Shared Branching: A Vital Service of the Credit Union Movement

Katie Miller, Credit Union Service Corporation
March 8, 2006

There is a hot trend in today's marketplace: branching, and banks are pursuing it with a vengeance. For members, location and convenience are key qualities in the evaluation of a financial institution. To satisfy these criteria, many banks have begun to spend millions of dollars in new facilities. For example, Citigroup has more then doubled its branches in the past five years, and doesn't plan on stopping there. Commerce Bank, located in the northeast, plans to double its branches in the five-year period leading up to 2009. Banks have been so successful at satisfying their members' desire for numerous well-located branches that a recent CUES study found that more then 68% of those surveyed chose a bank over a credit union because it was more convenient.

As credit unions attempt to retain and attract new members in this increasingly competitive environment, the need to offer numerous convenient branches becomes paramount. But for many credit unions, the thought of branching out at the speed of the competition is daunting. They know that they can't face the financial implications of building additional facilities, but still need to offer existing and potential members the physical presence of added locations. Even in our tech-savvy world, consumers have made it clear that they want to conduct their banking at actual brick-and- mortar locations—and they want to do it where it is convenient for them. So credit unions are faced with a dilemma: What is the most cost-efficient method of branching out?

Shared Branches

Many credit unions are finding that the answer lies in shared branching. In this cooperative system credit unions are linked, which allows their members to enter any participating facility and transact their business just as they would in their home credit union. And in a time where convenience rules, coupled with a member's ability to up and leave his or her credit union for any number of other more conveniently located financial institutions, shared branching is the solution.

Today, 20 million members from over 1100 credit unions benefit from access to over 2040 branches in 44 states and on military bases worldwide.

Shared branching has answered the modern member's demand for convenience by offering thousands of branches, while giving credit unions the ability to serve their members at all times without having to face the exorbitant expense of building additional locations. Many credit unions have turned to shared branching to aid in disaster recovery planning. The benefits of participating have been demonstrated to facilities when destroyed by hurricanes, tornadoes, floods, and other natural disasters. Although front doors may have been closed temporarily, members were never left without access to their accounts.

Ideal for Traveling Members

Shared branching has also proven to be essential for many credit unions with members who travel frequently, or take extended winter breaks in warmer climates, which allows these members to stay with their credit unions, even as they move across the country. And because of the range of transaction types available at shared branching locations, many members feel as if they are right at home, thus creating members for life.

Credit unions are finding that the power of cooperation is indispensable while being unique to the movement. So what is the future for credit unions in the era of branching? Consider a statement made by Carroll Beach, president/CEO of Credit Union Service Corporation in 2005:

"There are thousands of credit unions with innumerable branches located in almost every town in this country,” says Beach. “By collaborating, potentially none of these will ever need to build a branch again."

Clearly, when credit unions team up and take advantage of the benefits of opening their doors to each other, the branching hurdle will surely be an easy one to overcome.

Katie Miller is marketing communications coordinator for Credit Union Service Corporation in Duluth, Georgia. For more information on shared branching, contact CUSC’s national sales director Steve Davis at steve.davis@cusc.net or 866-812-2872.