Field of Dreams - 1This blog is part of a two part series to be continued this Thursday.

In the 1989 hit movie “Field of Dreams,” Kevin Kostner’s character, Ray, hears a voice in his corn field that tells him, “If you build it he will come.” With his farm on the verge of foreclosure, Ray goes across the country following clues which lead him to plow down part of his corn field and build a baseball field in its place. He doesn’t know why or for whom he is building it. He just knows if he builds it, people will come.

This leap of faith eventually paid off in the movie, but it doesn’t always pay off in real life – especially where financial institutions are concerned. Has your credit union or bank ever built a branch on the premise that having a structure will send business flying through the doors?  Chances are if you’ve built on that premise, you’ve also closed a branch or two as a result. Deciding if, when and where to build a branch requires strategy. Does your financial institution have one?

Many financial institutions implement common basic strategies, like the spoke and hub strategy – a central branch with satellite branches strategically placed so many miles away. Some financial institutions choose to build in up and coming neighborhoods, store front locations and in or near grocery stores. The problem with basic strategies is they fail to take into account consumers’ real needs or the reason why consumers use branches.

Studies conducted by Raddon Financial Group in Fall 2013 and by PwC indicate people still are using branches, but not quite as frequently as they used to. Most of the activity – about 90% – being conducted in branches is non-revenue generating transactions. Online banking usage has jumped significantly in the last decade, up by about 50%. According to PwC, 70% to 80% of consumers prefer to research loans online, and fewer than 50 percent of consumer prefer to apply for loans in a branch.

What may surprise some people is the Generation Y factor. Often thought of as the automated generation, Millennials (as they also are called) actually use branches more than any other demographic. They don’t limit themselves to branches, though. They use online channels, drive up ATMs and call centers. They use the automated channels for transactions and branches for guidance. They are looking for financial institutions to be their trusted advisors.

With these statistics in mind, should financial institutions continue building branches, change the way they operate branches or cut their losses and maximize online channels? I will answer these questions next month. In the meantime, please read my monthly e-newsletter for more statistics and information about branch usage and branch strategies for financial institutions.