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In today’s economic environment, earnings challenges are driving credit unions to look for ways to limit the expense associated with operating the branch network without compromising member service.
One of the first areas you might consider is online and mobile self-service banking options. Research tells us that the ‘virtual branch’, while important, isn’t going to replace the physical branch anytime soon. If you’re overwhelmed by the prospect of planning and managing your branch network in a way that accommodates the evolving needs of your members while practicing financial stewardship on their behalf, read on.
Resolving this dilemma begins with an actionable strategic plan to address current and future branch placements and functional design. The first step is to categorize existing and prospective branch locations according to both the market potential of the branch’s trade area and historical performance.
Market metrics should include population demographics, socioeconomic trends, household data, municipal plans, commercial density and competitor proximity. Assessing a branch’s performance includes traditional profitability measures, but should also consider behavioural and predictive data to analyze member transaction behaviours by segment. Overlaying the results using a matrix or grid will allow for an evaluation of market coverage and effectiveness.
The benefits of the assessment and planning process are twofold. First, you’ll be able to identify opportunities to reallocate limited resources from slow-growth or saturated markets to potential or established branches in either high-growth or desirable niche markets. In this case, resource reallocation refers to optimal distribution of financial, operational and human capital across the network. Some branches may be targeted for greater investment, others for more stringent cost control. Still others may be candidates for reconfiguration, consolidation or exit.
Secondly, this process provides valuable insights relating to branch design. One option may be to expand or reduce the branch’s footprint based on market analysis and member usage trends, as evidenced by the growing number of ‘super branches’, ‘nanobranches’ and ‘service pods’. Other considerations include a re-evaluation of hours of operation, types of services offered and methods of delivery customized to the specific needs of the market area and membership base.
More than ever, demonstrating efficient expenditure of member dollars is of critical importance. Operating a lean organization means taking on targeted process improvement using proven methodologies to reduce errors, eliminate costly rework and enhance service quality. Streamlining operations is essential in order to accommodate growth without incurring incremental costs.
Credit unions—like all businesses in today’s environment—are under considerable pressure to simultaneously boost operational efficiency and increase margins. Economic realities, changing external conditions and consumer interaction preferences are ushering in a new era for the credit union system. Technology is fundamentally altering the service landscape, which is affecting the placement, design and overall efficiency of brick and mortar branches. Transforming your network is a strategic imperative requiring a multi-faceted approach that builds strength and sustainability along with a lasting legacy for generations to come.
MNP has extensive experience providing accounting and business consulting services to more than 100 credit unions across Canada. Recognizing this is a time of opportunity for credit unions, MNP has a dedicated credit union services team that delivers service specifically designed to help credit unions achieve their goals. MNP’s credit union specialists provide strategic advice in Assurance, Taxation, Enterprise Risk Management, Corporate Governance, Consulting, Investigative & Forensic Accounting, and more.
Related Topics:Technology; Business Performance
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