Opportunity Analysis in Community Banking

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More than 6,000 community banks currently operate in the U.S. through more than 50,000 branch locations across the nation. ‘Opportunity Analysis in Community Banking’ is a market research study designed specifically to identify the role of community banks, the growth strategies these organizations employ, and the new opportunities in the community banking sector. While the share of deposits made in community banks dwindled from 70% in 1994 to 12.4% in 2009; the current economic recession is proving to be a boon for these organizations. Customers are losing faith in large financial institutions, and with the failure of the ‘too big to fail’ theory, are moving their deposits back to community banks. It is the right time for community banks to capitalize on this shift and put the right programs in place to accelerate their success.

In the current recovery phase, community banks are looking for cost-effective alternatives that can be implemented quickly. Services such as internet banking, collection compliance, mobile banking, and remote deposit capture play an important role in enabling community banks to better serve their customers. Lack of confidence in big banks is the major factor attracting consumers towards community banks.

A Community Bank Primer

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Long ago, before the advent of megabanks and banking conglomerates, people opened bank accounts close to home — sometimes even within walking distance. While the idea may seem quaint now, a growing number of people are opting for credit unions and community banks over their big box counterparts.Long ago, before the advent of megabanks and banking conglomerates, people opened bank accounts close to home — sometimes even within walking distance. While the idea may seem quaint now, a growing number of people are opting for credit unions and community banks over their big box counterparts.Opening an account at a community bank may not immediately occur to most consumers, but it should:

  1. Community banks (like credit unions) tend to have a leg up on larger institutions when it comes to convenience, customer service and lending rates.Community banks (like credit unions) tend to have a leg up on larger institutions when it comes to convenience, customer service and lending rates.
  2. Loans issued by a community bank enrich surrounding businesses and individuals, which help sustain local economic growth.
  3. Lending procedures tend to be less of a hassle at a community bank since there’s no need to pass information and paperwork through an extensive corporate chain of command.
  4. Community bank assets are smaller than megabanks because they’re local, but most still offer traditional account benefits like online banking, check cards and bill pay.

Given the recent financial crisis, make sure to check the stability of any bank before opening an account. Bank Rate’s Safe and Sound star ratings allow consumers to search for banks by name and check the financial stability, determined by star rating, online. The more stars, the greater the bank’s stability.Given the recent financial crisis, make sure to check the stability of any bank before opening an account. Bank Rate’s Safe and Sound star ratings allow consumers to search for banks by name and check the financial stability, determined by star rating, online. The more stars, the greater the bank’s stability.Lending procedures tend to be less of a hassle at a community bank since there’s no need to pass information and paperwork through an extensive corporate chain of command.

Five Steps for Community Banks to Improve Business Continuity

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Yesterday’s face-to-face banking environments have been replaced with ATMs, online banking, and expectations of immediate service and availability­. Customers are far less tolerant of a service disruption or a major disaster which affects a community bank they have entrusted with their financial assets.Customers’ expectations, coupled with expanding business continuity FFIEC and NCUA regulations, fortify the need to address business continuity as a program that must be maintained – having an executive and board endorsement to ensure its success.

Today’s competitive, regulated and economically stressed business environment means community banks may be living on a razor’s edge, meeting increased demands with decreasing resources.  In order to make proactive decisions regarding mitigation and acceptance or deferral of uncertainty, financial firms must focus on the full spectrum of technology risks to key business processes and the challenges they create.

Despite the increasing drive for greater system reliability, most banks cannot afford to designate 99.999 percent levels of availability for every system in their data centers. That approach is cost-prohibitive in terms of dollar and people resources. Rather, any information availability strategy must assess what risks are acceptable, identify which processes, systems and data are truly time-critical, and balance business and technology capabilities.  This approach will provide acceptable levels of resiliency and recover ability and ensure all risks are being considered

The Advantages of Small Banks

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Sometimes it takes a small bank to make a community grow. From granting SBA loans quickly and easily to offering Massachusetts Free Checking Accounts with no strings attached, small Massachusetts banks are a helping hand in the community.In fact, that interpersonal connection is a crucial element in what makes small banks tick. With branches located in only specific regions of the country, small banks know their market and work in the interest of cultivating that market to its fullest potential. Knowing one’s community is a powerful asset. It is true that both small and large banks employ individuals from the surrounding area. Naturally, employees would have insider knowledge of their neighborhood: not only understanding which mall is profitable but why that mall works. The difference is what branch workers can do with that information. Small banks are not tied down by the bureaucracy of larger financial institutions.

For example, in recent years, large banks have shied away from granting student loans to individuals based entirely on their level of risk. Small banks use a different method when considering loan applications. While individual risk is still a factor in the loan process, Bankrate.com writes that small banks typically place a lot more emphasis on one-on-one interviews. (http://www.bankrate.com/finance/college-finance/more-small-banks-offering-student-loans-1.aspx) Bank employees are given leeway to make decisions based on their personal knowledge of the loan applicant in addition to the traditional risk-factor method.

Small businesses are granted the same consideration. Big banks have the advantage of having more branches and offering loans at competitive interest rates. However, getting access to those loans is another story. According to the Small Business Administration (SBA), community banks in Massachusetts will typically accept more loan applications than large financial institutions.