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Evolution, competition, and consumer interaction preferences are recurring themes in the current landscape of Canada’s credit unions which present both disquieting uncertainty and unprecedented opportunities. Canada’s credit unions are caught in the crosswinds of change. Staying true to the cooperative principles and living the vision of being an integral part of their community is becoming more difficult. With technology fundamentally altering the service landscape, the placement, design and overall efficiency of brick and mortar branches is a hot topic.
Moreover, earnings challenges are driving credit unions to look for ways to limit the expense associated with operating the branch network without compromising member service.
“Research tells us that the ‘virtual branch’ while important, isn’t going to replace the physical branch anytime soon,” says David Baxter, Financial Services Consulting, MNP. “More than ever, demonstrating effective expenditure of member dollars is of critical importance. Planning and managing your branch network cost effectively while serving the evolving needs of members and the community requires striking the right balance.”
Assess the Market
Approaching the challenge 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. The analysis should include market metrics such as population demographics, socioeconomic trends, household data, municipal plans, commercial density and competitor proximity.
Assessing branch performance using traditional profitability measures is useful, but credit unions should also consider behavioural and predictive data to analyze member transaction behaviour by segment. Overlaying the results using a matrix or grid will allow for an evaluation of market coverage and effectiveness.
Leverage Your Resources
The benefits of the assessment and planning process are two-fold. 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. Some branches may be identified for greater investment, others for cost control, reconfiguration, consolidation or exit. Financial, operational and human capital can then be carefully redeployed for greater impact in target markets.
Second, the process provides valuable insight 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’.
“Credit unions will also want to consider a re-evaluation of hours of operation, types of services offered and methods of delivery,” says Doug Macdonald, Credit Union Consulting Leader with MNP. “Each of these can be fully customized to the specific needs of the market area and membership base.”
Achieve the Right Balance
“Credit unions—like all businesses in today’s environment—are under considerable pressure to simultaneously boost operational efficiency and increase margins,” says Annette Kuckartz, National Credit Union Leader. “Taking a multi-faceted approach to assessing and planning your branch network will allow you to do both while ensuring that members continue to get the high level of service they expect and deserve.”
MNP has extensive experience providing accounting and business consulting services to more than 100 credit unions across Canada– more than any other professional services firm in the country. 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.
To find out how MNP can help you, contact:
Annette Kuckartz, CPA, CA,
National Credit Union Leader
E: [email protected]
Doug Macdonald, MBA, PMP, Credit Union Consulting Leader
David Baxter, MBA, PMP, CIPM, Financial Services Consulting
T: 778. 374.2162
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