Community Banks do have a competitive advantage

Updated: Jun 21

"Yes there there are advantages community banks and credit unions have over the big banks."


By Allan Kirby.



OK, lets begin with one of my biggest frustration when dealing with a major Bank, it’s the ongoing changes in staff, for example I had multiple investment advisors over a single year, most of whom provided terrible advice as a result of not knowing me or what me needs where, and secondly the crazy turnover of bank managers.


“Lower fees, great customer care and attention and a lot of trust but they could do more.”

Community banks and credit unions on the other hand end have had much lower turnover, some of this i think has to due with the fact that larger banks put immense pressure on employees to meet sales targets and upsell products and services to clients. Big Banks try to squeeze as much as possible from customers and this can take a toll on employees and create unethical behavior (see below) and a toxic work environment.


Another issue I have which is likely shared by many is the mistrust we have with major banks, I am sure I do not have to explain why but I will:

  • The subprime mortgage crisis (financial institutions involved - too many)

  • Wells Fargo’s fake account and car insurance scandals.

  • US Bancorp money laundering scandal.

  • Deutsche bank - multiple scandals.

  • Canadian banks upselling pressures and Australia bank fees scandals.

Community banks are generally much more trusted by the public and of course do not carry the same baggage that currently follows many large financial institutions, this to me is good news but not surprising because Community Banks are clearly:


  1. Much more client focused and provide great customer relations.

  2. Provide better savings rates and lower service fees.

  3. Have a much deeper understanding of the needs and requirements of the community they serve.

  4. Invest local deposits into the local economy.

  5. Razor focused on small to medium sized business not multinational conglomerates.

There is so many reasons to like community banks and I will continually pond the table on the merits of taking your business to them, however I understand that even community banks are not perfect, they do make mistakes and sometimes do not provide the expected customer experience.


So if they are perfect, could they do more, I tend to think so, for example I believe that community banks could expand on their focus on great customer service by providing services such as “financial coaching”, Let’s explain why”


The biggest problems with major banks is the lack of a personalized banking experience and the ongoing push of products and services, not to mention high fees, hidden costs and the lack of good returns. However it would serve community banks well by teaching and empowering customers on personal financial management. It may sound counter intuitive, but i believe its a good idea to help empower your clients and


“Helping clients confidence and ability to manage their finances is a good start.”

Many banks do provide evening presentations and short courses to help customers but coaching is a much longer and more committed process. If community banks began providing such a service it would help deepen the client relationship and help clients better understand their needs. I have no issues with professional investment/financial advisor found with larger institutions but I have always found they are just trying to fit your needs into their products, and sometimes making it difficult for you the client to understand the fine print and what you are really getting. If a community bank can guide, encourage, and motivate you to act to achieve the life you want, with greater confidence and ease than you thought possible!, you can make these customers along with their family long term loyal customers.


In the end it’s only a suggestion and you the reader may disagree due to your experiences or preferences with larger institutions however for myself and others who have had a great experience it will be difficult to change our minds as we feel community banks have a competitive advantage if this is the type of banking you are looking for.


This is a MySmallBank.com blog written by Allan Kirby, who writes and produces Personal Finance and Money Management articles and videos along with My Success Magazine.


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Personal Finance and Community Banking blog

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