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© 2019 MySmallBank.com

Personal Finance, Money Coaching and Community banking blog

Providing realistic and authentic personal finance and money management articles, videos as well as publishing Mysuccess Personal Finance Magazine

5+ reasons why Community Banks and Credit Unions are still important.

Updated: Aug 21, 2019

I believe community banking will continue to be relevant even in the era of banking consolidation and financial technology modernization.


By: Allan R Kirby



When looking at the banking sector over the last decade, we have witnessed fundamental changes, such as the increased service offerings and use of online banking along with the closures of branches in many towns and village across North America. This fundamental realignment of banking services has been very good for many of the largest banks with very deep pockets to build out their IT services and improve the customers experience. But, in the new age of Financial technology, will this fundamental change result in the demise of smaller banks and credit unions?  

Superior service and support to customers will continue to be the foundations of community banks and credit unions. ”

Look, I really get it, for some readers, they are going to roll their eyes with distain over my article either because they had a bad experience with a community bank or they think smaller banks are no longer relevant. I am fine with that but from an overall perspective. I firmly believe smaller financial institutions will continue to play a critical role in our communities and will be around for a long time to come. In fact, I believe that these institutions have the right formula for success and may provide a superior banking experience for those who want to receive services face to face instead of online or on a phone.


Over the last number of years, I have read, time and time again, about many larger banking institutions closing branches and leaving communities. In most cases, it is likely due to the low profitability of the branches. However, the impact these closures have on small communities can be rather large, not to mention the inconvenience of having to travel greater distances to meet someone at a bank face to face.  Even with all of our technology,  it might actually be necessary to talk to someone in person to resolve difficult financial issues. It is even easier when the staff at a bank knows you and can help you out.


Superior customer service


One of the cornerstones of community banking and credit unions is the ability to provide excellent services to their clients. As I have mentioned before, this might not always be the case and there is never a perfect relationship with every customer and bank. But overall, community banks do strive to provide superior customer services with lower fees and ensure the needs of the local community are met.  I have had the pleasure of dealing with a number of credit unions over the years and even today I still bank at a credit union. As usual, I do find they provide the services that I have come to expect and enjoy at these institutions. More so, since I have continually have had so many issues and frustrations when I have dealt with larger banks.  As you read through my blogs, I will always provide some experiences and examples of poor customer service at many larger banks that I have dealt with over the years. Of course, everyone has a different opinions and I am no exception when it comes to my bias towards larger institutions, but when I have talked to other people,  I find their experiences are very much similar to mine. It is just that in some cases, people accept the poor services and higher fees as a price for convenience.

Better deposit interest rates and less fees. ”

Along with better customer services, what attracts myself to these smaller institutions is the higher deposit interest rates I get. One of the biggest pet peeves I have is the ever growing service fees and minimum deposits I am required to have at a major bank. I grew so tired of this, I too made the change and have been happy ever since.  I also had a difficult time trying to figure out the complex fees I was paying when I had a full suite of services I was leveraging at a big bank. But when I switch to a smaller bank, I found the fees low, easy to understand and they do not seem to change month to month, which seemed to be the case with larger institutions.


When community banks and credit unions succeed so do the communities they serve. 


There is no denying the fact that small banking institutions and even larger more regional based banks are much more focused on the communities they serve; it’s their main customer base.  So in order to differentiate themselves, they use a strategy that centers around the banking demands of the community, including local governments and small business. By understanding the needs of local businesses,  smaller banks can become laser focused on the needs of their community. In fact community banks/credit unions can and will:


1. Leverage local deposits from clients in order to provide loans to businesses and customers from the same community.

2. Provide critical support to small businesses owners and the agricultural community.

3. Support the community through investments and donating to local charities.


By helping the communities, community banks serve a vital service to help small businesses succeed. This can be especially true for smaller farms looking to partner with a financial Institutions that understands their needs. This may not always be the case with large national banks; they may not have the interest, expertise or understanding of the financial requirements to run a farm. 


Similar IT services are available


While smaller banks may not have a full set of integrated services available online, overall they do have online services that will meet most if not all of your needs such as: mobile check and email deposit, online bill payment and transfers. Additionally, you can find community banks do have mobile apps (Apple App Store, Google play) that allow you to check your balances, transfer funds and find ATMs within your community.  So its not all that bad when dealing with community banks, they should have the services your looking for both online and in person to meet your overall banking needs.


I understand that for many,  community banks just do not provide the convenience, but for some it plays a vital role in the community and will continue to do so for years to come. So as big banks close branches in smaller communities, this will provide some community banks and credit unions to grow their business.


This is a MySmallBank.com blog written by Allan Kirby, who writes and produces Personal Finance articles and videos.