By Ray Birch
MILWAUKEE—Looking to increase its “cool factor” and in the process attract younger members, one credit union is considering creating a “bar atmosphere” inside one of its branches.
That is the case with one credit union in Ohio that design and build firm La Macchia Group is working with.
“They have been considering creating a bar atmosphere in one of their offices,” explained Director Of Retail Strategies Tim Klatt, not naming the CU his company is working with. “They have not decided yet, but if they go this route the bar inside the credit union would be run by the CU’s employees.”
Klatt said the approach the credit union takes may be one similar to that adopted by the former Coors CU, now called On Tap Credit Union, in Golden, Colo.
“They may not actually have a bar inside the office, but beer taps inside the office and places to sit and relax, something like that. That is what Coors did, I believe.”
The move the credit union is considering is part of a growing trend among credit unions and banks to expand beyond the traditional in branch design, partnering with other businesses to attract a new set of consumers to their locations. Coffee shops and cafes have been the most typical partner of credit unions seeking to grow their consumer base, sources have stated. One credit union has even chosen to partner with an urgent care facility, as CUToday.info reported here.
Unique Challenges
Along with the opportunity to attract new members and grow branch business, creating a bar atmosphere in an office, or partnering with a local bar, come with some unique challenges, said Klatt.
“A bar has different operating hours, and bars generally don't get traffic until after a credit union closes, so there's a little bit of an operational difference,” said Klatt. “But there certainly is an opportunity to change the operating hours of the credit union and work after hours in conjunction with a bar partner. There is also the challenge of serving alcohol in a financial institution, and the insurance concerns there as well.”
What’s driving the Ohio CU to consider the move, said Klatt, is the need to attract more younger members.
“If they go this route it would be a wings and trivia type of bar,” he said. “They're trying to create atmosphere where younger members will be comfortable coming in and hanging out there and then realizing there is a connection with a credit union, giving the CU a cool factor in their eyes. So, if you’re a credit union struggling to attract younger members and can make some adjustments on the operational side, this could be a good idea.”
And the Best Partner Is?
Tim Klatt
With credit unions venturing into new branch partnerships, what’s the best move—a coffee shop, an urgent care center, a bar?
“The answer is that it completely depends on the organization,” emphasized Klatt. “It depends on their market situation and who they are trying to attract. I think that it just depends on the analytics of what is going to be successful in that marketplace. In some places it may be a bar, in others a coffee shop or a café could be significantly better. For example, we worked with a credit union in Merrill, Wisconsin, where a café was absolutely the right decision for one location. There were some local restaurants but not many, and none with a real café flavor. So it has been really effective for the credit union to go with the café. Now, if you are in a college town with a lot of little cafes, this would not be the move for you, so maybe you go with a bar in that case. It's really important to analyze both the members you're trying to attract as well the marketplace you reside in.”
Klatt said it’s typically a lease arrangement when a credit union partners with another local business, but said that credit unions, with their typically strong capital base, can add some incentives.
“They could offer to build out the space for the local business inside their office; that could be very attractive to a small business that can often struggle for capital. They could get a higher lease rate that way,” said Klatt, who believes the two businesses should be comingled—not separated—inside the branch.
Time For Consideration
Klatt believes it is time more credit unions consider a unique branch design that includes partnering with a local business. His concern is that the more non-traditional financial services players will make more of these kinds of moves.
“You’re changing the nature of how the credit union interacts with its members, and changing the reason for people coming into branches,” he said. “This is a partnership of two organizations, building off of each other's customer and member base. Target and Walmart are trying to create one-stop shops, and they’re starting to bring that into the financial services world, as well. And then there’s Amazon…If these players can navigate the regulatory compliance issues, then they're going to be real tough competitors for credit unions. So I think you're going to see CUs try a whole bunch of things to see what works.”