By Ray Birch
LA CROSSE, Wis.–One credit union cutting branches in favor of digital services says the pandemic was the “kick in the teeth” it needed to make the difficult decision to emphasize remote delivery over bricks and mortar.
As CUToday.info reported, $903-million Marine FCU has expanded digital services and has closed 18 of its branches. Its remaining 19 branches remain open but operate with “streamlined” hours. The CU has also eliminated 13 management positions, but is retaining 97% of its staff.
“To be honest, sometimes it takes a kick in the teeth to get to action,” said Chief Experience Officer Adam Keer, who added cutting branches will save $4 million annually. “I’m not proud of that, but let’s call it what it is. We spent well over a year challenging who we were as an organization. Throughout those conversations we knew that to advance our mission, we had to provide products and services that deliver value to our customers, and it was clear to us that what our members value was changing. Increasingly convenience and availability is what they are looking for. We saw more adoption of mobile banking and fewer visits to our branches happening, but the transition was slow.”
Keer explained the credit union’s strategic plan identified a vision of a highly digital future, but the organization believed that was five years away.
“I’m proud of the work we did to get to that clear vision, but we thought we would get there on a glidepath as members’ and employees’ appetites for change allowed,” Keer said. “The closure of our lobbies during the pandemic showed us that we were wrong. Our members and staff were ready for this change now.”
Not only did member behavior indicate that change should occur sooner, so did the business results during the early days of the health crisis.
“We saw this from objective data, such as achieving record loan volume while all our lobbies were closed and 80% of our staff were displaced from their workspace,” said Keer.
Not Expected
He acknowledged the staff’s attitude toward working from home was even different from what the credit union expected.
“We learned that 90% of our team were ready to work from home permanently—that’s what they told us during the pandemic,” he said, adding that going forward no more than 60% of its workforce will ever be working at its offices. “We also knew it was time from the positive comments from members as we accelerated several digital projects already in the works.”
Keer restated the COVID-19 crisis did not lead the credit union to decide to go to digital delivery, it just significantly moved up the timeline.
“The pandemic laid bare what was truly important,” he said. “Because we knew we had to, we were able to go fast with this change when we pulled the trigger. We implemented digital tools that weren’t perfect rather than waiting to test every minor detail, but members valued the fast availability, which created a positive experience. As a result we were able to grant over 1,000 completely digital consumer loans including a pandemic relief loan with no interest or payments for six months, and our Get Credit product—which provides a fully automated, digital share secured loan with no traditional credit underwriting—to any member looking to build credit for the future.”
Marine CU has had a digitally savvy member base, with the majority of the accountholders prior to the pandemic choosing remote delivery for most of their needs.
“But we saw a significant increase in adoption of mobile and online banking as a result of the pandemic from members who previously resisted change,” explained Keer. “With our lobbies closed, and our commitment to keep our front-line staff employed, we challenged ourselves to come up with a way to have our staff continue to deliver value and advance members’ lives in new ways.”
Keer said the credit union created the Compassion Taskforce to connect with members as soon as the health crisis hit.
“This team reached out to over 50,000 members via phone during the pandemic,” he said. “The purpose of us reaching out started with us simply wanting to check in on older members we thought may be lacking social interaction during the lockdown. We quickly found the Compassion Taskforce was helping these members log in to mobile banking and other technology to help them stay connected. It brought new meaning to advancing lives and showed how our impact on our members goes well beyond their finances.”
Other CUs Considering Move
Keer believes other credit unions are considering a similar move, noting the credit union’s CEO, Shawn Hanson, is receiving inquiries from credit unions about the CU’s decision. He said the pandemic could be what pushes more cooperatives to choose digital over branches.
“As I said, we knew in our gut this was the right thing for us to do,” said Keer. “For example, we had wanted to make changes to mobile deposit capture limits to increase availability, but lacked the will to make it happen. The pandemic helped us to get it done.”
Marine CU is introducing smart ATMs that have the ability to process 90% of transactions currently handled at the teller line. The new MarineCU.com website includes an interactive chat feature to provide another communication channel for members.
“And we will be moving towards some simple ‘bot’ functionality in chat while more robust solutions are being developed,” he said.
The CU has also introduced digital account opening for all new accounts.
“Regardless of whether you come to a branch, visit from your PC, or most likely, your mobile phone, the experience is the same,” said Keer, who noted the CU is upgrading its existing mobile and online platforms to create the omni-channel experience. “Members will fulfill their experience self-service, with coaching from our service staff if needed. Our goal is for it to be so simple that help isn’t needed for anyone.”
Bottom-Line Numbers
But bottom-line numbers were important to the decision to emphasize digital delivery, said Keer.
“The $4 million saved annually by closing these branches will allow us to better advance peoples’ lives by expanding our digital products and services,” explained Keer, who said the credit union is selling off the now closed offices it owns along with the equipment inside. “We expect an additional $4 million in savings—beyond the what we save from branch closures—related to reduced travel, training and other costs resulting from a workforce that has proven it can collaborate and serve members in a remote fashion. These savings are critical to allow us to have the resources to invest in our digital future.”
Keer said the future of banking looks a lot less like traditional banking.
“People are going to keep their money where it is most convenient for them and are going to borrow money from whoever makes it easiest to do so at a reasonable cost,” he said. “When you boil it down, that’s the basics of what we do. When you look at it like that, neither of those things require a bank. Venmo is more convenient to store money and transact than any bank offering, and what’s more convenient than going on a payment plan right at the register with Affirm? Our members are playing a completely new game and if we want to opportunity to continue to serve them and provide them value we need to get our players on the right field.”