Why are credit unions opening new branches in the middle of a pandemic? After all, health officials have warned the coronavirus may get worse – much worse – in the fall and winter months, which may lead to new stay-at-home orders and force credit unions to close their lobbies again.
What’s more, the huge costs of opening, staffing and maintaining new branches despite COVID-19’s many economic uncertainties and expected long-lasting effects may place a greater burden on any credit union’s financials as more members choose digital banking options over branch visits.
Nevertheless, some credit union leaders said they believe opening new branches during the age of COVID is an acceptable business risk that should pay off over the long term through service to their current and future members. Another benefit is that the coronavirus has accelerated the urgency to advance digital banking projects that credit union leaders said enhance the member experience at the branch.
“I think the two big factors that we’ll continue to focus on when we think about expansion is, how are we making it easier for members to transact with us – how are we doing that from the branch perspective and then how are we doing that from a technology perspective?” Raf Olazagasti said. He serves as EVP of Maryland’s largest credit union, the $4.2 billion SECU in Linthicum.
In August, SECU opened its 23rd branch in Clarksville, Md., which was publicly promoted as a financial center for the pandemic “new normal.” To keep members and employees safe, the 2,125-square-foot branch has been designed with plexiglass dividers, hand sanitizer dispensers, social distancing signs and private meeting rooms.
Additionally, the branch houses two ITMs, an ATM and a large touch screen computer for members to conduct online banking transactions. The drive-thru is also equipped with an ITM and ATM.
“It’s really up to members as to what their comfort level is and how much they want to engage with us inside or outside of the branch,” he said. “We want to be able to meet our members wherever they want to meet with us, whether that’s virtually, whether that’s in a branch, or whether that’s sometimes in the branch and sometimes virtually, we want to be able to provide that. That’s why the brick and mortar branches are still so important to us, because folks consider their primary financial institution to be in their community.”
However, because there is no way to determine how long the coronavirus will endure, how bad its second wave may be during the fall and winter months, and when a safe and effective vaccine will finally arrive, the future for everyone remains very uncertain, which may discourage some members or prospective members from visiting branches.
Because some members may not feel comfortable doing business in a branch for the foreseeable future, SECU has been investing a lot of resources into the development of a virtual financial center that will enable members to engage virtually with advisors to open a new membership or account, apply for a loan or credit card, or handle any type of service, including complex service needs.
“We want to provide that convenience, after or before business – their hours, for our members and, at the same time, provide a safe option for members who just prefer to do their business from home,” he said.
In July, the $9.5 billion Alaska USA Credit Union in Anchorage opened what it promoted as member-centric designed branches in Renton, Wash., and Apple Valley, Calif.
“Clearly, we are not where we thought we would be last November or December, and so looking at what we’re doing with our branches is something that has to evolve no matter what, and COIVD was just a huge thing that had an impact,” Elizabeth Pavlas, Alaska USA’s executive director for retail financial services, said. “We designed these branches so that our members could have choices in how they are utilizing the branches, and they provided us with more flexibility in the way we are interacting with members.”
In addition to enhanced cleaning and sanitizing protocols, as well as enforcing mask mandates where and when applicable, the Alaska USA branches feature a welcoming open floor concept with a variety of seating and workplace options that not only facilitate social distancing but also engage members.
“It’s really more of a collaborative space, and one we believe many individuals will find more fitting for the relationship that member-owners should have with their credit union,” Shannon Conley, SVP of branch administration for Alaska USA, said. “Many people are taking the bulk of their transactions online, so we’ve designed the branches to reflect that. That means enhancing self-service options and showing members how they can use the Alaska USA app to do just about anything they can do in a branch. If someone comes in to deposit a check, we want to teach them how to make that deposit with their phone – to go beyond helping them with their initial request.”
The $2.8 billion Ascend Federal Credit Union in Tullahoma, Tenn., currently operates 28 branches and 62 ITMs. In June and August, the credit union opened two new branches and plans to open two additional branches in October and December.
To efficiently operate all of its current and future ITMs, Ascend opened what it said is the largest ITM member service center in the middle of Tennessee. The new center is the home office for 45 employees who answer service calls when members tap an ITM’s two-way video monitor throughout the branch network.
“For the most part, it’s been rewarding to see how much everybody has taken hold of this new technology, but when we extended our hours of service from 7 a.m. to 7 p.m. six days a week, it was huge because members saw the benefits of these ITMs,” Tracy Moore, vice president of retail delivery for Ascend, said. “That was before COVID, and then when COVID hit, we had so many people who didn’t want to go inside the branches or maybe we had to close our lobbies on certain days. But our ITMs were always open and that is another positive benefit of ITMs.”
Additionally, Moore said the ITM center has helped reduce overall operating costs by centralizing and streamlining processes, something that also supports a more efficient member experience.
ITMs also enabled the $605 million Sun Federal Credit Union in Maumee, Ohio to keep some of its branches open during the initial coronavirus shutdown earlier this year.
What’s more, Sun Federal announced the opening of a new 1,400-square-foot branch in Perrysburg, Ohio, and now operates 13 branches throughout the Buckeye State and Pennsylvania. In its announcement, the credit union touted the ITM technology as the heart of the new branch that will enable social distancing while keeping the personal touch in serving members.
“Where we had this [ITM] technology in place, we didn’t have to shut down the branch,” Dave Wilde, Sun Federal’s vice president of marketing and business development, said. “We actually sped up some of the deployment of ITMs so that every branch has ITMs.”
To enhance social distancing measures inside Sun Federal’s branches, furniture was placed on wheels so that members and employees could hold meetings at safe distances. The credit union also provides styluses so that members and employees don’t have to place their fingers on touch screens.
“We want everyone to feel welcome and be safe at the new branch,” Sun Federal President/CEO Brian Hughes said. “We say it’s the perfect balance of comfort, technology and safety.”