SPECIAL REPORT: THE BRANCH OF THE FUTURE

Two Key Member Segments Will Shape Branches
Sam Kilmer
Changes in the branch of the future will reflect the changes occurring in financial services as a whole. Segmentation in how credit unions deliver service will become more widespread, such as targeting different products and services to different people.

Consumer behavior, in many ways, drives the branch. The branch will reflect the value proposition credit unions offer to members. In the next 10 years, the branch will take shape around the segmentation of two primary groups: 1) members who desire a well-rounded primary relationship involving financial advice and custodial services, and 2) members who use the credit union for typical payment-oriented and consumer lending services.

Unlike much of the more status-oriented demographic, profitability, or lifestyle segmentation that many credit unions use today, the segmentation driving the future branch is based on member preferences and actual use of the credit union. The mix of clients credit unions attract and retain likely will affect their branches and mix of technology.

In terms of technological changes, there will be more self-service kiosks, more automated decisioning, and more widespread deployment of member relationship management—a consistent, single view of the member’s relationship, transactions, interactions, follow-up, and so on. Just because more technology will be involved doesn’t mean member service will be less successful. To the extent that credit unions balance their high tech/high touch approach with an understanding of the segments being served, member satisfaction will increase in part due to technology deployed.

Two examples outside the industry hint toward the future. For the member segment desiring an advisory relationship, Merrill Lynch’s approach comes to mind: combining wealth management and investments with checking and a variety of other products and services in an advisory role. Merrill does this with a high-tech approach, but the approach leveraging the branch for a more high-touch orientation could be a differentiator for a credit union.

For the segment that doesn’t seek the advisory role and simply wants to transact, an ever-increasing amount of self-service likely will come into play. For example, when you rent a car you have the option to talk to someone. But you realize that for a variety of reasons ranging from staffing to how helpful the self- service technologies are, it’s usually more convenient to use the self-service technology. The self-service experience should be as good or better as the in-person experience for the routine tasks at hand.

Credit union members increasingly make similar decisions every day to use the automated teller machine or other self-service technologies, even when personal service usually is available a few steps away at no additional fee.

Sam Kilmer is director of business development for Harland Financial Solutions, Atlanta.

The CU Branch: Fast Forward 10 Years
Terry Treadwell
By 2014, the credit union branch will be both enlightened and enabled from a smart business process and efficiency standpoint. At last, the operational and technology changes and "user friendly" features that members have come to know and experience today via the Internet will be fully integrated as branch system components. This will allow credit union employees to perform branch tasks using intuitive and intelligent technology.

These changes will have been driven by credit union members’ continued preference for the branch, high- branch delivery cost, the need to replace obsolete branch front-office technology, and the need to enhance the branch to deliver nontraditional products. While the branch of the future may be familiar in some ways, it will be fundamentally transformed and reengineered. At last, the “Integration Holy Grail” has been achieved: Branches, Internet banking, and the call center all work together like an efficient Swiss watch. A consistent member-service experience throughout all channels now is a reality.

Credit unions play a leading role in handling all of their members’ financial needs by offering a broader array of financial services and products. This will cement member relationships for the long term. Credit union executives have figured out how to price products and services to both attract new members and motivate current members to move into desirable categories.

This will all be delivered by credit union branch employee teams who are articulate, well trained, and capable of providing a complex financial services menu to their sophisticated member base.

Terry Treadwell is director of market strategy for Summit Information Systems, Corvallis, Ore.

Real-Time Information, Unique Member Service
Gary Daniel
The branch of the future will allow for more truly unique member service than ever. The use of an ever- increasing number of automated transactions using real-time information will enable credit union employees to give member-specific information regarding the member’s current status and options.

The widespread use of real-time member relationship management systems will offer timely, relevant, filtered information so members can make informed choices and credit unions can treat members in the manner that best represents their overall relationship with the credit union. Credit unions will be able to know at a glance not only the accounts members hold directly with them, but also indirect accounts, including brokerage accounts, credit cards, and insurance. They also will know members’ profitability.

This will allow credit unions to make member-specific pricing decisions when appropriate. Credit union employees will only have to look at the [workstation] screen to determine what to say or what to offer the member. Behind the scenes, the analytics will have analyzed the information. Based on decisions the credit union has made about this member’s profile, the appropriate message will be displayed.

There will be a continued migration from paper to electronic transactions: automated clearinghouse, debit cards, Internet, voice response, imaging at the teller window, automated call centers, self-service kiosks, wireless access, and so on.

The branch of the future will help credit unions become even more trusted places to foster better member relationships and offer more valued services.

Gary Daniel is senior vice president and general manager for Open Solutions Inc., Glastonbury, Conn.

The Sky’s The Limit For Digital Banking
David Turner
I foresee the continuing trend toward digital banking for retail and commercial banking. With all data in a digital format, the sky’s the limit for delivery mechanisms, from the Internet to wireless and beyond.

As you’ll probably expect, credit unions and their members will rely more heavily on the Internet and wireless technology as delivery channels for financial services. As online banking and bill payment is growing in popularity today, bill presentment and online lending—from start to finish—will become easy and popular over the next 10 years. Demand also will grow for wireless transactions and alerts regarding certain account activities.

Moving former paper processes, such as lending, online is being made easier with wider collection and storage of digital data. Capturing transactions, documents, and other information digitally, as with the adoption of digital signatures, will enable the use of imaging to become commonplace for presenting all sorts of documents and information to members. This includes everything from statement delivery, which is picking up steam now, to the delivery of notices and loan applications in the retail and commercial arenas.

Within the credit union, the evolution of Web services and other new technologies will continue the surge toward converging systems to provide better user experiences for employees and members.

David Turner is chief information officer for IntegraSys, Plano, Texas.

Branches Will Serve Diverse, Sophisticated Members
Bruce Cormode
Look at trends in technology in all areas of our lives and it isn’t a stretch to see the branch of the future will need to position itself to serve ever more sophisticated and demanding members. Members will be active and engaged—participants in constructing their experience. In a sense, they’ll co-create their individual experiences. These experiences will be a source of value that benefits both the member and the credit union. This is an extension of traditional forms of member focus.

Branch employees will need to be expertly trained to support these demanding, technology-savvy members. They’ll need to be prepared to address an array of complex, highly specialized offerings, and the service issues that arise. Greater support will be essential to four key segments of members:

• Business services. Customer service requirements for the business member are relatively new and, therefore, different than for traditional members. Credit unions will need to be sensitive to this need and create specialized programs to deal with business members’ unique needs.
• Latinos. Latinos are the fastest-growing segment of the U.S. population. Credit unions will need to embrace them with more than just Spanish language services and bilingual staff. They’ll need to develop programs to support Latinos’ unique culture, family values, and cross-border needs.
• Baby boomers. Aging boomers require new sets of services. As they approach retirement and become the recipients of the greatest transfer of wealth ever experienced in this country, they’ll demand new services, including trust services and wealth management.
• New families. There will be a continued focus on revenues other than interest margin that will require credit unions to serve their different customer segments with specific packages to help nurture their relationships with them.

The core of the credit union movement is for the benefit of the member. While fees become increasingly important, understanding the profitability of that member will be equally as important.

Bruce Cormode is president of Symitar, San Diego.

Members Will Turn to Real-Time, Full-Service Kiosks
Jim Hutchins
The physical configuration of branches won’t change significantly, except for an increase in the number of real-time full-service kiosks being used in place of the more traditional teller line. Several credit unions are already using full-service kiosks with interactive camera feeds. This trend should spread.

The tools used in branches will change more noticeably than its physical appearance. Paper won’t be eliminated completely, despite years of predictions about the coming paperless society. But less paper will be used, and many of the documents that remain paper-based will be for convenience and then archived electronically and destroyed.

Wireless technology will become far more prevalent, not because employees will be serving members remotely, but because it simplifies infrastructure changes. CRTs [desktop computers using cathode ray tubes] will disappear almost entirely in favor of flat-panel technologies.

Fundamentally, branches won’t change much and the demographic of the people using branches will remain relatively unchanged. Increasingly, branch users will consist of people who can’t, don’t, or won’t use technology to replace branch visits because of either personal preference or the rare transaction that’s difficult or impossible to complete using electronic channels.

Jim Hutchins is vice president of systems development for Re:member Data Services, Indianapolis.