When Rivermark Community Credit Union ($556 million, Beaverton, OR) recently announced the closure of two branch locations, the credit union community sat up and took notice.
The notion of a "branchless" financial institution has been a buzz term for some time, but were consumers ready to conduct most (if not all) of their business through technology? Also what would a reduced number of branches mean for an industry based on friendly, personal service?
“Our decision to close some (not all) branches is a direct result of our strategic plan to increase our investment and emphasis in online services and technologies that provide members with unsurpassed convenience and access,” explains Scott Burgess, Rivermark Community Credit Union's President/CEO. “We're not planning to be a branch-less credit union.”
Burgess says that the credit union was instead being, “Proactive in executing our strategic plan of adjusting our branch network in order to redeploy our resources to other more efficient and widely used delivery channels. In doing so, we are ensuring that every delivery channel we offer, including our branches, are high performing."
In a recent press release, Burgess adds, "We are seeing a dramatic shift in how our members conduct their business with us. Our members are embracing this new ability to bank on-the-go; to open new accounts, sign loan documents and deposit checks remotely. Since they have around the clock access to financial services, they no longer have to depend on a branch for service."
Within the past year, the number of members using Rivermark's online banking service has increased 34% while at the same time the number of in-branch transactions has steadily declined.
Trends identified at Rivermark resound industry-wide. Virtual Strategy Magazine discussed Chadwick Martin Bailey’s recent study of the number of consumers who are opting for technology. The market research firm found that 64% of all bank customers tap into some form of online banking, with an emerging number turning to mobile banking as a preferred method.
Additionally the firm reports that the stereotype of the un-tech savvy credit union is diminishing, with members reporting the same level of usage as big bank customers.
Credit Unions Combine Technology with Personal Service
Although more members are turning to technology for service ease and convenience, many still express the desire to visit with a familiar credit union employee to perform transactions.
Coastal Federal Credit Union ($2.1 billion, Raleigh, NC) and Mid-Hudson Valley Federal Credit Union ($750 million, Kingston, NY) may have the answer to combining technology with a personal touch to provide superior service delivery.
Both credit unions have implemented video tellers in several branches, revolutionizing the way its membership works with the credit union. The video tellers are kiosks that provide the convenience of an ATM, but the capability of working with a live teller. Once the member signs onto a machine, he or she is connected to a live teller who can assist them with a vast variety of transactions.
“We started offering the video tellers to boost efficiency,” explains Joe Mecca, CUDE,
Marketing/Advertising Manager at Coastal FCU. “Within a traditional branch network you have a lot of downtime. There may be times where you have full staffing levels but no members in some branches. On other occasions you may have someone out sick or you have a smaller staff trying to deal with unusually high traffic. The video tellers allow us to handle how we staff on a branch to branch basis, providing us with the opportunity to consistently deliver the same level of high quality service no matter the circumstance.”
Mecca adds that video tellers provide faster service with a quicker turnaround and shorter wait time. “Technology automated cash dispensers speed up the transactional aspects because the teller isn’t manually counting cash, the machine is doing it.”
“Video tellers are the ultimate in branch convenience,” says Bob Michaud CFMP, SVP/CMO at Mid-Hudson Valley FCU. “At 4am members can touch the screen and can talk to a teller. This technology provides high touch service and it is part of our brand commitment to be convenient.”
Michaud says that the video tellers allow his credit union to compete with the larger financial institutions that tout long hours. “We can say that we are open 24 hours a day, seven days a week. We’ve found that being able to deliver the same level of service, no matter the time gives the member a tremendous amount of flexibility. In fact our busiest time since launching the video tellers is between 6pm to 10pm on a Friday night.”
He adds that the technology allows the credit union to bridge the gap between the teller line and technology. “Branch trends are declining but not going away,” he says. “There is still a high demand for tellers, but members’ busy lives make technology convenience a priority as well.”
Mecca agrees that the video tellers provide his members with tremendous flexibility to access the credit union when it’s convenient to them. “We’ve extended our hours from 7am to 7pm everyday--this means seven day a week teller service. For us, its all about efficiency and providing more hours and convenience service without having to increase expenses. In fact we are reducing expenses by cutting out wasted down time.”
The notion of video-based teller convenience is catching fire as other credit unions, like Five County Credit Union ($204 million, Bath, ME) implement the technology. The credit union is installing video tellers in two of its branches providing member access to tellers at its Lewiston call center.
Like Coastal and Mid-Valley Hudson, Michael Foley, VP/Sales and Business Development for Five County told the Sun Journal that, “This is all about being more convenient and more accessible.”
Could Mobile Banking Be the Next Credit Union “Must Have?”
Although video tellers are melding the notion of technology and branch banking, could mobile banking eventually become more dominant? While no one can predict if mobile banking could push branches into the Ice Age, many professionals admit that mobile banking has become so important that it has moved beyond something that is “nice to have” to a “must offer.”
Mecca says that mobile banking has definitely become a necessity at this point. “Two years ago mobile banking was nice to have now you must offer it,” he says. “Consumers are doing more on their phone than ever. They are not only searching but also shopping on their phone. I can’t tell you the number of times I purchased something just using my phone.”
Coastal launched mobile banking earlier this year and Mecca says that the mobile deposit number continues to climb. “We have not seen branch traffic drop off, but mobile surpassed mailed in deposits rather quickly,” he says. Coastal’s mobile banking product didn’t launch until May and Mecca reports a steep increase in mobile deposits by July.
Rivermark is also experiencing the mobile banking phenomenon. The credit union was the first Oregon credit union to offer mobile deposit and over 10,000 members have deposited more than 31,000 paper checks using their iPhone or Android mobile device. Within the past year, Rivermark’s mobile banking service usage increased by 86%.
Credit unions nationwide are following suit seeing the statistics. Genisys Credit Union ($1.4 billion, Auburn Hills, MI) recently rolled out its new iPhone app with mobile check deposit, making Genisys the first Michigan credit union to offer check deposits by phone.
“By simplifying the functionality of performing transactions, we hope that members will find managing their accounts more convenient than ever before,” said Jackie Buchanan, Genisys CEO.
More credit unions will hop on board as a study by Forrester Research, a technology and market research company, suggested that by 2017, 46% of U.S. bank account holders will access their account through mobile banking. This statistic is quite staggering considering only 13% of U.S. account holders currently use mobile banking on a regular basis.
Why will growth be so dramatic? Forrester contends that current mobile banking users are younger and more adept at using a mobile phone in a variety of ways. Forrester believes that as smartphone adoption increases and grows, the demand for mobile banking will become more of a natural, intuitive way to bank.