Originally posted on NCR Corporation’s blog
Guest Post By Josh Linder, Director, NCR Business Consulting
Popular press has argued that the branch is obsolete and that consumers are shunning the branch. Traditional financial products are being replaced with prepaid cards as cited in the Wall Street Journal.
Coming out of the great global recession, the key challenge facing banks is that non-interest expenses (NIE) are difficult to contain in the face of a changing consumer, and the emergence of new entrants into the banking sector (notably the growth of credit unions and virtual/online banks).
Branches are expensive to operate, yet they have been proven to be the best channel for sales and customer retention. There is no better place for meeting face to face with clients to provide advice, deepen the relationship, and sell high margin products. The key to success is reinvention of the branch to meet the needs of the new tech savvy consumer who has grown skeptical of traditional banks.
Management guru Peter Drucker once said, “The purpose of business is to create and keep a customer.” It is a “law” of any business: It is more cost effective to keep your current customers satisfied than it is to look for new customers to replace them. A recent Ernst and Young global consumer survey found that 25% of customers changed banks in 2011 due to poor levels of personalized service and branch location proximity. While it would be nice to think that most of them switched from banks to credit unions as part of Bank Transfer Day, odds are that plenty went the other direction too.
Successful credit unions will look at all aspects of their operations for opportunities to retain current members by constantly striving to improve their member experience.
The phrase ‘member experience’ is broad and encompasses practically every aspect of a credit union. There are many ways credit unions can improve the member experience. Loyalty programs, financial education, and community involvement are a few things your credit union may want to look at adjusting. There is another area of member experience, however, that is often overlooked even though it comprises a large part of your members’ interaction with your credit union: ATMs.
Originally published on CUinsight.com.
Back in Columbus’ day, geographic expansion for Old World nations was a relatively straightforward process. Over the centuries, both countries and credit unions have found growth to be much more complicated.
All of us learned the story of Christopher Columbus back in grade school. Notwithstanding the fact that there were already plenty of people in America at the time of his arrival, under the Old World law of the time all Columbus needed to claim the New World was a flag, and presumably a witness or two, as he reportedly uttered –
“I claim this land in the name of Queen Isabella, and hereby declare that henceforth all lands and territories extending to the furthermost point north and to the furthermost point south shall forevermore be called ‘North and South Columbus,’ and that my name shall be so inscribed on all future maps of this Glorious New World.” (Christopher Columbus, upon landing in the New World, October 12, 1492).
Fast forward to today, and new “lands and territories” come with more risk, cost and red tape for the nation’s credit unions.
It is not surprising that NCUA chose to ignore the extensive body of historical precedent set by the unbounded imperialism of the 1400s. Instead, NCUA set more stringent requirements in place for what a multiple common bond Federal credit union had to do when it received permission from NCUA to expand into an underserved area. A credit union has to establish and maintain an “office or facility” in the area [see 12 U.S.C. 1759(c)(2)] within two years, and then to maintain an “office or service facility in the area (see Chartering Manual Chapter 3.III.F)”.