By Alberto Hernandez – Chief Operating Officer at Valid
Community banks are enjoying some of the most fertile economic conditions for growth. A combination of low interest rates, a roaring economy and loosened regulations in recent years have come together to create optimal conditions for all banking institutions to thrive.
Yet despite this opportunity, community banks are slipping compared to their corporate competitors. Recent data shows that while community banks account for 50% of branches in the U.S., they have only seen 20% deposit growth over the past three years.
While they may not have the budgets or the tech talent of financial giants like JPMorgan Chase or Bank of America, community banks must make an effort to offer the modern services — and security — customers are coming to expect.
It’s no longer just about online banking and bill pay portals; those features are the minimum default expectations of the consumer. Instead, community banks should be focusing on offering customers the same leading-edge services with the same top-tier security of their competitors. Combined with the stellar customer service and deep support of the community these banks have always provided, there is ample opportunity to modernize and keep customers from exploring other options.
Community banks should embrace their relatively small size and close relationships with their customers to be more nimble in responding to their needs.
Security and reliability of payments, particularly for small businesses, is paramount, yet can be a pricey proposition. Suggestions about security improvements or modification to payments systems tend to fall on deaf ears when customers give feedback to big corporate banks — after all, making a change to payments systems enterprise-wide is no easy task. However, community banks are small and agile enough to quickly address the needs of customers, and the ones that commit to doing so will come out ahead.
Thankfully, community banks don’t always have to commit to this level of innovation on their own.
In the past decade, a bevy of third-party payments and security options have hit the market, many of which are geared toward helping smaller organizations improve their technology infrastructure to better serve clients. Community banks need to be thinking about how they can leverage these partnerships to answer customer demands, as opposed to trying to develop these types of solutions on their own.
The article can also be read by visiting PaymentsSource.