Community banks hold a powerful differentiator: local knowledge and personal relationships that national players can’t match. Even as M&A activity grows, 86% of small-business owners choose one provider for both business and personal banking – proving that trust and connection remain critical.
Your ability to stay close to customers, move quickly, and deliver personal service is your competitive edge. Leaning into that advantage can help deepen relationships, attract new business, and grow.
- Own your local edge: Deliver hyper-local service and community commitment that big banks can’t replicate.
- Strengthen small-business ties: SMBs value flexibility and advice. Position your bank as their one-stop partner for both personal and business needs.
- Double down on trust: Stay relevant by being visible, empathetic, and agile, building on the proximity that keeps customers choosing you.
With news of rising M&A, particularly among community-sized institutions, one might be tempted to think that community banks are starting to lose their luster with their key constituencies. American Banker puts it this way: “Are community banks a collective relic of the past and destined for the dustbin of history? Or will this segment of the industry, one that has long catered to small businesses and lubricated the engines of local economies, find new momentum and launch a future growth cycle?” The reality is that there is a compelling market need for a smaller, more personalized banking experience that community banking delivers.
That’s why giants like Bank of America are taking a page out of the community banking guidebook, seeking to connect more with 97 communities across the U.S. The bank plans to leverage their branches to “integrate retail banking, business banking, and wealth management into the services it’ll offer locally,” according to EMarketer reporting. Seeking to enhance a competitive edge against smaller (but in some ways mightier) financial institutions, BofA is leaning into locality to show its commitment to communities and consumers. Chase has a similar focus with its expansion to 500 markets over the next three years.
“There is certainly a lot of potential, and I think a lot of need for community banks,” says Jacob Thompson, managing director at Samco Capital Markets, in American Banker. “Some are investing and preparing for long futures” by planning to implement game-changing advances. “Small banks almost certainly will have to embrace and accelerate adoption of rapidly evolving technologies, notably including artificial intelligence,” according to American Banker. “AI presents the possibility to develop sweeping new efficiencies that could enable community banks to compete with the scale [of] their larger brethren.”
On the lower tech side, community banks can double down on the local connections they’re known for and seize more opportunities to serve small businesses. “At the end of the day, a small and medium-sized business (SMB) customer has financial needs much like any banking customer,” finds BAI in reporting on small business banking. “They want ease, flexibility, assurances, the latest digital offerings, and advice. But for banks and credit unions, SMBs historically require high-touch relationships that are costly to administer, with a hard-to-prove ROI.” And many larger banks have to build a small business infrastructure from the ground up.
However, for community banks and credit unions, serving the SMB customer has already been an integral part of their growth. Beyond customer diversity, there are additional benefits for the bank. Not only do institutions get to show their community commitment, they also benefit from customer loyalty – since 86% of business owners use the same provider for their personal and commercial banking needs, according to BAI Banking Outlook. So, community banks are in a position to earn even more business. Maher says, “We need a future with community banks that know their markets, know their customers’ needs and support local economies.”
If you’re a financial services leader wanting to deliver better banking experiences, get in touch with the experts at Adrenaline.
Believe in Banking is Adrenaline’s insights-led resource, created to inform, educate, and inspire leaders in financial services. Delivering credible content rooted in research, the platform highlights the forces shaping the future of banking. From perspectives on emerging trends to podcast interviews with industry trailblazers, this purpose-driven channel helps banking leaders learn, lead, grow, and thrive.
