Technology and the Branch of the Future

Categories:

• Banks
• Branch Transformation
• Credit Union
• Data

Leveraging Critical Credit Union Data Components for Smart Geographic Expansion

In the ever-evolving landscape of data collection in the credit union and financial service industries, the race to capture new markets and enhance member experience has intensified. Basically, you have to keep up.

Furthermore, with the growing influence of technology, interwoven with strategy consulting, site selection, branch design, and building, this bevy of tools has become vital for financial institutions to stay competitive and thrive and meet members’ needs properly.

In this post, we will explore six crucial data components that inform the branch pro forma; as well as and aid in the geographic expansion plans of credit unions, enabling them to build the branch fit for the growth of the future.

1. Loans and Deposits Forecasting: Unearthing the Elbow Room

Understanding Market Viability

When considering expansion geographies and specific trade areas, it is essential to assess the availability of loans and deposits in that market before making a final decision on branch real estate site selection.

This crucial data component helps credit unions determine the “elbow room” or growth potential in a given area, identifying if there are still untapped opportunities or if the market is already saturated and unsuitable for expansion.

3. Consumer Overlays: Tapping into Existing Consumer Bases

Building on Existing Clientele

Another critical factor in successful geographic expansion is identifying how many existing consumers reside in the expansion geography.

A pre-built consumer base can significantly impact the success of a new branch, providing a strong foundation for growth and member engagement.

5. Market Potential Indices: Measuring Consumer Behavior

Predicting Consumer Behaviors

Market Potential Indices (MPI) provide valuable insights into the likelihood of adults in a specific geographic area exhibiting purchase behaviors aligned with the banking products and services offered by the credit union.

This data component aids in assessing the market’s demand for the institution’s offerings or those they plan to introduce.

Paving the Way for the Credit Union Branch of Tomorrow

In the dynamic world of financial institutions, leveraging technology to analyze critical data components is paramount for making informed decisions regarding geographic expansion and long-term growth. 

Credit Union strategy consulting, site selection, and branch design and building can be significantly enhanced with the insights drawn from loans and deposits forecasting, competitive analysis, consumer overlays, demographic tapestry profiles, market potential indices, and the 4 Square Quadrant. Armed with these data-driven tools, financial institutions can confidently build the branch of the future, positioning themselves for success in a competitive landscape.

For expert guidance and assistance in harnessing the power of these data components for your institution’s growth and expansion plans, do not hesitate to contact LEVEL5, the industry leader in strategy consulting, site selection, design, and construction for credit unions and banks.

Let us help you create the branch of tomorrow that sets new standards and meets your members needs.

Designing Your Branch Prototype: Creating a Future-Proof Banking Space

Categories:

• Banks
• Branch Transformation
• Credit Union

A space says more than a thousand words, and your credit union branch prototype says a lot. In the ever-evolving landscape of credit union retail banking, your branch serves as the physical embodiment of your institution’s identity. A well-designed branch not only attracts new members but also nurtures existing relationships. It’s a space where face-to-face interactions occur, complex transactions are handled, and solutions are provided.

In this digital age, the branch remains a critical avenue for delivering the human touch that digital channels simply cannot replicate. As you consider reinventing your brand and enhancing your member experience, one vital strategy is the creation of a new branch prototype.

The Role of a Credit Union Branch Prototype in Modern Banking

Your branch isn’t just a building; it’s a strategic asset that showcases your brand, culture, and commitment to member service. A well-executed prototype branch serves as the foundation for your entire network, ensuring consistency and efficiency across all locations.

At LEVEL5, as leaders in credit union branch design for over 20 years, we emphasize the significance of a new branch prototype. The majority of our projects center around this concept.

Identifying the Need for a Branch Prototype in a credit union

The decision to develop a retail branch prototype arises when you seek a comprehensive and uniform approach to optimizing your branch network. This extends beyond new market entries, encompassing your existing branches in need of rejuvenation.

Often, established credit unions and community banks find themselves with multiple locations that lack engagement and alignment with their brand. A prototype offers a solution, breathing new life into tired spaces and setting the stage for future growth.

This comprehensive approach ensures that every aspect of your prototype branch aligns seamlessly with your institution’s vision.

Embark on Your Branch Transformation Journey

The role of the branch cannot be underestimated as you contemplate your credit union or bank’s future. It’s not just a physical space; it’s a strategic touch point that connects your institution with its members. Embracing a branch prototype approach, backed by a team experienced in design and implementation, can reshape your institution’s identity, enhance member experiences, and set the stage for sustained success in the dynamic world of banking.

Don’t hesitate to reach out to our team to discuss how a new branch prototype could transform your institution. With decades of experience in implementing effective and visually stunning branch design templates, we’re ready to guide you on this exciting journey toward branch innovation and excellence.

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

Categories:

• Banks
• Branch Transformation
• Consulting
• Credit Union
• Data

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.

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.

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.

Core Deposit Growth Strategy: Part 1

Categories:

• Consulting
• Credit Union
• Retail

Understanding Historic Trends is Critical for developing & executing strategy 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

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?

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 ➝

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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

Categories:

• Branch Transformation
• Consulting
• Data

increase Growth and Profitability with curated branch network strategy

What is important in branch network strategy?

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 

Relocate: Unlocking Potential through Strategic Moves 

Work with Credit Union & Bank Growth Consulting Experts

The yin and yang of branching

Categories:

• Branch Transformation
• Credit Union
• Retail

Much has been written about the branch of the future. What does it look like? What are the key strategies? How does the member/customer experience play out? Is it even already here?

The short answer is there is no short answer – only different perspectives. The right answer, if there is a singular one to consider, is this: the branch of the future construct is entirely on you and your organization to make it as you see fit.

One perspective on the future of branching is the discussion point involving the traditional legacy of a branch and its core being the transaction, while also understanding the momentum to the modern branch being advisory.

The problem with contemplating a branch strategy from either a transactional perspective or an advisory perspective is in the “or.” Your branch strategy should not be rooted in “or” – it should be rooted in “and.”

Think about it from the perspective of Yin and Yang. Colloquially, Yin and Yang are used commonly to describe to diametrically opposed concepts, like oil and water. But in reality, the concept of Yin and Yang is actually describing two things that compliment each other – not opposing one another.

So when you are contemplating your Branch of the Future and trying to figuring out the anchor strategy of a branch that is either transactional or advisory, the answer is both.

A well designed branch will have both a transactional and advisory zone. The layouts may differ, as long as the strategy is rooted in the member experience. And the way it is executed may also vary, with different forms of cash machines deployed across different areas (both inside and outside) of the branch to appease those short visit based transactions, whether it be ITM’s in the drive-through, Cash Recyclers affixed to floating Teller Pods, Assisted Self-Service machines flanking the Teller Stations, right up to a traditional ATM for walk-up traffic.

On the advisory side of the house, designs can see casual Onboarding Stations with tablets at the ready for initial conversations, semi-private conversations at high top counters with screens for a deeper financial planning session, or a fully private conversation in an enclosed office with a resident Personal Banker, or even in a video enabled room where members/customers can speak to a remote expert.

When you’re contemplating your next branch strategy and the discussion of transactions versus advisory arises, remember the Yin and Yang – they are not individual strategies unto themselves, they are complimentary strategies that are part of a larger, engagement-based branching experience.

If you’d like to learn more about branch strategy and review floor plans demonstrating a well-executed transaction and advisory zone, contact LEVEL5 today.

2019: Year Half Over and Glass Half Full

Categories:

• Branch Transformation
• Consulting

Let’s look back on the first half of 2019, and then we can look ahead.

With 2019 now half over, we thought it might be worthwhile to revisit The Financial Brand’s article from the beginning of the year entitled, “Top Branch Trends for Banks and Credit Unions in 2019” and see if the commentary outlined in the article is still relevant. How is Branch Transformation taking hold at the mid-point of the year? Has the commentary held true? What does the (near) future look like?

Branch Closures

Our newsfeeds are still dominated with the announcements of branch closures. This may spell doom and gloom for an industry continuously accused of not modernizing fast enough for the evolving consumer sentiment, but the “death of the bank branch” is not really the story here. Under the catchy, clickbait-oriented closure headlines, the real story unfolds, telling of consolidation as a result of mergers and acquisitions and/or due to branch relocations. In fact, just under the branch closure articles may very well be a companion article talking about branch expansion.

Branch Expansion

The big banks (large national brands and dominant regional players) have announced aggressive expansion plans at the onset of the year, and those announcements haven’t died down at the year’s mid-point.

On the coattails of Chase announcing aggressive plans to expand into Philadelphia, the Financial Institution announced this Spring to open nearly 100 new branches across 9 major metro areas.

And now, Chase has just announced their new New York City Flagship Branch, meant to be the epitome of how they intend to do brick and mortar banking from here forward.

Along those lines, community banks and credit unions continue to look towards aggressive expansion plans, despite the shadow of digital banking, the allure of digital-only banking and the fear instilled in all of us when doom-and-gloom articles speak of a possible recession, etc.

In fact, here at LEVEL⁵, our Consulting and Real Estate divisions have never been busier. John Hyche, an industry expert often quoted in The Financial Branch article, has seen the expansion trends materializing and his book of business has never been more full. As cited in the article, one of the key drivers in community bank and credit union expansion is the evolving shift in Demography.

Demography Shifts

One of the main reasons we’re talking about expansion plans with our clients is due to the shifting geographies and needs of banking customers. Since we are continually seeking to deliver on the financial needs of the customers/members, we know that location is key and opening a new branch on the wrong street corner is a costly mistake.

It’s not even really about where things have migrated recently or currently. The proper approach to location selection is rooted in the right data approach to understand the need and identify not what’s relevant now, but what will be relevant tomorrow and in three years.

As stated in the Financial Brand article, LEVEL⁵‘s own John Hyche states, “Branches will continue to follow shifts in demography as new areas develop. These moves reaffirm the popularity and value of physical channels in establishing brand recognition and gaining market share.”

Branch Transformation

The final piece in this overall equation is to not turn a blind eye to trends, but to equally not rush into them haphazardly. The burden of the right digital approach is a heavy one for us all to bare, but purchase and implementation decisions shouldn’t live in a box. The right mix of Digital Signage, Full/Assisted Self Service, Kiosks, Tablets, etc. need to be deployed based on the right strategy and how they will ultimately help enhance the overall customer experience based on the way you do it.

If the year is continuing to take shape and you’re interested in learning more about branch expansion, branch transformation and the right approach, Contact Us today to get the conversation started.

The Northeast Credit Union Branch of the Future

Categories:

• Announcements

New Hampshire Credit Union Grows into Hooksett

Portsmouth, New Hampshire based Northeast Credit Union recently broke ground on its new Hooksett branch. The new facility represents the Credit Union’s latest Branch of the Future. The Northeast team partnered with Atlanta-based LEVEL⁵ (www.level5.com) on the branch site selection and design-build of the project.

Tim Collia, President and CEO of Northeast Credit Union, stated, “We are excited to see our expansion in the State unfold. This building signifies our continued strong growth and reinforces our commitment to serving members and the community. With this new building, we are creating a new experience for our members that will allow us to serve them with a higher degree of care and expertise.”

The new Hooksett branch joins the growing trend in banking toward technology automation and optimizing the member experience. Instead of traditional teller lines, the new facility will embrace pods in an open retail environment. The branch’s function and experience is designed to allow staff to dive deeper into relationships with each member.

Mr. Collia continued, “We chose LEVEL⁵ as our partner because of the value they bring to the complete design-build process. Few firms in the country can study markets, procure real estate, design and construct facilities like their team.”

Mike Colvin, EVP and Principal at LEVEL⁵, shared, “We consider it an honor to be a part of Northeast Credit Union’s Hooksett branch and we look forward to the growth they will achieve through this new project.”

Credit unions across the country are expanding to grow membership and convenience. Canvas Credit Union in Denver recently changed its name and is now rolling out new locations. Their new “branch of the future” certainly is painting a new picture. Check it out.

Branch Success is a Three-Legged Stool

Categories:

• Announcements
• Branch Transformation

The branch of the future may not resemble the serious, conservative look of the past, but what’s behind all that glitz is anything, but fly-by-night.

Lobbies filled with furniture that looks as if it could double as a set from the 60’s era sci-fi show Star Trek. Lounging areas that are one disco ball short of a setting for a hot new nightclub. Lighting that would feel equally at home in an art gallery for postmodern sculpture.

Is this the lobby of a bank, or a leftover set  from a 60’s sci-fi show? Actually, it’s Mazuma’s 50,000 square ft. main office. And thanks for asking!

What’s behind all that design

This is, after all, the place where all of your bank and credit union’s channels converge. It’s the key cog in your service delivery network. The branch is more than just four walls, a vault and a teller line. As the saying goes, there’s a method to the madness. The branch of the future is a three-legged stool composed of the right mix of:

1. Function
2. Experience
3. Technology Integration

What’s your function?

The branch houses a process for people – staff and customers. So, the first step in developing a branch is to understand what functions are needed within it. A common starting point is uncovering and understanding the function of a transaction. Is the transaction teller-assisted (teller line or pods)? Self-service (ATMs)? Or assisted self-service (Interactive Teller Machines)?

Knowing and naming all the functions for the branch process is the key to decisions about placement, staffing and tools needed. Additional services offered in the branch potentially include lending, insurance or investments and should be included in this phase.

The design process starts inside the branch and then builds layers to offer services for the customers or members, and the community.

Experience – Think in Zones

As the function takes shape, then the desired experience is layered on top of the function. (The second piece of the three-legged stool.) Many a bank or credit union skip over the branch’s function and go straight for the experience because that is what is considered hip, cool or relevant. Certainly the experience matters, and matters a lot, but not at the expense of function – first.

The branch experience starts from the first impression, then zones of customer activity, and support. Each zone accomplishes both a function and experience through the branch’s staff and tools. Zones are established by length of time:

• Entry zone – where first impressions happen
• 1-5 minute zone – where self-service, assisted self-service, or teller-assisted decisions are made
• 5-20 minute zone – consultants, manager access, and full screen video helps customers or members solve larger concerns or questions
• Support zone – workroom, break rooms and storage are part of the process too – don’t forget about it
• Add on – something extra, like a community room

Zones are matched with function to facilitate experience of the branch with customers and members.

Tech is the final piece

Once the functions of the branch, and the desired experience of customers and members are identified, the all-important integration of technology is applied to make everything run. (The three-legged stool is complete!) Cash automation and recycling at the point of the transaction creates time for staff to focus less on counting, and balancing and more on tending to the needs of the customer. Self-service tools like ATMs and ITMs (Interactive Teller Machines) allow customers or members to serve themselves or with the assistance of staff during our after hours. Automation is not limited to cash transactions. It also includes video conferencing, security, and back office equipment – anything to accelerate the business. 

When all three legs come together, it often looks something…like this:

LEVEL⁵  is trusted by banks and credit unions across the country for our ability to implement the three-legged stool to a successful branch. Each component of the stool is needed or you risk sinking the Titanic.

The branch is as important as ever for customers and members to conduct business. However, it is not just about the design. What else helps you avoid the Iceberg?

Close my branch? That’s fine, I’ll Choose Another!

Categories:

• Announcements
• Branch Transformation

Consumers are deciding the value of the branch.

When it comes to the longevity and value of branches, opinions really do vary. Depending on our own stories, experiences, communities and allegiances, the branch’s importance will ebb and flow. However, when we look at evidence, the opinions fade and the demands of consumers ring loud and clear. Especially, when their favorite branch might close.

Millennials and the Branch –  A recent Bain & Co. study of 137,000 consumers found that 90% of participants visited a branch in the last 3 months, including 86% of Millennials (25 to 34 years old). The same study revealed Millennials desire human interactions in a branch because mobile & web solutions provided by financial institutions (FIs) are inadequate to solve all their needs. Furthermore, the study found that Millennials are the most likely consumer to apply for and receive loans.

Bain also reports that mobile banking adoption is leveling off at 55% – growing from 52% a year earlier. And though digital solutions can provide tremendous scale to FIs – they have not closed the gap enough to provide a sustainable revenue source i.e. loans for FIs to outpace the need for branches.

Sales and Humans – According to a study produced by Ernst & Young (not PWC for all you Oscar fans last year) over 65% of consumer sales occur in a branch and over 72% occur with a human interaction. When it comes to the financial engine for banks and credit unions,  sales = loans.

Branch Preference – A 2016 TimeTrade report found that nearly 57% of consumers prefer the branch as their primary way to interact with their bank or credit union. Furthermore, a recent FiServ study said 44% of consumers still prefer the branch as their primary connection point to their FI. JD Power reports that 77% of all new accounts for banks and credit unions walk through the front door,  compared to 82% five years ago. Today, 19% of accounts come through mobile channels, compared to 14% five years ago. Obviously digital is closing the gap, but very slowly, and many consumers prefer the branch…especially in the community-scaled model.

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Are Community FIs Closing Branches? Consumer-based banking has been primed for disruption for a decade. However, less than 3% of all community bank branches have closed during that period. This is in large part because for the community bank, consumer banking is not their primary customer. Yet, Credit Unions who by nature serve the underserved, and are all consumer – are not closing branches either.

The Bain study also discovered that nearly 40% of consumers will switch to a competitor, if their local branch closes. No wonder FIs don’t close branches.

It would seem that much of the fuel for closing branches is aimed at the Mega Banks. After all, they have closed about 10% of their branches in the last decade.  But even after all this churn, there are still over 90,000 branches in circulation. Much of this because Mega Banks keep opening branches too. Bank of America recently announced they are opening 60 more in 2017 – double what they opened last year.

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The Case for the Branch – The ongoing case for the branch lies with the value that consumers place on the human interaction. That interaction at present drives lending, which continues to be another human interaction. And lending drives the financial engine of banks and credit unions.

Therefore, value is decided by the market and consumers. And today consumers value, the branch.

The Business Case for the Branch in a FinTech World is no longer a mystery. New research shows the ROI for branching.