By Ray Birch
LAKEWOOD, Colo.—Twelve percent of credit unions in a recent survey indicated they will cancel existing branch-building plans as a result of the pandemic. That is just one of many insights gleaned by a survey of CU leaders across the country about what their plans are for branches moving forward.
Doug Burke, president and CEO of the CUSO Aux, which conducted the study in partnership with shared branching sister company InNetwork, emphasized that while the health crisis certainly has changed perspectives of some CUs toward the future of branching, many are still waiting before making decisions on their bricks and mortar.
“I think a number of credit unions are on the bubble now when it comes to the future of their branches,” said Burke. “I think some branches, even before the pandemic, were on the bubble. as well, with transactions falling. But now during the health crisis, at many locations transactions are down. I think credit unions are waiting until this crisis is over to see if the transactions will come back. That 12% figure could go up or down based on what credit unions learn between now and next Spring.”
The study, which polled leaders from 53 CUs ranging in assets from $14 million to $7.6 billion on the changing role of branches and the member experience, also found less than 13% of participants report they plan to permanently close branches in the next one to three years due to changes in traffic.
Smaller Footprints
No matter the credit union’s outlook on supporting and investing in branches, Burke said the study’s findings reveal most—if not all—credit unions now expect their the branch footprint to get smaller.
“That’s a trend that’s already been underway for the last couple years,” said Burke. “And that trend will continue and likely accelerate coming out of the pandemic. The study does show there aren’t that many credit unions planning to substantially change their number of offices, but there are a number saying they are hitting the pause button. I don't know if that is happening simply because we don't know when this is pandemic is going to end.”
What may have some CU leaders thinking of shuttering offices are announcements by mega-banks such as Wells Fargo and U.S. Bank that they are closing some locations and exiting certain markets. But the reasons for doing so might not be so clear-cut, observed Burke, pointing out the banks have seen transactions decrease but also have numerous offices where market areas overlap. The latter challenge, especially, is typically one not faced by CUs that have limited branch networks.
“Plus, consumers have said they don't trust someone that's not in their community,” added Burke. “While they may really never go in the branch, they like knowing their bank or credit union is on the corner and they could walk in if they wanted to.”
The report revealed 50% of participants said their credit union branch transaction volumes remain lower than 2019 but are growing, and 20% of participants reported that branch transaction volumes remain the same as in 2019. About 25% reported transaction volumes remain significantly lower.
“It’s no surprise 25% of participants responded that online banking transaction volumes are significantly higher than 2019 and that 70% said somewhat higher,” said Burke. “Mobile banking transactions nearly mirror those results of online banking transactions.”
Call Center Volume
When it came to transaction volumes at call centers, responses were roughly divided into thirds, with one group saying “about the same as 2019,” another responding “growing and now higher than 2019,” and another third saying, “significantly higher than 2019.”
Burke said the survey of CUs found branch transaction volumes varied based on geographic location.
“Some credit unions actually haven't seen much of an impact, while even some others have seen slight upticks in transactions, which frankly amazes me,” stated Burke. “I believe your transaction numbers depend on what state you are in. There are some states that have been very locked down, so branch visits in those states are way down. Probably more so in the Midwest and northern states, which didn't have as much of a lockdown, it ended up kind of business as usual there.”
Burke said the survey found 70% of credit unions were forced to close lobbies due to the pandemic.
“What did surprise us is 23% of credit unions reported they had to completely close offices due to staff issues—either someone came down with COVID-19 and they had to quarantine everyone, or they were short staff due to other pandemic-related issues, such as employees not being able to take their kids to day care.”
Contacted About Contactless
As the pandemic is driving credit unions to use more contactless technology for member identification in branches, such as CULedger’s MemberPass technology or using cell phones to connect with the credit union’s systems, the report attempted to gauge credit unions’ interest in the new technology, not only to speed transactions and keep staff and members safe, but to reduce fraud as well.
“We asked participants if contactless processes will become a member expectation, and 83% said yes,” said Burke.
For those who answered yes, more than one-third weren’t sure how contactless ID methodologies would factor in. Fifteen percent said that members will want contactless ID options, but they will wait until the member asks for them, and 10% said they will wait until Apple and Google make strides in the market. Just a quarter of participants responded that they were willing to take the lead in this area. However, more than three-quarters agreed that contactless identification would help their staff make better decisions, the survey found.
The survey asked additional questions related to mobile banking, ITMs and other self-service options. Burke said it was “no surprise” that comments were “all over the board” when participants were asked if they believed member expectations for remote service options are forever changed.
Changing Perceptions of Service
Changing consumer perceptions of service, such as preferring digital delivery speed and low friction over friendly face-to-face service, is one factor some analysts have cited for credit unions falling behind banks in customer service ratings two years in a row in the American Consumer Satisfaction Index (ACSI) annual study.
Doug Burke
Burke said it is difficult to tell from his company’s study whether members’ perception of service has markedly changed.
“However, anecdotally, I can say that credit unions are offering very different service delivery options and they are all over the board,” said Burke. “Some are very progressive with digital delivery. Some, not so much.”
Credit union executives were asked a variety of questions surrounding mask-wearing to gauge the cultural trends credit unions have been experiencing industry-wide.
“When asked how members respond to the temporary removal of mask in order to be identified, three-quarters responded that members are understanding and comply,” the study found. “None reported that members are upset and refuse. Nearly one-quarter responded that they don’t require members to remove masks. In a similar vein, when asked how members responded to mask requirements at the branch, 83% complied, none refused, and 13% do not require masks in the branch. Participants responded that employee mask requirements were overwhelmingly accepted. Less than 10% of participants noted that employees are not required to wear masks.
What Respondents Also Said
When credit union leaders were asked about issues related to branch hygiene, some of the responses included:
- An executive from a large Colorado-based credit union commented, “A cleaning crew comes in and sprays the center with Clorox 360. Staff is also wiping down teller stations and desks in between members. We pay for the cleaning crew and each cleaning costs roughly $450.”
- An executive from a small, heavily-touristed town in Montana wrote, “We closed our lobbies to members in March of 2020 and they have not reopened to the general public. We take appointments and areas are sanitized before and after the member’s arrival.”
- An executive from the Denver Metro area commented, “We didn’t have to clean the branch [when it was closed]. Our SEG, the City of Westminster, has had their building closed to the public since March and doesn’t know when, if ever, we will be able to go back on site.”