Mark Burgess jokes that areas of Alaska lacking financial service providers aren’t banking deserts; they’re “banking tundras.”
Burgess, the CEO of Credit Union 1, said the Anchorage-based credit union has taken a sharper focus on the issue in the last few years, evaluating how it can serve more of the state’s residents.
Alaska has 39 banking deserts and 20 potential deserts, and 25% of the state’s population lives in one of these areas, according to Federal Reserve data from 2024. About 65% of majority American Indian or Alaska Native communities are located in banking deserts or potential deserts – roughly nine times higher than the national average, the Fed has said.
Credit Union 1, which counts about $1.5 billion in assets, has 15 branches but covers the entire state. The lender is opening a branch in Homer, in the southern part of the state, this summer.
He declined to specify a target number of future branches, but said about 16 Alaska communities are on the credit union’s “watchlist, where we’re actively paying attention to long-term opportunities and community needs.”
Some communities on the list have fewer than 1,000 people and might be accessible only by plane or boat. The credit union is assessing to what extent it can tap technology – through interactive teller machines, for example – to equip branches in those towns, and whether that would serve the community to a greater degree than it’s being served now.
“Because Alaska is so huge, and because these communities are tough to get to, it’s not like I can just drive a truck over and drop the ITM and be like, ‘here we go, we’re good to go,’” he said in a recent interview. “We have to find a spot, we have to get [an ITM] out there on a plane, we have to get communication lines there.”
Communication infrastructure is one of the more challenging elements to secure, because it tends to be costly, he said. One local provider quoted Burgess $16,000 a month for internet service.
Still, setting up shop in more Alaska communities is on Burgess’ mind. In towns with only one bank branch, “oftentimes, the products and services that the banks offer are not exactly the products and services that the community that they’re in needs,” Burgess said.
He pointed to auto loans. Burgess noted that a national bank serving Alaska only offers auto loans at car dealerships, which can’t be found in rural Alaska. So when residents need to finance a vehicle, they turn to personal loans, which tend to carry a much higher interest rate.
Big-bank products tend to be “one-size-fits-all for the whole nation, and Alaska just isn’t that,” Burgess said.
Last year, Credit Union 1 opened three new branches, in Kotzebue, Skagway and Wasilla – communities that have fewer than 20,000 people combined, yet are separated by hundreds of miles.
“There’s a lot of ground to cover, and not always a lot of people,” Burgess said.
That’s led the credit union to get creative with its use of technology.
In smaller populations with fewer available workers, “what’s been really tough in those communities is hiring loan officers,” he said, since it’s a role associated with more training and regulatory requirements.
In light of that, Credit Union 1 has loan officers in Anchorage, Kodiak and Ketchikan that can video-conference into branches elsewhere, where electronic signature pads and scanners are used to capture what’s needed from the member in person. That remote capability allows the credit union to serve more of the state, he said.
Burgess said it’s been important to find ways “to augment the relationship with technology, not completely change it so it’s only technology-based.”
“What I’ve found in Alaska, more than some other places, is that local presence really makes a difference,” he said.
The credit union also uses interactive teller machines that are similar to ATMs but have a video component.
In parts of Alaska, “you can't just drive to another community” for banking services, Burgess said.
Banking options “are really only what is in that community. You're not going anyplace else, and people aren't hopping on a plane to go and deposit a check,” he said.
The more remote nature of some locations also means internet service can be strained, which can require workarounds.
After Credit Union 1’s mobile banking provider rolled out a “really pretty” new way for clients to transfer money a couple of years ago, the credit union’s members quickly informed the lender the digital capability wasn’t loading for them, because it used so much data to change screens, Burgess said. The mobile banking provider worked with the credit union to pull back some of the visual elements and make it more functional for lower internet speeds.
To address banking deserts, Burgess said there is a “laundry list” of information needed for the state-chartered credit union to establish a new location.
It can be helpful if branch space is provided inexpensively or at no cost, Burgess said, pointing to Tongass Federal Credit Union’s microsites, which serve remote areas of the state.
“Aside from people, that's the biggest expense to get there – the cost of the lease, the cost of the renovations, and then the cost of the communications and utilities,” he said.
