Data Dive

CO-OP Network President: Shared Branching And Credit Union Service Ubiquity

Consumers, on the whole, really like doing business with their credit unions. According to the latest iteration of the Credit Union Tracker, 81 percent of credit union customers report being highly satisfied with their services. And that satisfaction stems from the fact that credit unions have a reputation for being less expensive, less complicated to deal with and delivering a “higher touch” level of service than larger bank counterparts.

But big banks have a perceived advantage, newly named CO-OP Network president Jim Hanisch told Karen Webster in a recent conversation. Being big means being everywhere – and customers also want and need that everywhere access.

Credit unions, Hanisch said, do a lot to support and delight their customers while they are at home, but the minute customers drive out of town for work or vacation, they lose that easy access to a network of support. Customers may have a lot of complaints about big banks, their fees and their rather impersonal nature, but ubiquity can make up for a lot of sins when it comes to the provision of financial services.

Shared branching services can close that gap, Hanisch told Webster, by giving any member the ability to transact at any credit union that is part of that network. It’s why CO-OP pioneered that concept in 1991 and has been growing it ever since.

“With over 5,700 nationwide branches, we are probably second only to Wells in terms of number of branches. And we are likely to be number one in the next year or two," he noted.

In his new role as president, Hanisch told Webster, his goals for CO-OP are twofold: to continue growing the shared branching network by adding more members and continuing to expand what its member banks can offer their increasingly omnichannel customers.

How Share Branching Redefines Credit Unions' Banking Footprint

The goal of shared branching, Hanisch explained, is to give small and medium-sized credit unions some of the scale of its big banking counterparts by making their various locations and ATMs interchangeable from a consumer perspective.

“What the CO-OP system did was create a switch that allows transactions to be exchanged between credit unions,” Hanisch said. “Rather than being card number based, our system is account number based, and allows the members of any participating credit union to go to a partner branch and transact business against virtually the full array of their accounts.”

On the front end, he noted, customers can be certain they are getting good, real-time funds in and out of their accounts, whether they are looking for services from their home credit unions or interacting with partner credit unions on the road. For the credit union, settlement happens via ACH the next day.

What started as a small service representing a few pockets of regional credit unions has expanded to 1,900 member credit unions – or half of the credit unions in the United States. And the goal is straightforward: to capture that other half.

“We think there is a lot of opportunity to bring credit unions into our network, and a lot of opportunity for those entities to use that to capture more membership," said Hanisch. "If you are a relatively small credit union with a local presence, this gives you the opportunity to have additional penetration in terms of a surcharge-free and deposit-taking ATM network, and in terms of your branch system. We see it as a key competitive tool.”

Do Physical Branches Still Matter?

CO-OP’s dethroning of Wells Fargo as having the most branches in its network is not, according to Hanisch, solely a ringing endorsement of their growth – like many banks, Wells Fargo has been dialing back its physical presence as customers have increasingly turned to online and mobile banking.

But, Hanisch told Webster, the fact that customers are going online more often does not necessarily mean they want their physical branches to disappear.

“Twenty years ago, when we did surveys, people wanted an ATM at the end of their driveway, and a branch on their corner.”

Today, he said, the same survey yields that customers still want the first two things, but they also went a powerful, slick technological experience online.

“Things change, but they also don’t,” Hanisch told Webster. “I think omnichannel is an often used buzzword … from a practical aspect, I think more consumers are omnichannel and are getting more digitally savvy, but they still have needs for physical locations – or sometimes just want one.”

The footprint of banking, he notes, has to change – and is changing. The days of the 10,000-square-foot bank space are probably done, he noted. Going forward, the interior space will likely be more about interactions and services than simple transactions, which will be done digitally.

CO-OP's job, Hanisch noted, is working with their credit union partners to also increase the level of those multi-channel offerings – either by building in function, or helping them connect to it.

Some services, although they may be connected to CO-OP, simply aren’t their game – such as P2P payments. CO-OP did build out some functionality around P2P for members within their network, enabling them to easily move and settle funds in real time. But ultimately, Hanisch said, P2P is going to be a race run not by them, but between other contestants. They connected to Zelle, of course, happy to help those transactions for their members.

“We haven’t met a lot of transactions we don’t like, as long as they aren’t fraudulent.”

And the goal for CO-OP – on behalf of their member credit unions– is to make sure those transactions are flowing, even when local members are away from their local credit unions.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.