January 17, 2012
Credit Union Management magazine’s Web-only “Facility Solutions” column runs the third Tuesday of the month.
You have a number of options when it comes to selecting sources of expertise in branch planning. And you want to choose what will produce the most objective, rational, and beneficial strategic recommendations for your credit union’s facilities. Should you employ a local architect, strategic planning consultant, or design/build contractor to make recommendations that will help guide your credit union’s spending and potential future growth and profitability for the next 10 years? This is a critical decision. Let’s look at a few of the options and their pros and cons for the various aspects of branch planning.
Who should you work with when gathering data for strategic branch planning?
Local real estate agent. These agents know the market well. Most can provide basic demographic information, but have no access to financial demand data to understand the business potential of a market other than psycho-demographic assumptions. Good on-the-ground resources, but typically not reliable business strategists. Typically they charge no upfront fee and make their commission based on a closed deal.
Off-the-shelf branching recommendations. You can purchase off-the-shelf market analysis packages at a low unit cost. We have worked with a number of banks and credit unions that knew where they wanted to go and purchased a single site study to test their assumption. The national firms that provide this work typically provide very robust data analysis, but you must be careful about how you use this information.
Do you have a strategic plan in place based on your refined business strategies and total market area? How are you going to optimize total branch network performance over time and how does the selected branch location support this goal? Does this new branch provide the biggest bang for your buck, or would remodeling and relocating an existing branch be more beneficial? The point is, what is the strategy guiding the decision to locating a branch at a specific site?
National strategic branch planning expert. The best of these will offer a deep dive into financial demand to align your product offerings with target market characteristics to maximize market potential while optimizing existing branch network performance. Be certain to have an apples-to-apples comparison. Pricing may vary significantly based on their level of expertise, depth of data analysis, and completeness of the planning process. Be sure to evaluate how their engagement has increased their clients’ growth over time.
Design/build contractor. Most national design/build contractors offer strategic branch planning as a component of their work. The quality of the strategic planning effort can range from poor to good, depending on who is providing the service and the motivation of the contractor.
Most firms use outside consultants due to the demand for a high level of focused expertise and the need to access high cost data. Pricing can vary significantly as strategic planning is often employed as a door opener. The cost of strategic planning is low compared to the value of construction projects. Credit unions must take care to be certain that the strategic planning recommendations are not influenced by the potential for the design/build contractor to make a high profit later in the construction process—for instance, recommending that you build a free-standing branch when a leased branch or remodeling would be the most productive solution, adding more branches when adjustments to the current branching array would provide equal growth, or over-sizing branches.
Regardless of who you work with, the bottom line is that you must develop and operate a strategic branching plan that optimizes the performance of your existing branch network over time, places branches and alternative delivery systems at the most productive locations, and reduces cost while accelerating growth and enhancing profitability.
Who should you work with on strategic operations occupancy planning?
Local architect. This person or a good firm likely has a good understanding of local codes and the construction community. They rarely have the background or expertise to understand how a credit union operates; how best practice credit unions are planning their short- and long-term occupancy or what drives growth and the potential business variables. While they may be great architects, they typically do not have the background to help a credit union translate its staffing, product and service support, brand, and space needs into occupancy recommendations.
National operations planning consultant. These consultants often have extensive experience in operations planning; they may have worked inside financial institutions; and they may have completed hundreds of projects across the country for a variety of banks and credit unions. It is best if these consultants also have strategic branch planning expertise, so they can link branching and headquarters strategies to provide a complete budget and timing picture over the long term. Check their references for recent experience and performance.
Design/build contractor. Strategic operations occupancy planning may be offered internally by design/build firms. Some have the expertise to offer a high level of consulting, while others have more limited knowledge. If you’re going this route, be certain the contractor understands what drives operations growth and the alternatives. Also, be very careful that the motivation of a $5 to $40 million project is not influencing the strategies or recommendations; e.g. lease vs. own, remodel over new or a new facility over purchasing and remodeling an existing building.
No matter who you select, be certain all occupancy solutions are accurately and realistically presented so you are looking at the financial and business impact of remodeling, relocation and existing facilities vs. new construction over the next 10 and 20 years.
Who should you work with for branch business modeling and prototype development?
Local architect. Every community has good architects who can design attractive branch facilities. While aesthetics are important, even more important is the productivity of the branch, and how it will deliver the brand experience and promise to members and staff. Translating financial brands into branch facilities requires specialized expertise that can be proven by business results. Few local architects have the expertise to create a high performance branded business solution through branch facilities.
National branch design consultant. These consultants should be able to prove their worth by showing how they have created business uplift after completion and analysis of their brand translation, business modeling and prototype work. Has brand awareness increased in the target market? Has growth increased? Has product awareness and use increased? Has staff performance and satisfaction improved? Are the branches more efficient and productive? The cost of this work will vary significantly depending upon the depth of engagement, experience and proven results.
Design/build contractor. Some contractors, including a few of the national design/build firms, will employ their own internal resources and provide excellent work. But for most local and regional contractors their staff does not have the expertise, time or resources to provide the high level of business intelligence or design capabilities to drive successful branding and business modeling solutions. Local architects may be employed to provide the service, but this often results in a great-looking facility with very limited business foundation. If you are using a design/build contractor to translate your brand into a branch experience, be certain they are employing highly experienced staff or outside consultants with strong individual credentials.
The branch experience can be one of the most important competitive differentiators for credit unions. Branches are, and will remain, the most productive method of developing and building member relationships and share of wallet. And, they are expensive to build and operate. Whichever method you choose, you must ensure the result will produce high efficiency and productivity and deliver a brand experience that separates you from the pack.
Paul Seibert, CMC, is VP/financial design for CUES Supplier member EHS-Design, Seattle, and author of CUES Complete Guide to Credit Union Facilities.
