The Official CO-OP Financial Services Blog

CO-OP Financial Services Blog: Insight Vault

Shared Branch

Apr 19

Shared Branching Study Finds Users Among Most Profitable Members

Shared Branch, THINK CONFERENCE / by Craig Beach Senior Vice President, Marketing/Business Development, CO-OP Shared Branching

New research findings reveal that not only are shared branch users some of the credit union industry’s most profitable members, but that the availability of physical branch locations is in surprisingly high demand among younger members.

The study was conducted over the course of 2008 and 2009, and analyzed the shared branching activity of 25 credit unions representing various geographic regions, asset sizes and charter types. Conducted on behalf of CO-OP Shared Branching by Raddon Financial Group (RFG) of Lombard, Ill. (http://www.raddon.com), key findings include:

  • A total of 38.6% of the households that use shared branching are profitable, which is 10% more than the 28.8% of households that do not use shared branching and are profitable. On average, the annual household profit for shared branching users was $90.25, compared to profit of only $7.07 on households that do not use shared branching. After applying the direct costs associated with shared branching transactions, the average profit was still $47.53.
  • On average, 6.8% of member households actively use shared branching (defined as completing a transaction in the last 90 days), however usage variance among members ranged from 1% to 18% by credit union. The households that do use shared branching are likely to use it regularly, with 47.9% conducting 25 or more transactions each year.
  • Although the younger member segments do not have as large a base in the organizations analyzed, they are more likely than the older segments to utilize shared branching. This may come as a surprise because younger segments are generally more inclined to use new electronic channels. However, RFG research shows that younger users do not limit their ability to access their accounts and branches remain significant for them.”
  • There is a correlation between households that are profitable and their use of shared branches, in part due to the profile of types of products used by these households. For example, use of share draft accounts is high in shared branch households. Share draft accounts are generally held in the owner’s primary financial institution, share draft is a high transaction account and generates a significant portion of an institution’s non-interest income, so the households with these accounts can be more profitable to the institution.
  • Deposits are the most common transaction type after member verify, accounting for 26.2% of all transactions with an average amount of $1,226. Withdrawals (15.8%) and balance inquiries (11.3%) were other common transactions.
  • The highest level of transaction volume occurs between 10 a.m. and 2 p.m. Friday is the single busiest day of the week, with Monday following closely behind.
  • Households located more than 20 miles from one of their credit union’s proprietary branches account for 36.7% of the households that actively use shared branching. On the flip side, households that have a proprietary branch in close proximity are a smaller percentage of shared branch users. However, the group in the middle still has strong usage patterns of shared branching, indicating that some households will use the shared branching network even if it is only slightly more convenient than one of the credit union’s own branches.
  • Members of the credit unions in this study on average used 509 shared branch locations. However, members of one particular credit union analyzed used more than 1,900 locations.

If you would like to learn more about the results of this study, please contact one of our Network Service Representatives at 866-812-2872, option 2, or by e-mail: sales@co-opngn.net. For more information on CO-OP Shared Branching, visit www.co-opfs.org.

Add Comment

Apr 5

Making the Best of the Economy

Shared Branch / by Craig Beach Senior Vice President, Marketing/Business Development, CO-OP Shared Branching

As a nation, in both the business and consumer sectors, we continue to face financial hardships. While banks have been dubbed the culprits and are paying for their many mistakes that led to the 2008 economic turndown, credit unions have been able to offer a financial safe haven to the pool of potential members who have left their failing banks in search of more stable institutions. In 2009 alone, we saw 155 banks go belly-up, presenting a golden opportunity for credit unions to snatch up unhappy account holders and bring them to the other side.

One of the biggest fears of consumers who are considering moving their account to a credit union is the loss of branch convenience. With 97 percent of credit unions having less than 10 branches, and 69 percent having only one, potential new members could be swayed to a large national bank with thousands of locations instead of a credit union. Fortunately, credit unions have a unique solution to this problem: shared branching. Shared branching provides members branch access at more than  4,000 locations nationwide, offering credit union members the convenience they expect, and keeping even the smallest credit unions “right in the neighborhood”, wherever their members may be.

With the increasing popularity of mobile and online banking, some may think that access to physical branches will soon no longer matter, especially within the younger generations. However, research has shown that members still prefer to have a tie to a physical branch, even though they still use the other banking options, and that banking at branches is still important, especially with the added convenience of shared branching.

In a recent study conducted by Raddon Financial Group and CO-OP Shared Branching on the profitability of shared branching, findings showed that younger users do not limit their ability to access their accounts and branches remain significant for them. Although the younger member segments do not have as large a base in the organizations analyzed, they are more likely than the older segments to utilize shared branching. In the 18-34 age bracket, 17 percent are users of shared branching, while 13 percent of the 35 and older age range are users of shared branching.

There has never been a better time for credit unions to grow their membership. Take advantage of the mistakes made by banks and the added convenience of shared branching. Get your name out there, market your brand and show your community why credit unions are the way to go.

Add Comment