Fred Healey
Branch personality ‘mandate’

Credit unions once were intended largely to provide financial services to a corporation’s employees. Because jobs and workers typically are concentrated in urban areas, so too were credit unions. But as the need for financial products and services has grown and competition has increased, credit unions recently have been establishing a stronger presence away from job sites and in suburban areas.

“Building a branch near where a large demographic of members live and shop provides an alternative to longstanding locations across from the factories or offices,” said Kevin Blair, president of NewGround, a design/build, branding and retail services firm for credit unions. “At the same time, credit unions are selecting suburban site locations in areas optimal for new member growth.”

Locally, the same phenomenon appears to be taking place. Robert Kimmett, senior vice president of marketing and public relations at the Massachusetts Credit Union League, said as credit unions have grown larger over the years and membership has grown, moving closer to members’ homes has become a consideration for many credit unions.

“As credit unions became larger institutions and the need to do more business [occurred], they sought more visible and accessible locations,” Kimmett said.

Another reason credit unions have moved farther into outlying communities is corporate downsizing. Kimmett said many credit unions serving a company that closed some of its plants began seeking to broaden membership in order to maintain viability. Obtaining a community charter often is the first step in the transition.

That strategy was used by Fitchburg Community Federal Credit Union in the late 1990s.

The credit union was originally formed in 1948 to serve employees of the General Electric plant in Fitchburg. The membership expanded several years later to include employees of the Bangor, Maine, plant. Over the next 50 years, the credit union grew to more than 1,700 members and $8.5 million in assets.

In March 1998, GE closed the Fitchburg plant and the credit union’s board of directors applied for a community charter in order to remain open. In February 1999, the charter was issued to serve former GE employees and people who live, work, worship or attend school in Fitchburg and members of their immediate families.

During that time, the credit union moved to a location on the Fitchburg/Lunenburg town line. When Carmela Dupuis, president and chief executive officer, learned the former GE plant was being revitalized as office buildings she moved the institution back to downtown Fitchburg last October.

Being in a downtown location has proven to be successful, Dupuis said. Because many people are running their errands in the area, having a branch nearby has encouraged new member growth. Although credit unions are moving away from plants and factories, Dupuis said that doesn’t mean credit unions aren’t located where people work.

“People are commuting,” she said, adding that many members visit the credit union during their lunch breaks.

Kimmett said credit unions with community charters that are looking to increase membership tend to move out into the general population and away from job-based locations like military bases, where the membership may be severely limited.

Frederick D. Healey, president of Workers’ Credit Union in Fitchburg, said over the last three to four years, credit unions have tried to diversify their geographical presence. Although Workers’ Credit Union has always had a community charter and hasn’t undergone a change of location like other credit unions, Healey said he has observed the trend closely and considers the strategy sound. Most credit unions, he said, aspire to grow their memberships. To do that, credit unions occupying space in a company-sponsored building often need to branch out farther, he said.

Competitive Stance

Tremont Credit Union, with offices in Braintree, Boston and Stoneham, is experiencing a move from a corporate office to several retail locations. According to President and Chief Executive Officer Leonard Broderick, the credit union is closing its Landmark Center branch in Boston, which is located within a Blue Cross Blue Shield office. Instead of keeping staff on hand, the credit union will close and leave only an ATM.

“Business has changed,” Broderick said.

The credit union, which originally began as the Boston Teachers Credit Union, obtained a community charter two years ago. Broderick said as the institution has expanded into the general population, membership has grown.

When a credit union does decide to expand into a community, there are certain things of which executives should be aware. While broadening membership, Blair said credit union leaders must also make changes to their branches to be more competitive, functional and appealing.

“It changes the strategy for branching,” Blair said. “Most credit unions have covered the work side Â… now they are shifting to the hot retail area.”

One factor that can be prohibitive when moving from an office location to a storefront is land cost and the high demand for retail space.

“Land is not very available,” said Blair.

Blair said the land investment for credit unions can increase. But as the market changes and credit union members expect more, it becomes important to create a “dynamic retail environment.”

Society as a whole, Blair said, is changing from a service-based economy to an experience-based economy.

“[That] paradigm is really significant in the financial services industry,” he said.

Financial institutions have focused primarily on customer service over the years, but now members expect a high level of “experience” at their credit union.

Kimmett agreed, saying credit unions must stay ahead of the latest technology that can make a member’s experience better. Using more kiosks and electronics is crucial and becoming part of what is considered “best practice.”

Blair said both banks and credit unions are using technology in innovative ways, such as digital signage. Cash-dispensing equipment is being utilized more to count money, allowing tellers to focus their attention on customers.

While credit unions and their staffs are accustomed to providing members with certain products and services, Healey echoed Blair’s sentiments that a strong retail presence is crucial in today’s industry.

“The retail personality of a branch today is a mandate,” Healey said, adding customers come to branches on a reoccurring basis and expect the most-up-to date technology. “The branch of the future will be more of a store where members buy services.” Broderick said Tremont Credit Union’s newest branches, to be built in Roslindale Square and Dudley Square, will have a more retail focus. The new locations will offer a full array of products and services. The credit union currently has a location near the Children’s Hospital which has little signage and Broderick said that branch is not intended for retail use.

With all the changes occurring in the industry, Blair said banks should take note that credit unions are becoming stronger competitors.

“They’re a viable competitor, especially on the retail level,” Blair said.

Broderick said he believes credit unions have become larger and stronger over the years, but have maintained their original purpose of serving a particular field of members.

As competition heats up among banks and credit unions, Blair also said the days of credit unions working side by side in a friendly manner are disintegrating as credit unions change their look and strategy.

“The gloves are coming [off],” Blair said.

Jennifer Jope may be reached at jjope@thewarrengroup.com.