The Scenario:
BCU is a not-for-profit, member-owned credit union serving employees and families of large employers across the country. Operating primarily a Special Employee Group (SEG) credit union, BCU partners with top organizations that value the financial well-being of their employees. While most of BCU’s branches are in company partner locations, community charters in northern Illinois, southern Wisconsin, and Puerto Rico provide the credit union with greater opportunities to serve. Seeking to supplement their growth strategy by expanding their community branch presence, the credit union needed to identify and validate optimal locations inside key markets and develop a three-year branch roadmap to expand their influence.
The Solution:
BCU has experienced great success with their public-facing community branches, which are embraced and used extensively by members. To support this valuable complement to organizational growth, Adrenaline’s network analytics team completed a comprehensive network expansion study of counties in northern Illinois and southern Wisconsin – Cook, DuPage, Lake, Kenosha, and McHenry. This study included a broad county level market review, performance assessment of the credit union’s existing area branches, and a detailed qualitative review of prospective expansion submarkets. The resulting roadmap lays out proactive steps in priority markets, with recommendations for consolidation and expansion to amplify community presence and appeal to a younger demographic just beginning their banking relationships.
The Story:
Analytics found a high concentration of members residing within existing BCU branch trade areas, but an even wider distribution across greater Chicago which opened up opportunities for greater growth. Following a shift in work habits over the past five years, migration patterns are expected to have significant, lasting effects on branch utility and profitability – driving an even greater need for accurate forecasting.
Branches continue to be a bright spot for BCU. While many members are served remotely, the members who interact with the branch tend to be more engaged with the credit union. Members going into branches tend to buy more products and services, have greater balances on deposit, and report higher Net Promoter Scores for the credit union. The branch allows BCU to have those valuable face-to-face interactions, live out their relationship banking values, and support members along their financial journey.
Overall, the market study area represented a $175B deposit market, with 82% of the deposit base residing within Cook County alone. Additionally, deposit balances in the study area realized a 6.6% compound annual growth rate (CAGR) over the past five years, a significant pace that outperforms the 5.4% deposit CAGR from the five years prior.
With a relatively light branch presence across Cook, Kenosha, Lake and McHenry counties, the credit union hadn’t been optimally positioned to take advantage of all of the benefits of the network effect to maximize market share. Building or leveraging current hub branches in the highest opportunity markets allows for eventual support from smaller footprint formats in the branch network, as the network effect continues to reward branch density.
Despite physical branch limitations, BCU maintains solid member penetration in core markets. Understanding that branch potential is a function of underlying consumer and small business demand, the analytics showed that BCU had significant opportunities for new account openings coming from a mix of market factors, including household counts by branch.
With a goal of driving outsized membership growth in community markets, the credit union is now armed with tools to effectively leverage BCU’s relationship-focused approach at the branch and reaffirm the continued importance of this essential retail channel. As a result of the study, BCU carefully considered consolidation of existing locations and is currently in the process of opening two new branches.
