Fintechs and neobanks are going branchless. And, while it’s a compelling move, it leaves out those who prefer their banking in person.
For better or for worse, that includes a lot of credit union members.
But brick-and-mortar branch locations are tricky these days. Real estate is a rollercoaster, cities change rapidly, and remote work means people are more spread out. How can credit unions keep branches profitable?
TerraStrat has some insight here:
Credit Unions Still Need Branch Placement
At CU 2.0, we believe that the future is—if not entirely—at least partially branchless. Branch-lite, if you will. But we understand that doesn’t work for everybody.
So, branches will be an integral part of most credit unions’ strategy. Not only does it serve their needs, but it also serves the particular member bases that credit unions are known for.
Relying on branches presents a few challenges:
- Location. Placing (or closing) a branch is a highly strategic affair. A good location can expand membership and increase profits. A bad location can lose money year after year and ruin brand reputation.
- Real estate. All things being equal, credit unions should prioritize buildings and locations with higher potential to appreciate and be exposed to more potential members.
- Cost. Branches cost a lot to open and maintain. Thus, a small number of branches should serve a large number of people.
- ATMs and ITMs. Where do you place ATMs and ITMs to increase your coverage?
Credit unions must optimize their branch locations to serve more with less. But how can they do that?
TerraStrat’s Branch Location Strategy
TerraStrat uses machine learning (ML) to show credit unions exactly where to put branches, ATMs/ITMs, and more. At least, that’s how it works in a nutshell. It’s actually a bit more complicated:
TerraStrat was founded by experts in banking, AI, and geographic information systems (GIS). GIS in banking helps credit unions understand their member demographics, where they live, what they buy, and where they buy it.
The ML supercharges that.
Usually, you have to rely on highly educated guesswork, complex market predictions, and analysis. Whereas TerraStrat…
Well, TerraStrat does all that for you, but with highly sophisticated, ML-powered GIS, expert consultants, and years of experience to help.
The idea is, TerraStrat can help credit unions find the best places for their branches. This means:
- New branch locations
- Branch relocations
- Branch closures
- Remodels for new capacity
- ATM and ITM placement
- Optimal branch formats
All of those are key to maintaining profitability outside of the digital realm. TerraStrat provides a necessary service for credit unions that want to optimize branch locations and maximize branch profitability.
Other Considerations
It bears mentioning that TerraStrat does much more than data-driven branch location and physical network strategy. The info they use to give actionable recommendations for branch locations comes in part from each credit unions’ member data.
You might see where this is going…
That means that TerraStrat provides remarkable data services to credit unions. They help credit unions understand their members through data. This includes all the usual descriptive analysis, like where they live, how often they use digital channels, etc.
But they also use data predictively to show where members are going, what kind of digital engagement they lean toward, and which channel is the most optimal for cross-sell and acquisition.
Finally, they use data prescriptively, suggesting best courses of action to meet members not only where they are, but where they will be based on data.
There’s a lot to dig into there, so for now, it’s safe to simply know that TerraStrat can do a lot more than tell you where to add or close branches… though that’s certainly still on the table.
Additional Resources
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