Connecting Branches: Where Transformation Meets Performance

by Vivalociti

When discussing the "branch of the future," the focus is typically on how to incorporate the latest industry trends into a perfect solution that all financial institutions should adopt. However, many banks and credit unions operate with a patchwork of branch facilities that have been assembled over many years. The question is, how can they make this work more effectively?

When it comes to appealing to millennial and Gen Z consumers, the focus is often on new construction and creating a "branch of the future." However, for many institutions, building new branches is not a realistic option. Banks and credit unions are considering how to cost-effectively update and evolve their branch network; a complex issue critical to the strength of their message and success with younger generations.

According to the National Credit Union Administration (NCUA), there were 162 credit union consolidations in 2024, with 41 mergers approved in the fourth quarter alone. On the other hand, the Federal Deposit Insurance Corporation (FDIC) reported 155 bank mergers throughout 2022. As financial institutions acquire existing buildings, they may face challenges in maintaining consistent customer experiences and cohesive branding across their branch networks.

Assessing Branch Reinvestment ROI

Reinvesting in your existing branch network can yield the greatest ROI by strengthening your brand equity. In essence, brand equity refers to how relevant your brand appears from the consumer's perspective. External factors such as changes in industry trends, consumer behavior, technology, or market conditions can diminish brand equity over time, making it crucial to maintain relevance with consumers.

In order to succeed and expand, banks and credit unions must regularly update and uphold their brand. A vital component of this is to evolve their branch network, which often consists of a blend of old, new, and acquired facilities. However, updating branches doesn't always require a complete overhaul. Sometimes the most effective ROI is achieved through a "course correction" or "refresh."

To develop a strategy for evolving your branch network, it's essential to take a systematic and phased approach governed by discovery, design, and deployment. We will explore each of these steps in turn.

Discovery Key Questions to Ask

Collecting discovery data for each branch and the network as a whole can lead to a "report card" that highlights branches with significant potential for improvement and warrant substantial reinvestment, and branches with limited potential that only require minor cosmetic updates, or none at all. These "grades" can serve as a guide for an investment plan that targets high-priority locations and ensures the plan is feasible, considering the desired timeline and budget.