Updated: Feb 23
Despite the massive growth in mobile and digital banking since 2019, branch banking is far from dead. According to financial technology company Oxygen, nearly three-quarters of Americans visited a branch within the past year.
It’s not just older generations using branches, either. Over half of self-professed “mobile-only” account holders admit to visiting one of their financial institution’s branches. And nearly 20 percent of them stop by at least once per week, according to a study from Shikatani Lacroix, a strategic design firm specializing in financial institution offices.
But it doesn’t stop there - even more “mobile-only” account holders admit they would visit a branch if operational hours fit their schedule better.
But Why Branches?
For some Americans, physical banking through a branch or ATM is their most reliable option. This is especially true for those living in rural communities or poorer sections of large cities. Consumers living in these areas across the United States often lack reliable high-speed internet and mobile connectivity. Without communications access, account holders and small businesses are forced to rely on their local branches for service.
But that doesn’t explain why “mobile-only” consumers are so attached to a physical location. For that answer, we must turn to human psychology.
Recent studies have begun to show a distinct correlation between physical environments and a person’s sense of self. And people don’t see or perceive places in the same way, either. Each individual assigns memories, identification, and even personality to different locations.
It is safe to say branches become associated with a variety of emotions, especially as they become a feature of consumer commutes or a standard stop when running errands. Some account holders, especially, often associate a credit union branch with safety, reliability, and security.
And, when it disappears… the shock can go much deeper than an inconvenience.
The Battle to Keep Branches Open.
Most credit unions don’t want to close their branches. In fact, quite a few institutions have worked to cut expenses elsewhere to keep low-volume locations open, especially in areas that would be heavily impacted by a branch closure. But branches are primarily used for standard teller transactions or basic member services – all things that can be performed more inexpensively online. In fact, very little of standard branch activity generates revenues.
Then there is the issue of labor shortages. While large tech companies continue to announce widely publicized layoffs, the “great resignation” continues to impact other industries. In June of 2022, over four million people were still actively quitting their jobs. Recent labor reports show there are 1.7 positions available for every person actively looking for a job.
And while employees leave for what they see as greener pastures, the staff left behind must double up on work to cover while a replacement is found. But replacements are much harder to entice than before. Today’s new staff candidates are enticed by higher wages, more comprehensive benefits, and sign-on bonuses. Failing to pay out more money often means leaving loyal employees to doing more and, eventually, burn out.
A Unique Answer to Keeping Branches Open and Operational
Many credit unions are turning to branch transformation as a possible solution to the branch banking problem. Converting a low-performing location to primarily self-service can reduce the drain on employees and let them focus on more important tasks.
Yet, the costs of conversion to a self-service branch model can be daunting. Capital expenditure and compliance concerns are just the tip of the iceberg. Between daily operations and vendor management, an increase in ATM and ITM equipment can eat into employee time and energy as much or more than traditional branch setups.
ATM outsourcing provides an opportunity for credit unions to leverage self-service for relationship-driven locations without the costs or additional work. These expert ATM operators’ package advanced, full-function machines with day-to-day operations, support, service, maintenance, and more for one reliable monthly price.
While keeping capital expenses for hardware off the books are a big benefit, most ATM outsourcing partners also cover compliance. Credit unions contracted with ATM outsourcing partners rarely have to be concerned about when the next operating system update or PCI compliance standards will force an update or upgrade and incur more unexpected expenses. This is because compliance guarantees place the responsibility on the ATM outsourcing partner to manage and fund any required updates.
Perhaps even more important than saving on capital and monthly operating costs is the benefit for credit union employees and members. Outsourcing self-service machines to a reputable ATM outsourcing partner takes the onus of operations off the shoulders of credit union staff, giving them a single vendor to contact for questions, concerns, and issues should they ever arise.
Even better, ATM outsourcing gives credit unions the ability to reliably and affordably convert low-performing, relationship-driven locations to a primarily self-service model. Smaller staff numbers can be made more available to answer questions and provide in-depth member services for branch visitors – improving and building relationships better than ever. Finally, branches that are the lynchpin of rural and urban areas and a foundation of member identities can remain intact and continue to serve their communities into the future.
Lean How Partnering with ATM USA Can Benefit Your Financial Institution
Darren Smith, Vice President, ATM Management
Craig Helmers, Vice President, ATM Management