The top three community banking trends for 2022
Competition in the banking sector has heated up over the past year as a result of the COVID-19 pandemic accelerating the shift to digital services.
There is optimism for new opportunities and growth for CFIs in the new year
But, as businesses and local communities re-engage with more in-person interactions, community financial institutions (CFIs) could be set for a period of growth.
As financial services and banking technology providers plan for the rest of the year and into 2022 amid mixed pandemic recovery and uncertainty, these are the top trends in community banking that leaders should look out for.
Keep competitive with partnerships
The recent health crisis forced all financial institutions, big and small, to rethink their digital customer experience. Digital banking is not going to retract after the pandemic – this trend is even more important for community financial institutions (CFIs) who have traditionally relied on in-person services.
According to a 2021 eMarketer survey, 89% of US consumers say they use mobile banking channels, and 70% say mobile banking has become the primary way to access their accounts. Consumers will continue using digital banking solutions, as they now have plenty of familiarity and flexibility with digital banking.
In the past year, CFIs have increasingly partnered up with fintech service companies to build digital banking services without sacrificing the community investment benefits of local banking.
These partnerships were key to helping local businesses apply for Paycheck Protection Program (PPP) loans – more than 80% of businesses filed applications digitally with their banks. CFIs that were prepared for this digital shift with partnerships saw success in obtaining PPP loans for their customers.
We are sure to see future success from local banks and credit unions leveraging the digital power of fintech and pushing more capital towards product advancements through these partnerships.
CFIs that want to stay on top in the next 5 years should not plan to slow or stop these partnerships – they will be essential to stay competitive with the bigger digital brand power of larger banks.
Personal equals power
One aspect of banking where CFIs have looked to outshine the competition is customer service. Studies show consumers crave a personal connection with the brands they trust, and nowhere is trust more important than banking.
CFIs need to double down on reinforcing their personalised services over the next several years, reminding consumers that local branch experts can help much more quickly than bigger banks.
Accountholders should understand that they won’t forego modern digital capabilities when working with a community bank, as they have impressive digital experiences in addition to offering personalised, attentive customer service.
The good news is that consumer attitudes are open to shift after the pandemic – CFIs should be ready to gain ground.
Give back to the community after COVID
Banking local makes a huge economic impact on the community – when consumers keep their money local, community banks and credit unions can make more loans to the community, and in turn enable more job creation.
In fact, community banks fund 60% of small business loans nationwide. That’s despite holding only 15% of the assets across the country.
Local banks and credit unions are heavily invested in their local community – think about small businesses who sponsor the local youth sports leagues in your own community.
The local connection that CFIs have is similar, as they provide community resources that are deeply integrated into the community, such as financial literary classes.
As communities rebuild coming out of the pandemic, local financial institutions will be increasing their community outreach efforts and will look for more ways to invest in community growth.
We will see CFIs focus on making an impact with businesses and services that have struggled since the pandemic and re-committing to the transparency and accessibility that local community members trust CFIs to provide when banking.
On the community level, as people return to a more bustling pre-pandemic lifestyle, there is optimism for new opportunities and growth for CFIs, which have been bolstered by the digital tech inroads of the past 18 months.
Community financial institutions are now amply prepared to strike the right balance between personalisation and digitisation that consumers crave. For the sake of a diverse economy, it’s about time.
