Hello, digital. Goodbye, branch
There’s no one way for a credit union to embrace digital banking, but more CUs are doing just that – and those that don’t are likely to get left behind.
That was the message from a host of speakers who took part in the Credit Union Summit at SourceMedia’s 2019 Digital Banking conference held recently in Austin, Texas.
While many institutions are only now starting their digital journeys, the $11.6 billion-asset Alliant Credit Union began the process about seven years ago after determining only 20% of its transactions – including product purchasing and new memberships – were taking place in a branch.
The credit union had well over a dozen branches at that time, noted Phil Salis, senior vice president of member engagement and chief banking officer, and “I could shoot a cannonball through [a branch] at any time of day and not hit anyone.”
With transactions already migrating to the web and call center, he explained, Alliant elected to double down on its digital platforms and close branches. At the time the credit union was spending roughly $6 million each year on branch infrastructure that wasn’t producing much revenue. By closing those facilities Alliant was able to reinvest $5 million a year into enhancing its call center, building digital apps and more.
Alliant had historically served United Airlines employees and many of its facilities were inaccessible to the general public. However, the move still resulted in “a large group of very angry, pissed-off members,” admitted Salis. But those branches never had cash in them, he said, so the transactions that took place there were easy to replicate online. While there were angry emails and even some account closures, the end result of that process was still better than the credit union had planned for.
In shifting to digital, said Salis, “we made a conscious decision up front: We are not going to be for everybody; we’re not going to be able to satisfy everybody. We’re going to focus on a certain demographic, a certain set of folks that like doing business remotely, like doing business online and want to do business online.”
That strategy “changed the narrative” at Alliant as it began shifting away from viewing banks and other CUs as the competition and started thinking of online banks as its main competitors. And that thought process, he said, is key to an effective digital transformation.
“Once you can change that narrative and that mindset within the organization, all the decisions tend to be a bit easier – I’m not saying they’re easy, but they’re easier,” he said.
For Las Vegas-based Silver State Schools CU, the shift away from branches and toward increased digital services was partly the result of the economy. Silver State was heavily impacted by the Great Recession, losing money before ultimately turning things around. It has been profitable for roughly the last decade.
But as a result of losing money, the $789 million-asset institution was forced to decrease its branch footprint from 19 locations to seven, explained Chief Operating Officer Mike Randal.
The result, since increasing its focus on digital service starting in 2017, has been an improvement in member service.
“Digital has allowed the lead to follow the member, so when a member comes into the branch and starts a conversation, if that conversation gets interrupted and they call to the call center later, that conversation gets picked back up because that information is at the call center or the mobile-chat employee has that at their fingertips,” he explained.
Before the shift to digital, the bulk of a five-minute transaction with a member was focused on the transaction itself, “and the time to interact with the member was slim to none,” Randal said.
Since migrating, though, “we’ve flipped the script to where now the transaction is still an important part but it’s a very efficient transaction, and the other four minutes are spent interacting and building that relationship with the member,” he added.