Community financial institutions – get personal to stay competitive

Personalized customer service in bank branch

It’s an interesting time to be a community financial institution (FI) right now. There are plenty of challenges to face up to, from regulatory changes in Europe and fintech disruption, to the startlingly rapid evolution of technology and consumer expectations.

For smaller community banks and credit unions in the US, it might seem like a difficult time to do business, with so much change, intensifying competition and regulatory compliance to contend with.

Despite this frenetic and fast-moving business environment, community FIs must maintain their focus on the key characteristics that distinguish them from their bigger rivals, one of which is the ability to deliver a personalized service.

Challenges for community financial institutions

Small, community-focused FIs across the US have many obstacles to overcome, one of which is the growing regulatory burden. In an article for American Banker, titled ‘Don’t let community banking go from endangered to extinct’, Stephen Lange Ranzini, CEO and president of University Bancorp in Ann Arbor, Michigan, highlighted the need to “radically rethink” the regulatory approach to the community banking and credit union industry.

Then there is the question of competition, and how community FIs can continue to hold their share of the market against larger or more technologically empowered providers. recently reported on data from the Federal Reserve indicating that “community banks have lost some ground to bigger banks in small business lending over the past three years”.

The figures showed that community bank lending to small businesses dropped in 2016, while big banks lent more to this market. The Fed also highlighted competition from fintechs as a trend that could increase the pressure on smaller providers.

The value of personalization

So, what can smaller FIs do to stay competitive and offer a unique business proposition compared to larger institutions and fintechs?

One of the key focuses should be the delivery of a personalized, relevant service. Online lending marketplace P2Binvestor, itself a fintech business, told PYMNTS that this can be particularly important for banks’ relationships with corporate customers.

“Most small business owners prefer to be a strong customer at a smaller bank,” Krista Morgan, chief executive of P2Bi, said. “They get better service. It’s more personal. Small business owners still want a relationship with their banker.”

One of the factors in community banks’ favor is that they have a smaller client base than the vast financial institutions serving an array of business and retail customers all over the country. Fewer customers means more time and resources to dedicate to providing a truly relevant, bespoke experience – something customers are likely to reward with loyalty and advocacy.

Sometimes, the key to delivering personalized service can be as simple as ensuring that the relevant members of staff have the necessary time and flexibility to make themselves available to valuable clients.

By deploying the right technologies and processes, you can gain efficiency by automating routine tasks and freeing up your people to focus on customer/member service, relationship management and sales.

Solutions such as automated ATM cash and transaction balancing and self-service kiosks, for example, can make a big difference to branch efficiency.

Harnessing technologies, devising effective strategies and supporting staff are important parts of the mission to provide a personalized customer/member experience, which could help to secure the future of community FIs all over the US.


Image credit: iStock/AntonioGuillem

Written by Nakisha Garner

Nakisha Garner

Nakisha Garner is Senior Manager, Global Field Marketing at NCR. Nakisha specializes in developing marketing strategy to communicate the right solutions to the right customers and serve as a customer advocate. She has nearly 15 years of experience in the financial services market.