Jan. 18, 2011
Credit Union Management magazine’s Web-only “Facility Solutions” column runs the third Tuesday of each month.
The word “innovation” is becoming a brand attribute for a number of credit unions and banks. Banks and credit unions are slated to spend over $3 billion on branch development and rebranding the customer experience over the next three years. We know by historic measurement, and believe by forward extrapolation, that a well-conceived branded branch can and will help build critical member relationships in ways that are unattainable through virtual means. We see it in the numbers, as banks like Umpqua that have done a great job with branding branches consistently show branch deposits two to three times their competitors, and as credit unions see a significant increase in growth and share-of-wallet when an engaging and positive member experience is presented.
But, is there a value to the process of branch innovation itself?
The answer for many institutions involved in constant innovation/improvement or “Kaizen,” as celebrated in Japanese culture, is yes. The benefits of branching innovation include an energized and fully engaged staff, leadership in service convenience and delivery, constant improvement in efficiency, a culture that embraces positive change, and the member perception that innovation in branch design translates to innovation in financial services and personal financial success.
For example, take Citibank’s innovation lab in Manhattan. Here the bank presents the latest advances in retail branch design. Each time the innovation lab makes a change, it receives significant press coverage across the nation. The hype suggests that “even though I may never see this level of technology or design in my branch, the very fact that my bank is one of the leaders means I am with the right institution.” This perception is worth millions in advertising dollars.
For big institutions, the cost of pursuing constant branch innovation is spread across hundreds of facilities. For many credit unions the cost of branch innovation can be high, but it does not need to be. “Kaizen” is being embraced by banks and credit unions to continuously evolve their organizations in positive ways. Branch innovation becomes a part of the total cultural movement. When a high degree of innovation is integrated into the planning of a new prototype of individual branch, the added cost is very modest compared to the potential return.
$1.3 billion (U.S.) North Shore Credit Union in Vancouver, British Columbia, is a great example of a management team and staff pursuing constant improvement. Seven years ago they developed a new branch concept and prototype that was considered one of the most advanced in North America. Their “Financial Spa” concept successfully targets emerging middle, upper middle and high income markets. In seven years the CU has tripled its assets while adding just one branch and rebranding all others. The numbers suggest that they could sit on their laurels and continue to reap high returns. The opposite is true.
While North Shore CU retains the same basic brand expression, it constantly tunes each branch to target market conditions, enhance delivery technologies, elevate staff training, and engage customers and communities with their mutual values and interests. Embracing change in all aspects of the business has created a dynamic culture of change and innovation which keeps staff excited about coming to work and members wanting to increase their financial relationships.
In our work with credit unions we find that pursuing uncontrolled innovation can produce problems. Innovation must be managed so that free thinking is balanced with focus on core business objectives. At some credit unions we find too many initiatives being pursued with equal resources—and that can diminish quality, measurability, staff engagement, and rational application of innovation. But, well-managed innovation produces excellent results.
Pursuing innovation has value well beyond the next new technology or branch. It can positively change an organization to the core. Mark Weber, president of Weber Marketing Group, a CUES Supplier member based in Seattle, recently stated in a Bank Marketing magazine article: “Inside every branch you own the most powerful and controllable brand experience available; a captive stage to deliver a rich brand experience that ensures you remain relevant to target customers as their financial needs and preference evolve.”
The branch is the most visceral expression of your brand and innovation efforts. Here the benefits of innovation can be made tangible to staff, members and the community while increasing deposits, loans and ROI.
Paul Seibert, CMC, is vice president of EHS Design, a CUES Supplier member based in Seattle, and author of CUES Complete Guide to Credit Union Facilities.
