The Importance of Banking Local

Aug 21, 2020

Today, there are more banking options than ever before, but local financial institutions are crucial to the success and vibrancy of the communities they serve.

Better Services at Lower Costs

Most locally owned banks offer the same array of services, from online bill paying to debit and credit cards, at much lower cost than big banks.  Average fees at small banks are substantially lower than at big banks, according to national data.  Studies show small financial institutions also offer, on average, better interest rates on savings and better terms on credit cards and other loans.

You receive personalized attention.  It’s not unusual for a customer to be offered a cookie or cup of coffee when entering their local community bank branch.  Local banks value each of their customers as individuals, often greeting them by name and asking about their families and lives.  Local banks pride themselves on serving their neighbors and take the time to give customers the attention they need.

Smaller banks also tend to have less employee turnover than larger institutions.  Employees at community banks form deeper relationships with their customers, leading to higher quality service and flexible decision making.


Put Your Money to Work Growing Your Local Economy

Small businesses, which create the majority of new jobs, depend heavily on small, local banks for financing.  Although small and mid-sized banks control less than one-quarter of all bank assets, they account for more than half of all small business lending.  Big banks, meanwhile, allocate relatively little of their resources to small businesses.  The largest 20 banks, which now control 57 percent of all bank assets, devote only 18 percent of their commercial loan portfolios to small business.

If you’re a small business looking for a bank, remember that local banks are small businesses just like you.  Who better to understand what a small business needs to succeed?  Community banks offer many advantages for small businesses such as local connections.  Your community bank and business banker are a valuable source of networking opportunities for small businesses.  Connect with local suppliers, service providers, and potential clients.  These contacts fuel the local economy and grow small businesses like yours.

When you bank locally, your community bank is channeling your money back into your neighborhood.  Your money is invested locally, growing your local economy, and providing loans to your neighbors.  Big banks keep the majority of their upper-level staff working in far-off corporate headquarters, community bank CEOs and other top staff work in main offices located in your community.  From the highest-level staff and all the way down the ladder, community banks are fully invested in the local communities that they serve.  Banking policies are made by the people who live in your community and know it best.


Keep Decision-Making Local

Loan approvals and other key decisions at local banks are made locally by people who live in the community, have face-to-face relationships with their customers, and understand local needs.  Because of this personal knowledge, local financial institutions are often able to approve small business and other loans that big banks would reject.

Megabanks aren’t as worried about losing one of their 5,800 retail branches so their decisions aren’t community-based.  When you choose a local bank, you’re making a smart financial decision for yourself or your business.  Lower fees, better service, free accounts, and local decision-making benefits your financial bottom line and makes your banking experience more enjoyable.  You and your business benefits from local insight, relationship-based policies, and networking opportunities.

Back Institutions that Share a Commitment to Your Community

The fortunes of local banks are intimately tied to the fortunes of their local communities.  The more the community prospers, the more the local bank benefits.  This is why many local banks are involved in their communities.  Big banks, in contrast, are not tethered to the places where they operate.  Indeed, they often use a community’s deposits to make investments in other regions or on Wall Street.

Community bank profits stay local.  Money earned is funneled right back into the community by means of salaries, local spending, investments, capital improvements, and discounted services.  Local banks also give back with charitable donations to local organizations and financial support of youth athletic programs.  Community banks know their success is tied to the health of the local economy.  By banking locally, you are helping your neighbors and local businesses thrive.

Local banks have your community’s best interests at heart.  When you support your local bank, you support your community.  Your money stays close to home and is rooted in the local economy.  Your local bank account or loan helps fund small business loans, pay your neighbor’s salary, and support local charities. Your money stays in the community and makes it a better place to live.


Support Productive Investment, Not Gambling

The primary activity of almost all small banks is to turn deposits into loans and other productive investments.  Meanwhile, big banks devote a sizeable share of their resources to speculative trading and other Wall Street bets that may generate big profits for the bank, but provide little economic or social value for the rest of us and can put the entire financial system at risk if they go bad.

As a member of the community, local banks are held to a higher ethical standard than national chains.  They know that the policies of their bank and the behavior of their employees has a direct effect on the local community.  Unlike megabanks that use their assets to invest in national and international industries, most community banks invest in small, local businesses.

The news is filled with continual scandal from megabanks as they repeatedly break regulations and betray their customers’ trust.  Even their legal behavior is questionable as they use consumers’ assets to make speculative investments or invest in environmentally unfriendly oil, gas, and chemical industries.


Enjoy Stability

Local banks are deeply rooted in their communities and plan to stay.  Many local banks, like Barwick Banking Company, have served their areas since the late 1800s and early 1900s.  Local banks aren’t going away. They work hard every day for their communities because they depend on the health of their local economies to keep them running.