By Ray Birch
PHILADELPHIA—Looking to speed up how quickly a new branch becomes profitable? One CU claims it has come up with a new way to do just that, and it plans to sell the concept to other credit unions.
It's a concept that could become even more intriguing to credit unions as the coronavirus pandemic has led to a rethinking of physical facilities as more members are using electronic services.
Ardent Credit Union has developed the “Cube,” a 10-foot tall, 14-foot wide and 14-foot long prefabricated structure broken into three sections. The two end-sections expand on rails with the push of a button to create a 24-foot long branch. The structure is built out of plastic laminate with solid surface material as cladding and a steel plywood substructure.
Ardent CU is reporting the first Cube it put in place broke even and began making money in well under a year, which is far faster than the standard payback on a new physical facility. The Cube costs about $250,000 and is staffed by two employees. It handles approximately 800 transactions a month.
The $720-million CU’s first mini-location was installed inside of GlaxoSmithKline's Collegeville, Penn. location in late 2018. The credit union’s primary objective for the project was to create a full-service branch in a small GSK lobby space to serve the 3,000 employees at the site.
Fast to Open
“In addition to being more cost effective, the Cube can go from approval to open in a much shorter period of time than any other type of location,” said CEO Rob Werner. “You don't need as many deposits and loans to be to make this a profitable location.”
Werner emphasized the Cube is a fully functioning branch.
“It’s a very modular structure, in that the space opens and closes. You lock it up at night time, it collapses together and an employee comes by in the morning with a key to swipe and the Cube opens for business.”
The Cube has a small center section in which there is a small vault, an interactive teller machine, and an ATM on an outside wall.
“One side is a teller line and then the other is an office to speak with a member service rep,” Werner explained. “The employees who staff the Cube are multi-functional and can handle all types of transactions. Again, this is a full-service branch.”
Werner said the Cube in no way compares to a traditional office, but it also comes at a fraction of a large office’s million-dollar-plus price tag. He said it is also cheaper to build than taking a slot in a strip mall or in a large retail store that typically come with a construction tab that is more than double that of the Cube.
Not for Outdoors
But the small location must be inside another building, such a mall or an SEG group’s location.
“It can’t be open to the elements,” Werner said.
A request from one of Ardent’s SEGs, GlaxoSmithKline, led to the development of the Cube.
“We had an office in that location but it was on a lower level and really out of the way,” explained Werner. “We told them we wanted to put something in their lobby, but they said it had to be something really good looking, almost like a piece of artwork. They said if we put something in their lobby they wanted it to be something they would be proud of.”
Strong Traffic
Werner said GlaxoSmithKline and its employees are regular users of the Cube.
“Business there has really taken off since we opened the office,” said Werner. “Membership growth at the location tripled from August to September, right after the branch opened. And the Cube increased membership growth by 82% when you compare its results to the six months prior to the Cube opening.”
The concept for the office is based on compressed filing systems seen years ago in large banks.
“They used to have these large file rooms filled with filing systems that ran on rails and expanded and collapsed,” said Werner. “That’s where the idea came from.”
Power is delivered to the Cube from underneath its location and distributed to the expandable sections through the top rails, Werner explained. The Cube was developed with assistance from an international architectural firm and Diversified Storage.
“That’s how our concept was built out,” Werner told CUToday.info.
May Sell the Concept
Werner said Ardent is now exploring selling the rights to build the Cube, along with its design, to other credit unions.
“We have essentially placed a value on the patent,” said Werner, who added Ardent may form a CUSO for that line of business.
Including the Cube, Ardent has a total of eight locations. Werner said the unique office will become another part of the community chartered credit union’s branch expansion strategy.
“Philadelphia and the surrounding counties have more than 4.2 million people,” said Werner. “I can see us adding several of these locations in the next couple years.”