The Banking Industry is Asking What is the Destiny of Community Banks?

It’s undeniable that technology and non-bank businesses have introduced new options for bank customers and a topic of discussion these days is What is the destiny of community banks?   The answer to the question depends on the response of the banks themselves.

Whether customers continue to rely on banks hinges on how well bank’s service and value address the customer’s unique lifestyle needs.  Bankers must have an awareness of today’s customer.

For instance, savvy customers expect transparency with little tolerance for the ambiguous terms and conditions in the fine print.  Add trust by simplifying of fee structure to help customers avoid unnecessary fees.

Community banks incorporating extraordinary service and follow through into their culture will stand out.   Awareness of the buying habits and wants of the segment the bank desires to serve is paramount.

Community banks that empower their employees; provide robust client associate training and recognize achievements within a reward structure that motivates individuals with clear and measurable goals will grow their customer base.

Successful community banks differentiate themselves by specializing.  For example, when businesses have a complicated deal, a specialist bank is a place to go for discussion and transaction.

Successful community banks will adjust to the electronic age to remain viable.  For instance, a bank might upgrade its technology to become an online lender streamlining the lending process.

Community banks can strategize by becoming the go-to authority on community-based businesses such healthcare and nonprofits or stand out as dental and medical practice lenders or start-up funders.  Providing services specific to the business needs such as fraud detection enhances retention.

Community banks face increase regulation with additional expenses.  Smaller banks may have to merge to survive.  However, combining resources to expand networks also extends capability, adds flexibility and gives the bank additional tools to better compete.  Mergers and acquisitions bring strategic opportunities including a larger talent pool and ability to scale more efficiently.  Larger banks can reduce per capita costs of infrastructure with a bigger customer base.

The same regulatory pressure that causes banks difficulty also discourages non-bank entrants into the market.  Unless non-bank participants wish to place themselves under additional scrutiny, they will avoid this sector of the industry.

Community banks must rise above selling a commodity and differentiate themselves.  What they have going for them is the value customers perceive in a local business.  Banks need to capitalize on this perception.  People place more trust in community banks than other industries to maintain their privacy and security, and these issues have become significant concerns.

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