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Why You Should Participate in Shared Branching & ATM Networks

By Sam Brownell - June 09, 2020

Learn how participating in a shared branch or ATM networks may allow your credit union to add employer groups or underserved areas outside your service area.

How participation in shared networks allows a credit union to add employer groups or underserved areas beyond its service area

If your credit union is actively, or wants to be, adding new select groups (SEGs) or underserved areas, you should be participating in any shared branching or ATM networks that will allow you to do so. The reason this matters is because of the NCUA's definition of a qualifying service facility for adding select groups, which reads:

A service facility for multiple common bond credit unions is defined as a place where shares are accepted for members’ accounts, loan applications are accepted or loans are disbursed. This definition includes a credit union-owned branch, a mobile branch, an office operated on a regularly scheduled weekly basis, a credit union-owned ATM, or a credit union-owned electronic facility that meets, at a minimum, these requirements. A service facility also includes a shared branch or a shared branch network location, including a shared ATM or other electronic facility, if a credit union participates in a shared branching network.
For purposes of serving an underserved area: (1) a service facility is a place where shares are accepted for members’ accounts, loan applications are accepted, and loans are disbursed; and (2) a service facility does not include an ATM or shared ATM.
The credit union’s Internet Web site is not a service facility.

A credit union can use any shared branch or ATM in a network to satisfy the service facility requirement for adding a select group, provided the credit union is a participant in the  network itself.  Therefore, this participation allows you to extend the service area within which you can add select groups.

While there is no set rule, the NCUA typically considers a facility's service area to extend somewhere between 25 and 30 miles. So if you are trying to add a group beyond that range from your own network, you could then potentially leverage a network you participate in to add the group. This would allow for the addition of select groups that would otherwise fall outside the service area of your own service network.

Anchor SEG Strategy to Opening New Markets

More importantly, this can be used as a growth strategy. Credit unions can leverage shared networks to get a foothold in a new market you are attempting to penetrate before opening a branch or making a greater investment in serving a community.

A best practice for penetrating new markets you plan to add underserved areas in involves identifying potential large select groups in a target marketing effort, adding as many of them as possible and penetrating them as well as you can. Then, once you have enough members in a new target market, opening a branch will allow you to serve not only the members of the groups you already have but also the potential members you can open up through a new underserved area in the market.

This helps accelerate the profitability and mitigate the risk of the investment you have to make to establish a qualifying service facility for an underserved area in that target market.


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