Best (and Worst) Cities for Shared Branching

Christian Mullins
April 27, 2009 | COMMENTS

Shared branching has exploded in popularity in recent years, leveling the “brick and mortar” war with America 's largest banks. The concept is simple: If a credit union is one of the 1,200+ participants, their members may go to any one of over 3,000 shared branching locations nationwide and conduct basic transactions as though it were their own credit union. While vacationing members utilize shared branching, it is primarily a member generation and retention product, promoting itself as the best of both worlds: credit union savings/loan rates and thousands of locations.

But not all cities are created equal. According to population estimates, there are 259 cities in the United States with a population of 100,000 or greater, with shared branching locations ranging anywhere from a “stones throw” to “short flight.”

Because these cities vary greatly in population, from 100,148 (Billings, Montana) to 8.25 million (New York City), they have been separated into three population categories: 500,000+, 200,000-499,999, and 100,000-199,999. The rankings were determined by the number of branches within 10 miles of the city divided into the city population.

Some cities and metropolitan areas are well represented by shared branching networks, but there are also cities that have little to no representation at all. In fact, 27 cities currently have no shared branches within 10 miles, including Billings, Montana (210 miles to nearest location), Sioux Falls, South Dakota (140 miles), and Midland, Texas (110 miles). As long as these cities and others like them are not or underrepresented, their credit unions will remain vulnerable to competition from banks and, in some cases, other credit unions. Furthermore, relocated members that are used to a shared branching system may feel disenfranchised, limiting their choices to credit unions with several branches or joining a bank for convenience.

Shared branching is a win-win for credit unions. For small credit unions, a merger becomes less likely, as the number of their branches become competitive. Large credit unions retain additional members, minimizing lost assets and loan revenue. No one enjoys the process of switching from one financial institution to another. Shared branching gives members a reason to stay with your credit union wherever they may go.

Reprinted with permission from CU Potential, a blog written by Christian Mullins, a 14-year-veteran of the credit union industry.