Transforming the Branch to Meet the Needs of Today’s Digital-first Members

July 25, 2023

By Dr. Kathy Snider, Senior Vice President, Product Portfolio Management, Co-op Solutions

Much ink has been spilled over the impending decline of the branch. As consumer preferences have shifted to digital banking, both via mobile apps as well as online, conventional wisdom states that branches are largely a luxury that financial institutions can no longer afford.

Indeed, banks have continued to aggressively reduce their branch footprints in an effort to shed operational costs and staff, with the net number of bank branches declining by 2,061 in 2022.

Yet, despite a 1.2% drop in the number of credit union branches in 2020 during the depths of the pandemic, credit unions have added branches in each of the past two years. The net number of credit union branches grew by 86 in 2021, and 96 in 2022.

Why have credit unions continued to add these physical assets, while their banking competitors are taking the opposite tack? It is obvious that the branch still serves an important role for credit unions and their members.

The Rise of the “Phygital” Financial Consumer

Credit unions have always been focused on serving their members the way they want to be served, and today, those expectations are increasingly moving to digital. But consumers have not completely abandoned their desire for physical, in-person engagement, particularly when it comes to higher-value, more complex interactions.

For example, a recent trend is the rise of the “phygital” consumer—one who prefers to engage via both digital and physical channels. This trend has exploded in many industries, such as retail (think of the popularity of buy online/pickup in store, aka “BOPIS”), healthcare (patients now expect to be able to “check-in” for their appointments online, which enables them to get in to see their healthcare provider sooner), and auto buying (where shoppers will research and select their vehicles online, before visiting the dealership for a test drive).

Financial services are no different. According to a 2021 PwC digital banking study, the percentage of financial consumers who identify as phygital rose from 17% to 25% between 2020 and 2021. At the same time, the percentage of branch-dependent users declined to 35% (from 42%) over the same period.

This data makes clear that digital engagement is on the rise, and credit unions must take notice. Yet, PwC’s study also shows that 6 out of 10 financial consumers still value—and regularly visit—a branch. Credit unions understand this desire and are focused on offering their member-owners the best possible experience.

That’s why credit unions are not divesting their branch networks to the same degree as their bank competitors. But it is well understood that the purpose of the branch is changing, from one centered around basic teller line transactions to a focus on building and deepening relationships. Along with this change in purpose, the look, feel and functionality of the branch will also need to evolve.

“It’s no secret the financial services landscape has experienced rapid transformation,” said Kevin Mulder, Senior Manager of Business Solutions for Novatros. “With the rise of Fintechs, the maturing of mobile apps, and consumer desire for more expedient access to their accounts, credit unions have made a tremendous push to digital. However, as consumers evolve, reports show they want it ALL, including access to convenient branches.”

To engage the new breed of phygital member, credit unions must incorporate digital technology into their branch design. One way to do this is through ITMs—interactive teller machines—the next evolution of the ATM.

ITM Integration Is on Co-op’s Roadmap

Whereas the in-branch teller line may still be needed for a certain segment of the membership, the future lies in virtual banking. The interactive teller machine (ITM), or video remote teller is a combination of interactive touch screens, traditional ATM functionality and video technology, and offers a vivid, near-in-person experience for members and staff. Critically, the ITM offers significantly reduced operating costs and greater efficiency than a traditional in-person teller line.

Although the ITM has been around in some form for several decades with Co-op supporting first generation ITMs, its broad acceptance has been hampered by consumer resistance to giving up in-person teller line interactions, as well as clunky, unreliable technology and a less-than-ideal user interface.

But the pandemic has helped condition the public to become more comfortable with remote, video-enabled interaction. Before 2019, had most of us ever even heard of Zoom?

Sensing opportunity, the industry’s leading major ATM manufacturers have continued their investments in ITM technology, with a focus on improving reliability and creating an overall better experience.

That’s why Co-op is excited to be progressing an upgraded solution for integrating shared branching capabilities at the ATM that is easier to operate and support. It will provide members with intuitive, self-service access to both account-based and card-based transactions at the ATM and kiosks, without the need for an in-branch teller.

As the provider of the largest ATM network in the country, providing credit union members with access to over 33,000 surcharge-free ATMs, the advancement of this technology and addition of new features is an ongoing area of focus for Co-op.

Shared branching continues to be a focus

Another ongoing priority for Co-op is our investment in the largest credit union shared branch network in the country. We recognize that the evolution of the branch only reinforces the importance of shared branching as a hallmark of the credit union philosophy of “people helping people.”

With 5,451 branches coast to coast, the Co-op Shared Branch network provides greater in-person access than any single bank, including Wells Fargo, JPMorgan Chase, and Bank of America. The Co-op Shared Branch network allows members of one credit union to perform a range of transactions at another credit union. Through the Co-op Shared Branch network, participating credit unions can serve members in diverse geographical locations, even when they move or travel.

In our commitment to supporting the evolving shared branching model, Co-op is excited to announce the introduction of IDCheck (coming soon), an integrated identity and authentication solution that allows credit unions to combat fraud more thoroughly across the member journey within multiple channels. IDCheck will enable Co-op Shared Branch credit unions to authenticate Co-op Shared Branch members via a QR code and one-time passcode multi-factor authentication. By adding this new solution, credit unions will help protect their members at participating shared branch locations.

The Branch Remains Key to “People Helping People”

The future of member service stands on three components: digital technology, an optimized branch network, and the ingrained credit union philosophy of “people helping people.”

Co-op Shared Branch State Network Partners say that to succeed, credit unions must ensure that each of these three components remains strong to prevent them from falling behind. This means offering members the latest digital services that allow them to access their accounts 24/7 from wherever they are. And it means maintaining a convenient, accessible branch network staffed with courteous, knowledgeable credit union experts that truly care about your members.

“As we look for ways to expand network capabilities and operational initiatives aligned with these trends, our Shared Branching model continues to set us apart from our competition,” added Mulder. “Integrating ITM Technology within the Shared Branching space will continue to drive the cooperative strategy and retain the People Helping People philosophy of the Credit Union Movement.”

Shared branching, fitted with the latest in convenient digital technology, is an important piece of this puzzle, and one that is unique to the credit union movement. As always, Co-op is listening to our credit union and industry partners and is committed to delivering the digital and human-powered solutions that you—and your members—are asking for.

Explore how your credit union can join the Co-op Shared Branch and Co-op ATM networks. Contact your Co-op Business Executive, call 800.782.9042, or email

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