Banking is one of those choices often made without much thought. Most have a convenient choice and stick to it, which makes total sense. However, for those who feel like just an account number at the large institution where they maintain their finances, a community bank is something totally different and it’s important to learn just how that difference plays out in reality.
Community banks have existed at the financial heart of many towns and cities for decades. They aren’t a niche choice, or second-best option. For millions of consumers and business owners, they’re simply the best.
Decisions Made Locally
One of the most impactful differences with a community bank is where decisions are made, at larger institutions loan and account approvals go through centralized operations distanced from the citizenry and the applicants. At a community bank, the loan officers making decisions about applications are generally from the area making it more likely that they also understand the local economy, the businesses in play, and can assess a situation better than with a credit score. For anyone wanting to understand how this plays out in practice, additional context is available on what community-focused banking looks like from the ground up.
This is crucial when application scenarios are a little out of the ordinary. A business that is well-known in the area but has sketchy finances or an individual going through a transitional period may be better heard at a community bank than at an anonymous big box institution.
A Personalized Customer Experience
Banks at a larger scale lack the familiarity that is found at a community bank, whether by intention or inability to retain staff. At smaller banks, employees who work there ten years might be the same friendly faces that greet the customers at entrance to the bank every day. This means that small business owners need not take time to explain their operations to an ever-changing loan officer, but can rely on their rapport with someone who appreciates their message.
This isn’t merely about friendliness although that’s part of it, it’s about having someone who knows your history, knows your account, knows what works best for you, as opposed to receiving generic advice from customer service hotlines.
Lending for Small Business and Community Growth
Community banks are known to be substantial lenders for small businesses and entrepreneurs and more than what one might expect simply based on size. Since community banks are entrenched in the economy in which they sit, they are motivated to see success in local businesses. Therefore, when it comes time to apply for loans, with no other competing banks on hand, there is more flexibility and opportunity to work through an application than automated qualifiers.
For those who fit into either category, this can make all the difference when financing is needed to succeed or if it will just fall flat. Community banks also lend quicker and more efficiently, which matters when times are tough on the job front or when expansion is imminent upon opportunity.
Simple Products Without Complication
Larger financial institutions have a seemingly endless supply of products, many of which are loaded with complications and terms that should never exist if they’re designed for people. Community banks tend to simplify. The products offered are generally what people use anyway so fees are transparent and easier to understand.
The value of knowing what you’re paying for, and why, means many customers don’t realize how much they cherish simplicity until they’ve experienced larger institutions and floundered in fine print. There aren’t any hidden fees emerging from page after page after page.
Reinvestment into Local Markets
Funds deposited at a community bank stay within the local market; funds deposited at national banks do not always yield the same results. Instead, money is sent up the chain, where customers are merely numbers. Money grows and is lent out elsewhere then pulled back down with exorbitant fees.
Community banks reinvest within local lending frameworks which create mortgages, businesses and structures built for and by those working there. Funds within the community stay within the community. For those who care about where their money goes, this is an essential distinction. It’s one of the more immediate ways in which customers can contribute to their own community’s financial wellness without spending anything additional.
Technology Has Become Adequate
A reasonable concern for a smaller bank used to be digital prowess; however, with gaps closing over time, most community banks catch up where they should to have full mobile and web experiences from bill pay to remote deposit functionality as expected by bigger banks for convenience sakes.
They might not look as pretty as an app made by a national conglomerate but the functionalities are streamlined enough for most daily use and include the benefits of personal connections mentioned above.
Understanding What’s Best for You
Ultimately, providing a model of banking that doesn’t come through scaling efforts but through relationships forged and invested interest derived can be idealized by many but not all. For those individuals and business owners who value a bank that knows them in other aspects of life, this is an ideal offering regardless of what’s lent or lost it’s well worth understanding what’s provided before assuming bigger is better.
