Five Strategies for Predictable Core Deposit Growth

Categories:

• Consulting
• Credit Union
• Data
• Retail
• Services

This article originally appeared on CUInsight.com.

In today’s financial landscape, core deposits are the lifeblood of your credit union. 

Interest rates seem to have stabilized, but the combination of the rise of interest rates and inflationary pressures in the last few years has returned us to a place where the best way to grow your credit union is by growing core deposits. 

While you may have embraced that reality in theory, many credit union leadership teams struggle to find and implement practical strategies that will help you compete and win in your market.

Strategy 1: Focus on advisory services over transactional.

Focus on building relationships and providing thoughtful financial advice to members. Big bank conglomerates may beat you on digital tools, but there’s no reason they should beat you on delivering advisory services that increase your members’ financial wellness. 

To do this well, you need to build trust, provide excellent customer service, and give members solutions to the practical financial problems they face. 

In some ways, “advisory over transactional” could be the category that all of the strategies below fall underneath, but it’s important enough that it needs to be at the top of the list.

Strategy 2: Target Gen Z.

Gen Z was born into a world with digital advancement in hyper-speed, but also a world of financial turbulence. The result is a generation that may seem like something of a paradox—digital natives who are more financially conservative. 

By providing financial education and enablement, you have the chance to bring this generation into their fold as loyal members and low-cost depositors.

Consider offering educational classes for the community about topics like living on a budget, getting your first mortgage, and understanding different saving and investing options. You’ll build trust and give members the tools they need to thrive financially.

Strategy 3: Reinvent branches.

Have you noticed how often restaurants update and remodel their locations? Usually about every 5-7 years. And it’s not a waste of an investment, either. Studies show that remodeled restaurant locations usually see sales increases between 15-40%. 

If updating the space where people go for a chicken sandwich makes that much of a difference, how do you think people view a branch that hasn’t been updated in 10+ years?

Make the strategic investment to update your spaces—not just with a coat of fresh paint and new carpet (although you probably need those as well). Reimagine your space to facilitate a more advisory approach instead of putting your staff behind a huge teller wall. 

You’ll be surprised at how a refreshed and reinvented space attracts new members.

Strategy 4: Highlight local connections.

Here’s another area where credit unions can run circles around the big bank conglomerates. Make strategic investments in your community and don’t be shy about spreading the word about the good work you’re doing. 

Many people don’t understand that credit unions are fundamentally different from banks in that they don’t exist to benefit a group of unknown shareholders. As nonprofits, credit unions should invest time, energy, and resources to help people understand how they make communities better by keeping revenues in the community. 

Strategy 5: Gather and share member testimonials. 

Putting systems in place to consistently gather and share member testimonials is one of the most important things you can do from a marketing perspective. 

People are bombarded everyday with literally thousands of marketing messages. Online reviews play a shocking role in the decisions people make every day about which products and services they choose. 

In fact, partially due to the overwhelming amount of marketing messages consumers receive, they overwhelmingly trust what others say about you over what you say about you. 

You can regularly request that satisfied members post a Google review of your credit union (there are automated services that will make this fairly easy that are surprisingly affordable). 

And, you should consistently ask members for their feedback so you can both improve the services you offer and share their positive testimonials through all of your communication channels. 

Far too many credit union executives drastically underestimate the power of member reviews and testimonials. Many of your members will be happy to give a review or testimonial—they just need to be asked. 

More Intense Competition for Core Deposits is On the Horizon. Are You Ready?

It may go without saying, but we feel the need to say it anyway. Greater competition for core deposits is coming soon—in fact, it’s already here! 

If you’re not feeling a sense of urgency to find and implement effective strategies to grow your core deposits in a predictable way in the future, you haven’t been paying attention the last few years. 

Now is the time to take bold action. Even if you can’t do all of the strategies we’ve articulated here, choose one or two and get going now. Then, over time, implement as many as you can. That’s a plan for predictable long-term growth.

Contact Us for Credit Union Growth Strategy

Reach out to our expert credit union consulting and branch optimization team today for help with targeting and reaching new members – we’ve guided credit unions for more than 20 years with a reliable data-driven approach to identify member demographics and optimal ways to foster their engagement.

Three Common Mistakes Credit Unions Make When Looking to Grow Core Deposits

Categories:

• Consulting
• Credit Union
• Data
• Leadership

This article was first posted on CUInsight.com.

How are we going to grow core deposits?

This is the question many credit union executives have recently been wrestling with. With zero percent interest rates a thing of the past, the only real option credit unions have is to expand their reach—attracting new members who make new deposits. How can you avoid mistakes credit unions make to grow core deposits?

The unfortunate reality is that many executive teams had been lulled into an uneasy sleep over the last 15 years, thinking that the low interest rate environment would never end. Now, finally facing the fact that we won’t be going back to that any time soon, they’re scrambling for a silver bullet to find new members, open new accounts, and bring in those new deposits.

In that scramble, we’re seeing credit union executives oftentimes making three big mistakes. If you want to cultivate a growth strategy that yields consistent, predictable long-term growth, you’ll need to avoid all three.

MISTAKE #1: Putting all your eggs in the digital basket.

Do you need a good solution for online banking? Of course. Are you going to create an online banking experience that differentiates you in your market to the degree that it will be your primary growth engine? Probably not.

Community based credit unions will almost always struggle to compete on a digital solution alone when compared with enormous banks that can invest tens of millions into their online tools. You need digital banking solutions that work, yes, but you’ll never grow solely based on your app or your online bill pay.

To compete and win the online banking battle will take more than you will ever be able to spend. If you’re putting all your hopes for growing core deposits into attracting new members through your slick mobile app, think again. The online experience is one factor—and not even the most important one—for people (no matter their age) who are evaluating banking options.

Digital alone won’t grow your core deposits.

MISTAKE #2: Believing the “branching is dead” myth.

Branching as a growth strategy is far from dead. If you’ve been paying attention lately, both PNC and JP Morgan Chase recently announced enormous investments in their branches.

They’re planning to open new branches, close under-performing branches, and remodel existing branches, investing billions of dollars in making sure that they’ve got up-to-date locations in the communities where their potential customers live and work.

At LEVEL5, we’ve seen insight-based branching strategies predictably grow core deposits no matter the economic landscape. Digital transactions don’t build trust. And trust is what ultimately drives where people put their money.

When you’re on a road trip, you’ve got to decide which gas station and convenience store you’ll use. How do you decide? You look for indicators of the other businesses nearby, if the exterior looks clean and well-maintained, and the ease of access to get in and get out.

If you consider all those factors when you’re going to spend 10 minutes there to fill up your car and get a snack, how much more important are those factors when people are considering where to put their money? Branching is still the best strategy to build trust and attract new members.

MISTAKE #3: Thinking data is the same thing as insight.

Do you remember when everyone started talking about the power of big data? The conversation was all about how advances in technology would allow smaller entities to gain the same access to enormous amounts of data to better understand their companies and their customers.

Big data by itself won’t help you grow your credit union. Everyone has data these days. You don’t need more data. You need more insight.

When you can sift through the mountains of data and draw conclusions that matter, that’s insight. When you can see and take advantage of real estate opportunities when the best locations aren’t even on the market, that’s insight. Insight comes from combining data from many sources—including boots-on-the-ground research—and leveraging both experience and expertise to understand what the data means … and how it can guide your growth strategy.

If you don’t avoid these mistakes credit unions make to grow core deposits, you’ll be taking enormous risks and miss key opportunities while your competitors—including the big banks like PNC and JP Morgan Chase—gobble up the best locations and new deposits.

But if you can resist and avoid these three mistakes, you’ll be on your way to developing a predictable growth strategy that will attract new members and increase your core deposits and get a jump on the competition.

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To learn more about how you can set your credit union on a predictable growth path, download LEVEL5’s latest white paper, Core Deposit Growth Trends →.

Technology and the Branch of the Future

Categories:

• Banks
• Branch Transformation
• Credit Union
• Data

Leveraging Critical Credit Union Data Components for Smart Geographic Expansion

In the ever-evolving landscape of data collection in the credit union and financial service industries, the race to capture new markets and enhance member experience has intensified. Basically, you have to keep up.

Furthermore, with the growing influence of technology, interwoven with strategy consulting, site selection, branch design, and building, this bevy of tools has become vital for financial institutions to stay competitive and thrive and meet members’ needs properly.

In this post, we will explore six crucial data components that inform the branch pro forma; as well as and aid in the geographic expansion plans of credit unions, enabling them to build the branch fit for the growth of the future.

1. Loans and Deposits Forecasting: Unearthing the Elbow Room

Understanding Market Viability

When considering expansion geographies and specific trade areas, it is essential to assess the availability of loans and deposits in that market before making a final decision on branch real estate site selection.

This crucial data component helps credit unions determine the “elbow room” or growth potential in a given area, identifying if there are still untapped opportunities or if the market is already saturated and unsuitable for expansion.

3. Consumer Overlays: Tapping into Existing Consumer Bases

Building on Existing Clientele

Another critical factor in successful geographic expansion is identifying how many existing consumers reside in the expansion geography.

A pre-built consumer base can significantly impact the success of a new branch, providing a strong foundation for growth and member engagement.

5. Market Potential Indices: Measuring Consumer Behavior

Predicting Consumer Behaviors

Market Potential Indices (MPI) provide valuable insights into the likelihood of adults in a specific geographic area exhibiting purchase behaviors aligned with the banking products and services offered by the credit union.

This data component aids in assessing the market’s demand for the institution’s offerings or those they plan to introduce.

Paving the Way for the Credit Union Branch of Tomorrow

In the dynamic world of financial institutions, leveraging technology to analyze critical data components is paramount for making informed decisions regarding geographic expansion and long-term growth. 

Credit Union strategy consulting, site selection, and branch design and building can be significantly enhanced with the insights drawn from loans and deposits forecasting, competitive analysis, consumer overlays, demographic tapestry profiles, market potential indices, and the 4 Square Quadrant. Armed with these data-driven tools, financial institutions can confidently build the branch of the future, positioning themselves for success in a competitive landscape.

For expert guidance and assistance in harnessing the power of these data components for your institution’s growth and expansion plans, do not hesitate to contact LEVEL5, the industry leader in strategy consulting, site selection, design, and construction for credit unions and banks.

Let us help you create the branch of tomorrow that sets new standards and meets your members needs.

How to Choose the Perfect Location for Your Credit Union or Bank Branch

Categories:

• Banks
• Branch Transformation
• Consulting
• Credit Union
• Data

a data-driven branch strategy approach

Selecting the ideal site for your credit union’s or bank’s next branch is a critical decision that can significantly impact your institution’s long-term success. Gone are the days of relying on intuition alone; today, financial institutions need to use data-driven strategies to make informed choices. 

At LEVEL5, we understand the importance of coupling data with our Branch Site Selection services to provide well-informed, actionable recommendations. In this article, we’ll explore why it’s crucial to let the data dictate the right location in your trade area and how partnering with a developer-minded firm like LEVEL5 can lead to the best results.

The Benefits of a Developer-Minded Branch Network Partner

Choosing a site is about understanding how the chosen location fits into your long-term plan. That’s why we think of ourselves as developers with your overarching plans as the goal, not mere brokers. Our approach involves a thorough assessment of the geographies and available options within a given trade area. 

Moreover, we overlay the Credit Union or Bank Branch Design types that best suit the specific location, directly aligning with your 10-Year Branch Pro forma developed during the Strategy phase. This approach ensures that the site chosen will indeed support your long-term objectives.

Location, Location, Data-Driven Action: Partner with LEVEL5 for the Perfect Credit Union or Bank Branch Site

Selecting the right site for your branch or headquarters is a critical process that requires more than just intuition or simple mapping. A data-driven approach, coupled with a clear strategy, is essential to making informed and actionable decisions to grow your branch network. 

At LEVEL5, we bring you the expertise of a developer, not a broker, as we assess geographies, identify suitable options, and align them with your long-term goals.

Let the data guide you to an optimal site and work with a partner who understands your unique needs. Contact LEVEL5 today to ensure that your financial institution makes the best location choices for sustainable growth and success.

Don’t Let Your Data Go to Waste: Maximizing Growth Opportunities in Credit Union Banking

Categories:

• Branch Transformation
• Consulting
• Credit Union
• Data

The Perishable Nature of Data in Credit Union Growth Strategy

Credit union growth strategy is like apples. When you go to the grocery store, and you see those ripe, crisp apples at their peak of freshness, you buy a bunch with every intention to consume them over the next day or so. You put them in a bowl, on the counter, but if they go unattended, they begin to stale, go past their peak freshness, eventually going rotten.

In the world of credit union banking, data and apples are one and the same. When delivered, they are fresh. If left alone, they begin to stale with each passing day. If you are a financial institution executive looking to grow and you are given fresh data, do you intend to do something with it, or will you just watch it rot?

When you hire a firm like LEVEL5 to assess your current and potential growth markets, we give you irrefutable data points and a 10-year pro forma back-tested at 96% accuracy. When looking to de-risk decisions, you have confidence in the black and white, binary numbers to help support your decisions. 

But that data has a shelf life, and you need to strike while the iron is hot. Otherwise, you may miss out on real growth potential because as time ticks on, your data becomes stale, all the while, your competition will likely be making their moves.

Let’s say you receive the data and you don’t act on it for 6 months…that’s 6 months you could’ve been making progress, now lost. Can your institution really afford to be behind for so long?

There are 3 pivotal ways to optimize your network, but acting on your current data analysis is highly time-sensitive in order to reap the rewards.

When you meticulously create a new branch prototype, you’re laying the foundation for attracting new members and offering excellent quality experiences for years to come. This design is carefully crafted and tailored to meet the needs of your members’ unique demographics as well as to accommodate the future needs of your financial institution. Consider the following if you’re hesitant to put your prototype into action: Why go through all that upfront work creating the next generation of your institution, just to never use it? You’re truly doing yourself a disservice by waiting too long to act on quality data, plain and simple.

Data Crunch Time: Take a Bite of Growth Opportunities Before They Spoil

In the fast-paced world of credit union banking, data is a valuable asset that can drive growth and help you stay ahead of the competition. By acting on current and valid data, you can make strategic decisions about opening new branches, closing underperforming ones, and crafting innovative branch prototypes for the future. Don’t let success pass your organization by waiting too long to act on quality data.

Embrace actionable data and partner with experts who can guide you through the process of utilizing it for meaningful and lasting expansion.

Contact our team today to unlock your credit union’s or bank’s growth potential before time runs out. The clock is ticking, and your institution’s future success relies on your ability to adapt, make informed decisions, and leverage the power of fresh data.

Branch Optimization: Choosing the Right Path for Long-Term Success

Categories:

• Branch Transformation
• Consulting
• Data

increase Growth and Profitability with curated branch network strategy

What is important in branch network strategy?

The Four options

Keep: Identifying High-Performing Branches 

Identifying branches worth keeping involves a comprehensive assessment that goes beyond immediate performance. It requires evaluating various factors such as financial benchmarks, forecasts, and environmental considerations.

By examining both internal and external data, financial institutions can determine branches that not only perform well in the present but also show promising long-term potential.

Branch Remodel: Breathing New Life into Branches 

Relocate: Unlocking Potential through Strategic Moves 

Work with Credit Union & Bank Growth Consulting Experts

A Modern Playbook: Leveraging Big Data for Decision Making in Financial Institution Growth and Branch Design and Construction

Categories:

• Banks
• Consulting
• Credit Union
• Data
• Services

With LEVEL5’s 20 years of experience, we have developed a modern growth playbook that relies on big data rather than old-school intuition, providing quantifiable insights that have consistently achieved business success.

In this article, we will explore the significance of data in expanding financial institutions long-term, the limitations of intuition, and how LEVEL5’s data-driven approach can help your institution make strategic decisions with unparalleled precision.

The Power of Data 

Data vs. Information

Data is the foundation, but it is the interpretation of that data that turns it into actionable information. Think of an alarm clock displaying the time—it’s data. The actionable information is that it’s time to wake up. Similarly, financial institutions need actionable information—what to do and when to do it—derived from data in order to make informed decisions.

Using Data for Strategic Branch Network Decisions

LEVEL5’s Strategic Consulting Group has a finely honed analytical process, utilizing both private and public data points. We have developed custom algorithms that provide fool-proof, data-driven facts to guide strategic decision-making. This approach ensures that expansion market decisions are not based solely on intuition, but rooted in concrete data.

Market Analysis for Credit Union & Bank Growth

When assessing new expansion markets, relying on intuition is no longer sufficient. 

For example, when considering a new branch location, perhaps a specific idyllic area in the community first comes to your mind. 

You might “feel” this is a prime spot for growth, but how far does this “feeling” really get you?

Sure, it may be a well-trafficked area, perhaps near a hub of retailers, but what if there are even more optimal locations in your town unbeknownst to you, spaces with even more traffic, even more of your member demographics, and with even more potential for future growth?

It pays to know!

That’s why each market decision must be backed up with careful, in-depth analysis that helps you minimize unknowns and maximize potential. 

LEVEL5 has been assisting clients with market analysis for two decades. Our comprehensive approach examines state, county, metro, and trade areas to determine growth trajectories that make sense both in the present and for the next 5-10 years. The resulting reports provide clients with a 10-year branch pro forma, offering accurate visibility into how a branch will perform on a specific street corner.

By analyzing data at various levels, including state, county, metro, and trade areas, we provide actionable insights that enable informed decision-making.

De-risking Growth Decisions with Unbiased Data

The Role of Data in De-risking Decisions

Data provides clarity and reduces uncertainty when making growth decisions. It allows financial institutions to understand their “elbow room” in a given market and forecast performance accurately. 

By running multiple pro formas that consider branch types, personnel, and technology fit, LEVEL5 ensures decisions are based on reliable data rather than subjective intuition.

Data Points the Way

The Power of Data-Driven Decision Making: Insight Beats Intuition

Data-driven decision making is not new. Industries such as e-commerce and sports have long embraced the power of data to enhance their strategies. Financial institutions can also harness this power to inform their branch playbook and make well-informed decisions.

By basing your decision-making on quantifiable insights rather than intuition, you set your financial institution—whether a community-owned bank or credit union—on a path toward sustainable, long-term growth.

LEVEL5’s Holistic Approach

LEVEL5’s approach to strategy and market analysis goes beyond traditional consulting engagements. We combine market analysis with site selection, ensuring that the quantifiable insights provided are actionable. Our comprehensive process involves two main components: critical inputs and outputs.

Critical Inputs:

The critical inputs for LEVEL5’s market analysis are derived from a range of data sources. These include proprietary data points exclusive to LEVEL5, as well as data points specific to the financial institution itself. 

Staffing interviews provide qualitative and quantitative insights, while market segmentation analysis and trade area analysis contribute to a comprehensive understanding of the market.

Outputs:

The outputs of LEVEL5’s market analysis process provide clients with actionable information. 

A 10-year pro forma offers visibility into a branch’s performance, including key factors such as loans, deposits, and return on investment. 

Branch type models allow for flexibility in considering different branch types, while the staffing model helps evaluate the impact of personnel on performance. 

Additionally, technology-needs assessment ensures that capital costs related to technology are considered in growth decisions.

Grow Your Financial Institution with Confidence Through a Data-Driven Strategy

In the dynamic world of financial institutions, and especially in a tough business environment like the one we’re facing today, relying solely on old-school intuition is no longer enough to stay competitive. By embracing big data and adopting a data-driven approach, financial institutions can make informed decisions and build with confidence.

LEVEL5’s expertise in utilizing data and providing actionable insights has made us a trusted partner for financial institutions looking to design and build successful branches. 

By leveraging the power of data, LEVEL5 helps financial institutions navigate the evolving landscape with assurance, backed by accurate insights and strategic decision-making.

Contact LEVEL5 today to learn more about our proprietary data-driven approach and unlock the growth potential of your financial institution.

The Network Effect

Categories:

• Banks
• Branch Transformation
• Consulting
• Credit Union
• Data
• Retail

Have you ever visited a new city and find yourself needing a pick-me-up that only a good cup of coffee will satisfy? As tempting as a local cafe can be, they are an unknown and you don’t want to take a chance and risk a good cup of coffee on a bad mom and pop shop. Luckily, you know they’ll be a Starbucks nearby. Heck, there’s likely several of them nearby. Even if it’s not your favorite cup of coffee, it’s a familiar place and you know exactly what you’ll be getting.

Familiarity and consistency may be at the heart of why franchises exist, but there’s more to the story – especially when considering the economic factors of a high concentration of locations for a specific business.

The reason you’re seeing so many Starbucks around town, and sometimes even across the street from one another, is not because they are doing you a favor and having so many locations for your convenience. Those stores are making money. And making even MORE money by the sheer fact that there are so many concentrated within a geographic region.

According to Investopedia, the “Network Effect” is “a phenomenon whereby increased numbers of people or participants improve the value of a good or service.” Translating this into retail locations, there is an increase in overall store performance by the sheer fact that there are other stores nearby.

To put this in simple economic terms, if a specific trade area has 4 Starbucks each earning $800,000 per year. The fifth location in this Trade Area will not only likely earn that $800,000 average, but because of the concentration of locations (the Network Effect), all five Starbucks locations can expect a X% lift across the board.

You can easily translate this retail strategy to your Branch Network.

If you have a good saturation of branches around a city, you are not only providing retail location conveniences to those living in that market, you will be gaining market share, share of wallet, and pinching your competitors.

Doing this even more so by accurately saturating a market with locations not only accomplishes the above, but your overall revenues and profits across the board will benefit from the Network Effect.

Now, this all sounds well and good when you talk about it in theory. The key here, however, will be execution. If you scatter branches arbitrarily around a market in efforts to achieve The Network Effect, you might not like the results. It is imperative that you do your data homework before executing this plan, or, better yet, work with a partner who specializes in interpreting data to produce the most effective strategy.

Once you’ve gathered the data, interpreted it, and created a strategy for your branch network, it’s time to execute. Not executed hesitantly, one branch at a time, to test the waters. The Network Effect can’t take place unless the network (concentration) is there. Entering one market strong with a few branches will yield better results and more loans and deposits than entering a couple different markets with individual branches.

Contact LEVEL5 today to learn more about our Strategy and Market Analysis work, which can help you find the right location, and determine the right amount of branches in a market to help you achieve the Network Effect.

Hub & Spoke model

Categories:

• Banks
• Branch Transformation
• Brand Deployment
• Consulting
• Credit Union
• Data
• Retail

Any branch optimization and expansion strategy should have a well-laid out plan regarding Hub & Spoke.

A classic and well-known strategy within the retail sector, implementing a Hub & Spoke model has a play within your branch strategy as well.

The foundation of a Hub & Spoke strategy is born in the Market Analysis phase, where geographic assessments are analyzed and overlaid with branch types that are a fit for that market. They are then perfected in the Design phase where a branch prototype is completed, along with accompanying Kit of Part components for scalability across different branch types and markets.

Here, we’ll break down the key sequential steps to planning and executing a well-planned Hub & Spoke strategy.

Step 1 – Strategic Market Segmentation Analysis

In looking at the broader Market Segmentation Analysis, this geographic assessment is your “50,000 foot” view of expansion areas, which could be at the state or county level, or both. Within this, there will be multiple Trade Areas deemed as viable expansion opportunities.

When working with LEVEL5, the key point of differentiation between other “Real Estate Consultants” is that we only make recommendations in specific Trade Areas where viable sites are available.

The sites of consideration are then ranked in order.

If you’re looking to build multiple branches in multiple geographies over the course of a 5-year aggressive growth plan, LEVEL5 will help you plot your Trade Areas based on different and varying priorities such as growth markets, demographies, loans, deposit, build-out costs, etc.

Step 2 – Branch Type Mix

Once multiple Trade Areas have been identified across a large Market Segment, you need to start thinking about which branch types fit in which Trade Areas, while also considering adjacent trade areas and their branch types.

Choosing the right branch type in a given market can be daunting, and the wrong decision can result in an underperforming branch leaving loans and deposits unclaimed in that Trade Area.

The key branch types of consideration in a Hub & Spoke model are:

• Flagship Branch – Your primary, free-standing branch, likely offering the most services, best experience and boastful brand deployment components
• Satellite Branch – A full-service, free-standing branch, just not to the level of your Flagship
• Headquarters Branch – A full-service branch, embedded in your Headquarters location
• Storefront Branch – A full-service branch embedded in a shopping center
• Micro Branch – A smaller footprint, not offering as many services/functions, but still delivers the transactional needs of your consumers
• Branch with Regional Office – A full-service branch, located far from your headquarters, thus the need for “back office” facilitates to support that “remote” geography

Step 3 – Staffing Models

When a branch type is considered for a specific location, layering a Staffing Model is the next step.

Based on the branch type, total volume of employees can be calculated based on square footage, assumptive traffic patterns, as well as product and service mix.

Staffing specialties to consider are Universal Tellers, as well as Mortgage, Investments, etc. based on the needs of the customer/member in that area.

Step 4 – Technology Models

The final component of a Hub & Spoke model involves the technology and equipment needed to fully execute a branch type. Considerations here are ATM’s, ITM’s, Cash Recyclers, Digital Signage, among others.

Developing your Hub & spoke model

While the four steps outlined above are presented sequentially, their considerations actually should be viewed more as a variable matrix.

Knowing how all the elements intertwine is one thing, but understanding how to execute a Hub & Spoke model, specifically when the disparate parts make up a proforma to aid decisions, is an entirely different task.

Lucky for you, LEVEL5’s Strategy and Site Selection departments do this every day.

If your Bank or Credit Union is in need of a full branch assessment and right-sizing for a fully formed, well-executed Hub & Spoke retail branch model, you deserve to contact LEVEL5 today.

Entering a new market

Categories:

• Banks
• Branch Transformation
• Consulting
• Credit Union
• Data
• Services

When assessing growth plans, and following the methodologies outlined in our recent Branch Playbook, you should have a clear understanding of how important data is when making market expansion decisions.

A proper Branch Playbook dives deeper into the geographic components that make up Market Analysis.

Data de-risks growth decisions, and is a critical element of expanding into a new market.

Enacting growth strategies by opening branches in a new market is not as simple as pointing to a map and building a branch. The days of building a new branch in a “busy” area of town just doesn’t cut it.

The right data not only informs these decisions, but gets you beyond generalities and into the specifics you and your Board need to greenlight projects and get you on the right growth path.

When it comes to data, LEVEL5 calculates and delivers an in-depth proforma that reviews variable data points across a 10-year horizon.

Below is a rundown of the critical data components that inform the proforma and aid your geographic expansion plans:

• Loans and Deposits Forecasting – Likely the most important component when assessing the Data Outputs, when assessing expansion geographies and specific Trade Areas, you need to understand the “elbow room” in that market, i.e. are there still Loans and Deposits to be had, or is a given Trade Area saturated, and thus not viable
• Competitive Analysis – Speaking of “elbow room” – is there an opportunity for you as a new retail banking entrant into a given market or not? Going beyond the elbow room, do the competitors in that given market dominate and/or outspend you, or will your entry be well received?
• Consumer Overlays – A critical factor in geographic expansion is answering the question of how many of your existing consumers live in this expansion geography. Having a pre-built consumer base is often an important component  
• Demographic Tapestry Profiles – You may know exactly who your consumers are, but do those consumers live in the next town over. Consumer demographics can shift greatly within only several miles, so understand the overlays of your existing base in expansion geographies
• Market Potential Indices – The MPI measures the likelihood of adults in a given geographic area to exhibit purchase behaviors based on certain banking products and services that align to your offerings (or those you plan to introduce)
• 4 Square Quadrant – The final component of the LEVEL5 Market Analysis engine is the delivery of a 4 Square Quadrant reading of a host of proposed branches in a given Trade Area by scatter-plotting them based on the branch performing well or poorly, and cross sectioned with the market potential being good or poor

To learn more about LEVEL5’s Strategy division and our unparalleled Market Analysis, contact us today so we can begin the assessments needed to help you grow the right way.