Will Credit Union Branches Disappear?

The Future of Credit Union Branches in a Digital World

Brett Fairbairn

Brett Fairbairn

Brett Fairbairn

A conference recently made me think about the future of credit unions as connecting points between the real world and the digital world. The conference was in Luzern, Switzerland, where mainly German-speaking co-op leaders and academics came together to discuss co-op identity and growth. One of the working groups was on co-operative banking and digitization, and it was their report that got me thinking.

Co-operative banking is one of the most mobile and digital lines of business any co-op could be in. We have come to understand that money, deposits, loans, and so on — many of the “products” credit unions deliver — are essentially information. They are numbers in databases — numbers that can be transferred or changed at computer speed. Today, the digital world is the real world of banking commodities.

Only occasionally does the virtual world of banking services take material expression. An automated banking machine (ABM), when you think about it, is a machine that converts information into physical monetary bills when you need them. An ABM is a small, specialized material outpost of an unseen digital world.

Which brings me to credit unions, especially their distributed physical facilities. What is a credit union branch? What will it be in the future? In an increasingly digital world, such branches could go at least two ways.

First, branches could disappear. The workshop participants called this the “digital regional bank” option. As a branchless, virtual business, a credit union might maintain an identity by connecting to its regional community through symbols, community sponsorships, and itinerant services or activities throughout the region. People would still see the credit union as local in some meaningful way, but they would relate to it without their relationship being mediated by credit-union-owned bricks and mortar. If they meet a credit union service provider (say, a financial advisor), this would happen within someone else’s house or building. This is one possible future for credit unions in a digitizing world.

Second, the group asked, what if branches continue to exist? What will they look like? What will happen in them? This is where things really got interesting.

Since banking as such does not need a building, what happens in a future credit union branch will not be primarily about banking. Rather, conference participants imagined a community-oriented space that might include a café, a fitness centre, and opportunities for sellers of local products and services. Within this context, the credit union might offer pop-up banking services, educational and informational activities, appointments with credit-union representatives. The concept resembles a “co-operative house” — a shared roof for multiple local community and co-operative activities.

This future branch would be the material intersection with a rich, digital credit union world that would include online services, electronic forums for discussion and debate, and digital libraries and training resources. The credit union would “live” in a co-ordinated way both in the digital realm and in the physical, local, community-oriented world of the “co-operative house.”

So this might be another future, one in which the local credit union branch or co-operative facility is a varied, fluid, shared community space. Here the credit union’s digital identity takes physical form when it needs to, as when members or prospective members need to meet a real person, and when they need pointers into the credit union’s online resources, services, and communities. At those moments, the branch becomes the area of intersection between a physical, local community and the online community and banking services of the regional credit union.

This future is more like an evolution than a revolution. There are signs of it already as physical branches are reconfigured from traditional fixed tellers and services towards more flexible and social spaces. It is exciting to imagine seizing and shaping this trend decisively to re-embrace locality, community, and co-operation to create welcoming, inclusive, and engaging experiences for people.

Digital regional banks will no doubt emerge and be both useful and successful. But I’m drawn to the inspiration of re-imagining the credit union branch as a co-operative house.

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