Deposit Growth Strategy in Today’s Market

Given the current economic landscape, now is certainly the time to reexamine your credit union’s strategic planning for the long-term. In many ways, the conditions that threaten the industry are more of a “return to normal” adjustment than a doomsday scenario.

To find solutions to guide us into the future, we need to understand more of the industry’s historic response to similar conditions and return to some tried-and-true long-term strategies for sustainable growth.

What are those strategies? That’s what we’ve covered in the next parts of this series.

Growing Core Deposits Blog Series Part 2 ➝

Growing Core Deposits Blog Series Part 3 ➝

Have questions today? Please contact us! For over 2 decades, LEVEL5 has developed winning credit union growth strategies through every ebb and flow of the economic landscape, so you can certainly say we know a thing or two about charting a course for a healthy future.

Branch Optimization: Choosing the Right Path for Long-Term Success

increase Growth and Profitability with curated branch network strategy

branch exterior depicting branch network strategy by Level 5

What is important in branch network strategy?

When it comes to strategically managing branch networks, financial institutions face crucial decisions about whether to keep, remodel, relocate, or close branches. These decisions can significantly impact growth and profitability over many years. While data plays a vital role in informing these choices, there are several factors to consider beyond mere numbers to ensure your resources and efforts are allocated correctly for healthy growth.

In this article, we delve into the strategies for making the right decisions and highlight the importance of strong leadership in shaping a successful credit union or bank branch network.

The Four options

Keep: Identifying High-Performing Branches

Identifying branches worth keeping involves a comprehensive assessment that goes beyond immediate performance. It requires evaluating various factors such as financial benchmarks, forecasts, and environmental considerations.

By examining both internal and external data, financial institutions can determine branches that not only perform well in the present but also show promising long-term potential.

Branch Remodel: Breathing New Life into Branches

Sometimes, a branch in the right market may experience a decline in performance. Instead of closing it outright, a remodel can be a viable option.

how the remodel helps

Through incorporating new technologies, design elements, and layouts, financial institutions can rejuvenate the member experience and attract and engage more customers with a fresh and modern ambiance. An updated branch remodel design enables them to tap into the untapped potential of existing locations.

interior depicting level 5 branch network strategy

Relocate: Unlocking Potential through Strategic Moves

Under-performing branches in suitable markets might benefit from relocation. The decision to move can arise from factors such as branch type, traffic patterns, or location restrictions.

data for relocation

Analyzing external data, including market trends and demographic information, helps financial institutions identify areas with greater growth potential.

By strategically relocating branches, they can leverage favorable conditions and improve overall branch performance.

Close: Making Tough, but Necessary Decisions

Closure is a challenging decision for any financial institution. However, there are instances where it becomes necessary to maintain the network’s performance. Branches that not only underperform but also adversely impact the entire network may require closure. Strong leaders must rely on internal and external data to make the tough call of closing branches that are no longer viable.

Work with Credit Union & Bank Growth Consulting Experts

Effective branch management involves making strategic decisions about keeping, remodeling, relocating, or closing branches.

In the dynamic landscape of branch network management, making informed decisions is vital to maximizing your credit union’s or bank’s growth and profitability. Financial institutions need a partner that can provide expert guidance and data-driven insights to navigate the complexities of keeping, remodeling, relocating, or closing branches.

That’s where LEVEL5 comes in. As a leading growth consultancy and best-in-class branch design and construction firm, we’ve specialized in branch transformation for over 20 years, offering actionable, comprehensive solutions tailored to the unique needs of financial institutions.

A Modern Playbook: Leveraging Big Data for Decision Making in Financial Institution Growth and Branch Design and Construction

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growth strategy using external data — While most financial institutions have access to internal data sets, the real power lies in a growth strategy that utilizes external data—which LEVEL5 does, with a remarkable track record of 96% accuracy in our strategic recommendations.

With LEVEL5’s 20 years of experience, we have developed a modern growth playbook that relies on big data rather than old-school intuition, providing quantifiable insights that have consistently achieved business success.

In this article, we will explore the significance of data in expanding financial institutions long-term, the limitations of intuition, and how LEVEL5’s data-driven approach can help your institution make strategic decisions with unparalleled precision.

The Power of Data

Data vs. Information

Data is the foundation, but it is the interpretation of that data that turns it into actionable information. Think of an alarm clock displaying the time—it’s data. The actionable information is that it’s time to wake up. Similarly, financial institutions need actionable information—what to do and when to do it—derived from data in order to make informed decisions.

Using Data for Strategic Branch Network Decisions

LEVEL5’s Strategic Consulting Group has a finely honed analytical process, utilizing both private and public data points. We have developed custom algorithms that provide fool-proof, data-driven facts to guide strategic decision-making. This approach ensures that expansion market decisions are not based solely on intuition, but rooted in concrete data.

Market Analysis for Credit Union & Bank Growth

When assessing new expansion markets, relying on intuition is no longer sufficient.

For example, when considering a new branch location, perhaps a specific idyllic area in the community first comes to your mind.

You might “feel” this is a prime spot for growth, but how far does this “feeling” really get you?

Sure, it may be a well-trafficked area, perhaps near a hub of retailers, but what if there are even more optimal locations in your town unbeknownst to you, spaces with even more traffic, even more of your member demographics, and with even more potential for future growth?

It pays to know!

That’s why each market decision must be backed up with careful, in-depth analysis that helps you minimize unknowns and maximize potential.

LEVEL5 has been assisting clients with market analysis for two decades. Our comprehensive approach examines state, county, metro, and trade areas to determine growth trajectories that make sense both in the present and for the next 5-10 years. The resulting reports provide clients with a 10-year branch pro forma, offering accurate visibility into how a branch will perform on a specific street corner.

By analyzing data at various levels, including state, county, metro, and trade areas, we provide actionable insights that enable informed decision-making.

De-risking Growth Decisions with Unbiased Data

The Role of Data in De-risking Decisions

Data provides clarity and reduces uncertainty when making growth decisions. It allows financial institutions to understand their “elbow room” in a given market and forecast performance accurately.

By running multiple pro formas that consider branch types, personnel, and technology fit, LEVEL5 ensures decisions are based on reliable data rather than subjective intuition.

Data Points the Way

The Power of Data-Driven Decision Making: Insight Beats Intuition

Data-driven decision making is not new. Industries such as e-commerce and sports have long embraced the power of data to enhance their strategies. Financial institutions can also harness this power to inform their branch playbook and make well-informed decisions.

By basing your decision-making on quantifiable insights rather than intuition, you set your financial institution—whether a community-owned bank or credit union—on a path toward sustainable, long-term growth.

LEVEL5’s Holistic Approach

LEVEL5’s approach to strategy and market analysis goes beyond traditional consulting engagements. We combine market analysis with site selection, ensuring that the quantifiable insights provided are actionable. Our comprehensive process involves two main components: critical inputs and outputs.

Critical Inputs:

The critical inputs for LEVEL5’s market analysis are derived from a range of data sources. These include proprietary data points exclusive to LEVEL5, as well as data points specific to the financial institution itself.

Staffing interviews provide qualitative and quantitative insights, while market segmentation analysis and trade area analysis contribute to a comprehensive understanding of the market.

Outputs:

The outputs of LEVEL5’s market analysis process provide clients with actionable information.

A 10-year pro forma offers visibility into a branch’s performance, including key factors such as loans, deposits, and return on investment.

Branch type models allow for flexibility in considering different branch types, while the staffing model helps evaluate the impact of personnel on performance.

Additionally, technology-needs assessment ensures that capital costs related to technology are considered in growth decisions.

Grow Your Financial Institution with Confidence Through a Data-Driven Strategy

In the dynamic world of financial institutions, and especially in a tough business environment like the one we’re facing today, relying solely on old-school intuition is no longer enough to stay competitive. By embracing big data and adopting a data-driven approach, financial institutions can make informed decisions and build with confidence.

LEVEL5’s expertise in utilizing data and providing actionable insights has made us a trusted partner for financial institutions looking to design and build successful branches.

By leveraging the power of data, LEVEL5 helps financial institutions navigate the evolving landscape with assurance, backed by accurate insights and strategic decision-making.

Contact LEVEL5 today to learn more about our proprietary data-driven approach and unlock the growth potential of your financial institution.

3 Reasons to LAUNCH: Discover

We Have Liftoff

LEVEL5 is excited to help your FI with your growth initiatives in 2023 and beyond with our LAUNCH Program.

We’ve built this phased approach to assessing and launching your growth strategy around the methodical steps aimed at uncovering the challenges getting in the way of your Credit Union or Bank achieving its objectives and goals.

Phase I: Discover

LAUNCH program discover — Training materials

The first phase in. our LAUNCH Program is called “Discover” – when our relationship will begin with a casual conversation, no more than 30-minutes, where we simply have a chat.

In this discussion, we’ll go over our services and background – but this phase is frankly about you. We’ll want to know about your FI’s history, your place and positioning in the communities you serve, and most importantly, current state versus desired state.

Your “Current State” is where you are today – number of branches, trade areas, assets, branch type mix, and of course, your member/customer base.

Your “Desired State” is where you want to be – expansion plans, asset goals over the next 3-5 years, thoughts on branch types, hub & spoke models, as well as any M&A’s that may be in play.

From here we’ll start to discuss next steps. Most importantly, we’ll need to uncover what is getting in the way of you executing and achieving your goals. That bridge from here to there is typically full of roadblocks, but that’s where LEVEL5 comes in.

Why LAUNCH At All?

The LEVEL5 LAUNCH Program follows a methodical, yet casual approach to uncovering the critical needs of your Financial Institution. Through a series of easy discussions, our team will be able to capture your goals, but also understand what is getting in the way of you achieving them.

From there, we’ll be able to move into the other phases of the LAUNCH Program and make actionable recommendations on how to execute to these goals.

To learn more about our LAUNCH Program, and to schedule your first “Discover” call, contact us today to get going.

The LEVEL5 Construction Warranty Process Explained

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When you embark on your next credit union or bank branch construction project, you’re making an investment in your growth for years to come. That’s why you want to know that all aspects are completed correctly during the build process, so your facilities will work properly to meet your goals.

Here, we want to break down our One Year Warranty process that’s offered on new branch Design-Build projects so you can better understand how your investment receives an extra layer of protection. Remember, each individual contract is different, but here we provide a general overview.

Let’s jump in.

When Does The Warranty Begin?

Warranty start date can be determined by one or a combination of the following scenarios:

A. When the building is occupied and used by the Owner for its intended purpose. Sometimes, owners move in before the final punch list is completed, but when this occurs, the owner gets Beneficial Occupancy and is utilizing the building systems.

And/Or

B. When the final punch list is generated and then subsequently addressed and completed by the General Contractor and then when the Architect Officially Issues the Certificate of Substantial Completion (this is contingent upon the punch list being completed satisfactorily.)

If you’re unaware of what a punch list is, it’s a document created towards the completion of a project, which identifies work that has not met specifications of the contract. It is generated by a site walk-through with the LEVEL5 Superintendent, Project Manager, the Owner (You), and the Architect.

Before a final payment is issued, the General Contractor must successfully resolve all outlined tasks.

The key to warranty is when the project is substantially complete and contracts vary as to the definition of Substantial Completion. Every contract can be different. From our perspective, the key is the definition of Substantial Completion.

What Does The Warranty Cover

Speaking in the turnkey context, a warranty will essentially cover all aspects of the building’s structural quality, appearance, and function including, but not limited to:

Design flaws by the Architect
Mistakes made by any Contractors
Damage to items or spaces
Incorrect installation of equipment/malfunctioning equipment
Promised elements that were not delivered

When orchestrating a project, we create subcontracts with Subcontractors.

Subcontractors are often referred to as Trades and are managed and directed by a General Contractor to complete specific aspects of your project. Some examples of common Subcontractors include the Electrician, Roofer, Landscaper, Window Installer, Brick Mason, etc… These subcontracts have a One Year Warranty, which runs concurrently with LEVEL5‘s overarching general contract.

The General Contractor will typically dictate to Subcontractors when their One Year Warranty on work begins. Our contracts with them allow us to require that they solve any issues resulting from their work on the project.

In addition to the One Year Warranty period, there are multiple separate Manufacturers’ Warranties running congruently from your project.

For example, the manufacturer of the roofing products, flooring materials, plumbing fixtures, HVAC systems, etc., usually provides a warranty on those materials. The warranty timeframe varies depending on the product, but works to cover factory defects if they occur.

It’s crucial to note that warranties normally don’t cover problems that are a result of neglecting prescribed maintenance. Maintenance requirements are usually specified in close– out documents at the end of a project.

The Final Step of The One Year Warranty

The final step is to ensure all final warranty items are accounted for and solved for by the 12-month mark.

This final walk-through is made 30 days before the One Year period ends and is typically attended by the Owner and our Project Manager.

If there are outstanding warranty items requiring a solution, our team quickly takes action to ensure that the proper party responsible resolves the issues as soon as possible.

Contact us to learn more details on our extensive warranty. We work meticulously so that your final building is up to world-class standards, ready to meet the needs of your institution.