How Hometown Community Banks Can Maintain Their Identity and Independence
Customers love their community bank because it truly understands their needs. But when technology solutions are introduced without the same personalized care and focus on connection, efforts to modernize can sometimes create more distance between the bank and its customers. As technology continues to evolve in the banking industry, customer expectations are growing at a similarly rapid pace.
So, how can hometown community banks keep up without losing what makes them special? In this article, we’ll explore the benefits of community banks, the challenges of modernization, and practical ways to adopt new technology while staying true to your roots, allowing you to remain competitive and strengthen your role in the community.
While it’s essential for hometown community banks to digitally transform in order to keep pace, it’s equally important to remain true to your core values of customer service and community. These values foster trust, loyalty, and the positive reputation that enables your bank to nurture the personal relationships that set you apart.
When supported by modern technology that aligns with these values, banks can meet customers’ needs quickly and securely, while preserving their human touch.
However, many technology providers treat community banks like any other financial institution, offering impersonal, one-size-fits-all solutions that undermine these relationships and deep-rooted core values built over generations.
This lack of personalized tech solutions can create a disconnect, as it fails to support the unique needs and local focus of community banks. Without the right digital functionalities and resources, hometown community banks may risk losing customers to larger, more tech-savvy competitors or fintech companies.
Many banks are already well on their way to investing in new technologies that address their customers’ needs more quickly and efficiently while driving profitability. A 2024 survey found that 93% of surveyed institutions have already deployed APIs or planned to do so by the end of 2024 [2024 Digital Banking Performance Metrics Report].
Application Programming Interfaces (APIs) enable customers to access a broader range of financial services more quickly, securely, and tailored to their specific needs. This allows community banks to introduce new revenue streams while enhancing their customers’ experience, which is a win for the bank and its customers.
Community banks are pillars in their local communities due to their unique ability to build deeper personal relationships with their customers, especially when compared to larger institutions. Without their personal touch, these communities would likely have fewer chances to access the financial benefits of community banks and grow economically.
By staying independent, hometown community banks can cater to the specific needs of their customers and make decisions that directly support local growth.
To highlight the economic importance of community banks, the Federal Reserve Bank of Kansas City found that “as of Q2 2024, small business loans as a percent of total loans at community banks were more than double that of regional and large banks.”
It all comes down to community banks’ deeper understanding of the local market and closer relationships with business owners. Small business loans fuel economic growth, which supports innovation and contributes to the uniqueness of the community, its regional identity, and resilience. The same cannot be said with larger institutions, which typically rely on automated systems, impersonal procedures, or remote decision and processing centers.
Without embracing up-to-date tools and technology, community banks could not only lose customers but also harm the local community they serve.
The goal isn’t to replace the unique relationships community banks have built with their customers but to enhance the overall customer experience with modern technology and digital tools. Community banks should consider approaching their relationship with these new vendors with the same care and attention they give to their customers.
Technology doesn’t have to be a roadblock. It can be a catalyst to move in the right direction.
By choosing the right partners and vendors, hometown community banks can better position themselves to stay competitive, maintain and build customer trust, and continue to support local communities. They can strike a balance between innovation and the personal touch their customers rely on.
Contact BMA Banking Systems today to discover how we can help you enhance your community banking customer experience and maintain independence.
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