Is your credit union market smart?

Optimization:  an act, process, or methodology of making something (as a design, system, or decision) as fully perfect, functional, or effective as possible.

A recent financial industry study presented by Accenture, discussed a 15-20% reduction in the number of branches required to operate an efficient “hub and spoke” branch network, with a 25% staff reduction in the average branch when the proper mix of branch “design models” was distributed throughout the network.

Not every organization can achieve these results, but when taking a hard look at a Credit Union’s retail branch network, network optimization is a proven method by which an organization can ensure that their retail network is performing at its highest level, capturing new opportunities and growing market share in a methodical, measured and more importantly, a cost effective manner.

When dealing with your network, it is important to understand that if you are market savvy, market smart and follow a collaborative, structured and informed process, success is sure to follow.

    Your executive leadership team needs to be committed to the optimization process, integrating the process into day-to-day operations. A sponsor for the program needs to be identified with a clear set of expectations established, including the ultimate goal. The amount of capital, both fiscal and human, which will be invested and the timing expectations, in terms of your projected return should not be overlooked. This will take time and it will be an investment, so your patience is a virtue in this case.
    Real world detailed and unencumbered analysis and data from your leadership team, branch staff, members, small business leaders and outside consultants is extremely important. Organize these individuals and groups to form the basis of your optimization team and value the unique insight and experiences that each group and individual has to offer.
    Guidance from an experienced spatial analytics and GIS (geographic information system) provider allows your team a multitude of options in terms of data, mapping, modeling, querying, and analyzing large quantities of information so that you can accuratety evaluate every potential decision. Additionally, GIS gives you the power to identify specific target markets and map the results, integrate household income and demographic information, visualize various financial models, project financial product propensity and evaluate your competitive market share. The success of your optimization program is dependent on the ability to identify cannibalization, or how a new location impacts existing locations in your network, as well as the recapture impact of a consolidation analysis. Spatial analytic models are one of the key tools used to evaluate this impact.For example, our analytics partner, Pitney Bowes Software, draws information from thousands of demographic, member and branch data points and builds robust models that help to enhance the effectiveness of our Market Smart branch planning and measurement tool. A common “best use” practice of these models is to take a clean slate or zero base branch view of each submarket, so that a leadership team can be armed with objective, fact-based information when seeking to draw the most from their network.
  1. COMMUNICATION                       
    Communicate your progress and results of the data gathering process with your team members, as they invested their time to initiate your program and get it off the ground. Why not seek their feedback and additional input in refining your optimization study, for no other reason than to demonstrate that their views and opinions matter and are appreciated? Effective communication also extends to your board and when your leadership team is unified in their message, the confidence of your board is elevated as well.
  1. ROI
    It is one thing to project an ROI (return on investment) on your overall branch network and certainly your board is expecting this minimum level of analysis from your leadership team, right? We advise our clients to view each existing and future branch location as a separate entity, in terms of investment, return and performance. What key indicators mark a specific location as successful, what can be done to improve the performance of a location and at what point should a location perhaps be repurposed or abandoned? The same holds true for marketing costs, as each location has it’s own unique market characteristics, goals and challenges. Most marketing professionals would also agree that marketing funds should not be applied across the board, but should be allocated where the investment has the most opportunity for influence and impact.
    We like to view the branch as a tool to drive conversation and enhance relationships, as in-store transactions are receding in numbers every day. Omni-channel delivery which includes your mobile app, web platform and ATM network have created new requirements for the branch and as one of our clients put it so well, “…our web presence should drive our members to our branches when they need high-level advice and personal service, not the reverse…”. That makes the development of your retail prototype all the more critical, as the prototype is the result of many hours of research and planning by your design and delivery team, and the prototype kit of parts should reflect your unique market position, brand, culture, values and mission in the various communities that you serve.
    The timing of the deployment of your prototype, whether it applies to a new branch or branch retrofit, needs to be in alignment with your optimization program as well. Your optimization program should provide insight into which retail locations are most likely to be successful, allowing   for the capital to be invested in the locations where the likelihood of  success is greatest. Your prototype design will also be based on workflow, member interaction, transactions types and primary and secondary          member personas, so that the evaluation of member engagement, technology and equipment will be completed well in advance of any projected capital investment and rollout.
    Your network optimization program can falter or fail when ongoing location performance measurement, evaluation and adjustment is either ignored or avoided. This can occur for many reasons such as staff workload, inadequate training, or in some cases, failure to take action on a legacy location. Chances are that if a particular location hasn’t met its basic performance goals, then a red flag should most likely be raised and serious conversation needs to take place.

Being Market Smart while optimizing your branch network allows your team to make informed decisions in a methodical and rational manner, minimizing emotions and maximizing the opportunity to make the most of your capital, as well as your staff resources.

Bob Saunders

Bob Saunders

Bob is a founding partner of Momentum (, which is a national provider of strategic facilities services to the financial industry, as well as higher education. Strategic operations ... Web: Details