Promising Future for Community Banks Competing with the Big Guys

While digital banking with large banks has become much more common, it is clear that community banks competing is still a reality in modern banking. Despite their difficulty implementing new technologies, community banks offer many benefits compared to large banks. 

What is a Community Bank?

Community banks have less than $1 billion in assets, with loans making up less than a third of these assets and deposits making up at most half. These banks also operate in only one specific region and do not have branches spread out over a wider area

Strengths of Community Banks

Personalized Services

With the staff of community banks being from the surrounding community, it is common for banks to know their customers personally. This makes it possible for them to offer far more personalized service than larger banks that do not know their customers personally. 

Specialized Services

Many community banks offer unique financial services specifically tailored to the local community's needs, such as agricultural loans. These tailored financial services are one excellent example of community banks competing with large banks unwilling to invest the time and resources in developing such niche financial services.

Commitment to the Local Community

Community banks focus much more on their communities' interests than larger national banks, which focus more on capital markets. Community banks also invest in the community by supporting local programs and with volunteer work. Additionally, community banks are committed to providing loans to local businesses and customers in the area with vital financial services. This commitment to their community is essential to community banks competing with the big guys. 

Lower Fees and More Accessible Loans

Community banks also offer lower fees than larger banks and are committed to relationship banking. With relationship banking, community banks use more personal information when making loans rather than only using impersonal information that does not paint a complete picture of the person seeking a loan

By using more personalized metrics when giving out loans, community banks make loans more accessible to those individuals and businesses that may not be eligible for them at larger banks. 

Local Accessibility

By remaining committed to in-person banking, community banks offer access to those who may be unable to or unwilling to use digital banking from larger banks. This accessibility also extends to underserved communities that larger banks overlook, as community banks are committed to the local community. Accessibility to those unable to make the digital transition and underserved areas is vital to community banks competing with larger banks

Weaknesses of Community Banks

The number of community banks steadily declined from nearly 10,000 in 2000 to about 5,000 in 2020. Some community banks have struggled to make the digital transition due to the costs involved. This makes them less adaptable and able to meet customer expectations for varied digital financial services. 

Community banks struggle as they lack more specialized financial services than larger banks that have invested a lot in building these options. Most credit unions and community banks also only have a handful of locations which can make them less helpful to customers who spend much of their time away from where the bank is located. 

Changes in Technology and Customer Expectations

Customer expectations have changed completely when it comes to banking. They want to avoid going into a physical branch as much as possible. Additionally, they expect that banks can seamlessly integrate their online and in-person services.

Banks nationwide have recognized the benefits of adopting new technologies to meet customer expectations. However, large banks have had much more success leveraging these innovations to reduce costs and increase efficiency. 

Community Banks Competing in the Future

Struggle to Adopt Technology

Central to community banks competing with the big guys is investing in new banking technologies. Consumers want to be able to conduct routine financial services online, and by offering this, community banks can compete with large banks. However, many community banks need to catch up when adopting new technologies. This has led to many customers transitioning to large banks with more robust digital financial options. 

Community Banks Shining During the Pandemic

Despite the overall decline of community banks, they demonstrated their value throughout the pandemic. This is because community banks successfully used their closer relationships with their customers to provide them with the financial services they needed during that difficult time. This is critical to community banks competing with big guys as customers trust them more and are more willing to be flexible to meet the customer's needs.  

Path Forward

Even though many community banks need to be faster to adopt new technology, many more recent community banks have made great strides in adopting new technology. Community banks have the opportunity to provide an excellent customer experience. Unlike massive banks, they are committed to understanding and knowing their customers. Adopting new innovative technology allows community banks to create a truly customized financial experience for customers

Community banks must cooperate successfully with others, such as their customers and fintech, to adopt technology into their financial services. Partnering with third parties such as fintech and neo banks allows community banks to implement cutting-edge financial services while mitigating the high setup costs. 

New digital banking solutions allow community banks to expand their financial services to larger geographic areas. For example, customers who opened their accounts in a small rural community can easily use their existing accounts in a distant city with effective digital banking. 

Community banks must invest in truly understanding the nuances of the technology they are adopting. This ensures they can maintain the reliability their customers are used to. Community banks must also use new data analysis solutions to evaluate where they can improve their financial services. This data will allow them to provide even more customized service to their customers and make them more valuable to their customers


Despite the rise of new technologies in banking, it is evident that community banks competing with the big guys is still possible. By using new solutions to make their service even more personalized and convenient, community banks can succeed in the world of modern banking. 

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