Digital Banking Is Redefining the Purpose of the Branch
As routine banking shifts to digital channels, credit unions are rethinking the role physical branches should play in serving members.
Routine banking is moving to digital channels.
For decades, the credit union branch served as members’ primary destination for nearly every banking activity, from opening new accounts to depositing paychecks. Today, that model has shifted dramatically. Digital transformation has fundamentally reshaped where members conduct everyday banking, allowing mobile apps and self-service technologies to absorb routine transactions.
Credit unions recognize that this digital migration is no longer simply about offering online access. It has become central to how institutions compete for new members and deepen existing relationships. Recent research found that improving digital member engagement was CUs’ most-named strategic priority, cited by 64% of those surveyed. That priority translates into specific digital strategies: data analytics and predictive modeling (80%), 24/7 automated online account opening (69%) and social media participation (60%). These investments reflect changing member behavior rather than a desire to eliminate physical banking. Consumers expect everyday financial tasks to require little effort, whether checking balances, transferring funds or applying for basic products. Digital tools satisfy those expectations while reducing friction for both members and staff.
Automation also creates operational efficiencies inside the branch. Employees who once spent much of their day processing deposits, withdrawals and account maintenance requests can devote more attention to conversations that technology cannot easily replace.
The branch’s role needs to evolve.
As routine transactions migrate online, CUs face a more fundamental question: What role should physical branches play in a digital-first world? The answer taking shape is not retreat but reinvention.
The evidence is in how CUs are planning their networks. In Wipfli’s survey of credit union executives, 62% reported plans to open new branches, while 58% intend to repurpose existing locations to support new banking experiences. Only 18% anticipate closing branches. Rather than viewing branches as costly legacy infrastructure to be pared back, a clear majority are investing in them. This represents a notable shift from the broader industry trend of branch closures.
The case for what those branches should do is becoming equally clear. By offloading routine transactions to digital channels, CUs can free branch staff to spend their time on education, financial guidance and community engagement instead of processing deposits and withdrawals. The branch’s value can then concentrate around the interactions where expertise, trust and human relationships matter most to members. These are moments an app cannot replicate.
Whether members value that shift is the next question.
Members Still Want Human Banking, Just in Different Ways
Members expect digital convenience and personal guidance to work together rather than replace one another.
Convenience still includes physical access.
65%
of Gen Z consumers prefer opening new accounts inside a branch, despite their familiarity with digital banking.
The rapid growth of digital banking has changed how members manage their finances, but it has not eliminated the importance of physical access. Even as digital payments grow, members continue to value cash, ATM access and nearby branches, particularly during moments when convenience and personal assistance matter most.
A Velera Eye on Payments study points to cash as a clear example. Eighty-six percent of consumers expect to use cash within the next six months, and cash still ranks third in consumer preference, behind debit and credit, remaining a fixture of everyday spending even as digital payment methods become more common.
That makes access points just as important. One-quarter of CU members visit an ATM every week, with seven in 10 primarily using it to withdraw cash. Even more telling, 64% say they have paid an ATM surcharge, most often in an emergency or for a conveniently located machine. And in a separate survey, roughly 30% of consumers named ATM or branch access as their top concern, more than any other issue raised. Those habits suggest that convenient physical access is still crucial to members, even when digital alternatives exist.
Together, these findings reinforce that digital transformation is not simply about replacing physical infrastructure. Instead, it requires creating an ecosystem in which digital and physical channels complement one another, offering members the flexibility to choose whichever option best fits the situation.
Even digital-first members still value human guidance.
Gen Z has grown up with smartphones and expects banking to be available whenever and wherever needed. However, that doesn’t mean these members want every interaction to be digital. Research shows that many younger members prefer face-to-face conversations when making important financial decisions.
Velera’s Credit Union Growth Outlook describes Gen Z as an omnichannel generation that moves comfortably between online and in-person banking. Rather than viewing branches and digital banking as competing options, these consumers expect the two to work together.
When financial decisions become more consequential, many younger members still seek personal interaction. Twenty-eight percent of Gen Z consumers prefer receiving financial advice in person, compared with 46% who prefer online guidance. Branch preference shows up at key moments as well. Research from Adrenaline finds that 65% of Gen Z prefer opening new accounts in person. And when the in-branch conversation turns to personalized guidance, 76% say they will act on it.
The shift is undeniable: Physical banking is becoming less about processing transactions than facilitating meaningful conversations. Members expect technology to handle routine banking while people provide expertise, reassurance and personalized advice. CUs that successfully combine those strengths can create experiences that digital-only competitors often struggle to replicate.
The Branch Network Is Becoming a Strategic Differentiator
CUs are redesigning physical banking around advice, community engagement and expanded access rather than simply maintaining traditional branch networks.
CUs are redesigning, not abandoning, the branch.
As digital banking becomes the preferred channel for everyday transactions, credit unions are rethinking their physical spaces. Forward-looking institutions are reworking branches to support conversations, financial education and long-term relationship-building with small businesses and communities. This evolution reflects a growing recognition that branches can create value in ways digital channels cannot. While members increasingly handle routine banking online, they often prefer in-person discussions when navigating complex financial decisions, planning for major life events or seeking personalized guidance.
That changing role is influencing both how branches are designed and how employees spend their time. According to Wipfli’s State of the Credit Union Industry 2026, 76% of executives planning to repurpose existing branches intend to convert them into advisory hubs. Rather than dedicating more floor space to teller lines, this frees institutions to create spaces better suited for financial consultations. At the same time, 64% are enhancing ATM capabilities so members can continue completing routine transactions efficiently outside traditional teller interactions.
Branches are also becoming more deeply integrated into their local communities. Wipfli found that 53% of institutions repurposing branches are creating collaborative spaces that can host educational programs, community meetings and member events. These investments recognize that physical locations can strengthen member relationships even when routine banking increasingly occurs elsewhere.
The same priorities guide decisions about whether to open new branches altogether. Institutions planning new branches cite digital adoption rates (63%), operating costs relative to revenue (55%) and younger-member growth (47%), not simply transaction volume, as key drivers. Taken together, these choices show CUs treating the branch as a strategic asset rather than infrastructure to maintain.
Shared Branch extends the value of the physical network.
Reimagining the branch also means rethinking how members access in-person services beyond their primary credit union. Through shared branching, participating credit unions open their branches to one another’s members. This makes it possible for a member traveling or relocating outside the home CU’s footprint to conduct in-person business at any branch in the network. It’s become one of the industry’s most cost-effective ways to expand access while controlling operating costs, giving members thousands of additional locations to bank without any one institution building more of its own.
A Velera and Visa study found that 63% of CU members visited a branch in the prior six months, a sign that physical banking remains a meaningful part of the member experience despite rising digital adoption. Demand for broader access becomes even clearer when members encounter gaps in availability: In the same study, three in five CU members reported needing branch or ATM access at a time when one was not conveniently available.
Shared branching helps address those moments by extending the reach of participating institutions while preserving the personalized service members expect. The Co-op Shared Branch network, powered by Velera, is the largest credit union-owned branch network in the United States, with more than 5,550 locations nationwide, enabling members to bank in person regardless of where they live or travel. Complementing that reach, Velera’s Co-op ATM Network has continued to expand, adding more than 37,000 surcharge-free ATMs nationwide, further increasing convenient access to cash and self-service banking.
These developments demonstrate that physical banking remains an important competitive asset for CUs. The strongest branch strategies focus on providing members with reliable access to trusted advice, convenient services and consistent experiences rather than maximizing transactions.
Building the Branch of the Future
Digital banking didn’t eliminate the need for branches. It redefined and strengthened the reasons for having them. As routine transactions continue shifting to digital channels, the value of the physical branch lies in the guidance, trust and personal relationships that technology alone cannot provide. Credit unions that align their branch strategies with these changing expectations can solidify member loyalty while continuing to invest in digital banking.
PYMNTS Intelligence offers the following actionable roadmap for CUs looking to align their branch strategies with members’ evolving needs:
- Evaluate branch success based on relationship outcomes rather than transaction volume. Track measures like member engagement, financial guidance delivered and long-term relationship growth.
- Design seamless member journeys across digital and physical channels. Moving from mobile to ATM to branch should feel like one continuous experience, not a series of disconnected handoffs.
- Repurpose branch space to emphasize advice, education and community engagement. Design for consultations and member events rather than teller lines.
- Expand convenient physical access through shared branching, ATMs and self-service technologies. Shared branch networks and expanded ATM access extend members’ reach without the cost of building new locations.
- Treat branches as strategic assets that reinforce, not compete with, digital banking. Position them as destinations for expertise and relationships that digital channels can’t deliver on their own.
As member expectations continue evolving, successful CUs will be those that recognize the branch’s role has not diminished. It has become more focused. Institutions that effectively integrate digital convenience with meaningful in-person engagement will be better positioned to deepen relationships, differentiate themselves from digital-only competitors and remain central to their members’ financial lives.
