Two weeks ago when the state of Alabama and the Florida panhandle were hit hard by snow and ice, a trade publication reporter asked if credit unions were using shared branching as a way to get the word to members that they can still access their accounts. This recent weather event is just another example of how shared branching places an important role for credit unions.
The first quarter is a good reminder to what kind of business sense it makes for credit unions to take part in shared branching. This quarter, the Florida Credit Union Shared Services (FCUSS) and the Credit Union Service Center (CUSC) of Alabama will send rebate checks to member credit unions that are part of shared branching and dividend checks to shareholder credit unions. In Florida, it will be more than $720,000 this year, while Alabama will give back more than $100,000. This number in Alabama is somewhat deceiving. Last year the CUSC board of directors decided to lower its fee structure for participating credit unions by keeping more income at the point of transaction.
As your League president, I am fortunate enough to serve on the board of director of both FCUSS and CUSC of Alabama. This gives the LSCU great insight into the continued importance of shared branching and how the LSCU and the two networks can work together for the betterment of our member credit unions.
As technology evolves, I’ve heard the argument against shared branching. Mike Yatross, CEO of FCUSS, tells a good analogy. In the 90s as debit cards became the norm, credit unions said that checks would go away completely. Looking back today, there has only been about a five-percent dip in the amount of checks produced. Mike says that today’s generation still likes going to a branch to do business. That’s why shared branching still makes sense. Plus, FCUSS and CUSC of Alabama are looking to the future of mobile technology to reach the younger generation.
CUSC of Alabama opened 25 new outlets in 2013, while FCUSS also saw growth. More credit unions are seeing the strategic importance of shared branching. One thing you may not have thought about when opening a new branch is that shared branching income can help recoup some of those costs while the credit union builds membership. You not only open one branch, but you open hundreds to the members in close proximity to that branch. Shared branching is also a less expensive way to grow your geographical footprint.
Since the Great Recession, credit unions have worked hard to differentiate themselves from big banks. Shared branching is a perfect way to show a potential member that you have more than 5,000 branches across the country. Big banks can’t refute that. It also defeats their argument of convenience. I hope you will consider shared branching in 2014. As you can see, it is worth if from a financial standpoint, a marketing standpoint, and it differentiates you from your competition.
Where's Patrick: I have one of those weeks where I will be crisscrossing the state of Florida meeting with CUs and attending chapter events. I’m attending the Broward Chapter Annual meeting on Tuesday and speaking at the Southernmost Chapter Annual meeting on Wednesday, as well as the Northwest Florida Chapter Annual meeting on Thursday. To see my schedule for the next two weeks, visit the LSCU Information for Credit Unions webpage.
Visit the LSCU YouTube page for the President's Quarterly video.