Why Community Banks & Credit Unions Are the Backbone of Economic Growth—and How They Can Stay Strong
Community banks and credit unions play an essential role in keeping local economies vibrant. These institutions understand the businesses and families in their neighborhoods. With that knowledge, they fund small businesses, help families build security, and foster growth where it’s needed most. But like many of us, these institutions are facing challenges they’ve never seen before.
Competition for deposits is fiercer than ever. Previously an afterthought at many institutions, deposits have suddenly leapt to the forefront of conversations during exams, in loan proposals, board rooms, and branches. Branch and commercial teams are already stretched thin and the financial landscape is evolving so quickly that keeping up feels like running a marathon at a sprinter’s pace.
It’s a lot. But there’s also so much potential. Let’s unpack how community banks can stay strong in the face of these challenges—and why their success is so vital.
The Quiet Power of Community Banks
Think about the ripple effect community banks create. When a small business owner gets a loan, it’s not just their dream that comes alive—it’s the employees they hire, the families those employees support, and the local shops they all visit.
Community banks are the ones making those ripples happen. They’re not just funding ideas; they’re fueling communities.
The Challenges They Face
But here’s the thing: even the most committed institutions face obstacles.
Attracting deposits:
Big banks and fintechs often dominate the spotlight, leaving community banks to work harder to stay visible. For Gen Z and other new business owners, fintechs offer irresistible appeal with their ease of setup, flashy promotions, and slick tech solutions. In many cases, businesses can open an account within minutes and move on to their next task. Banking, for many business owners, is often an afterthought—a necessary commodity they assume is the same everywhere unless a loan is involved. Without clear differentiation or visibility, community banks risk being overlooked in favor of perceived convenience.
Overloaded Teams
Branch staff and commercial lending teams are stretched thin, managing a wide range of responsibilities. Branch employees juggle everything from loans to customer service, while loan officers race to meet goals, keep pipelines full, analyze financials, process requests, and ensure compliance.
With so much on their plates, identifying deposit and treasury opportunities often takes a back seat—not for lack of potential, but simply because time and bandwidth are in short supply or compensation structures are not properly aligned.
Navigating Rapid Change
The pace of change in banking is relentless. AI, new technologies, evolving compliance regulations, and shifting customer expectations make it a constant challenge to stay ahead. Banks have access to an overwhelming number of new tools and services, but sifting through them to identify what truly enhances efficiency and customer satisfaction can feel like a full-time job.
In many cases, institutions are so focused on keeping up with day-to-day demands that they struggle to capitalize on the full functionality of the systems they already have in place, leaving untapped potential on the table.
It’s a tough balancing act, but it’s not impossible.
Practical Ideas for Staying Strong
Here’s how some community banks are tackling these challenges—and thriving:
Make Treasury Management Programs a priority: Oftentimes with no expert on staff - Treasury management programs are overlooked. However, these programs are critical to driving efficiency, profitability, and customer satisfaction. Even small adjustments to cash management strategies—such as refining product offerings, streamlining processes, or optimizing pricing—can lead to significant gains.
The key is having the right tools and people in place to meet your customers’ needs. A high deposit rates alone won’t keep customers loyal if they don’t have access to the solutions they need to effectively manage their cash flow. Ensuring you offer the right treasury products, like automated sweeps, ACH origination, or fraud prevention tools, can differentiate your bank and provide tangible value.
Invest in training: A well-trained team can be your bank’s most valuable asset. Empower your employees to identify opportunities, cross-sell treasury products, and confidently address customer pain points. Training can also help bridge the gap between frontline staff and commercial or treasury teams, creating a more unified and collaborative approach to serving business clients.
Consider ongoing professional development that combines technical skills with customer-focused sales training. When your team is equipped with the knowledge and tools to address real-world challenges, they become trusted advisors, strengthening client relationships and driving growth.
Collaborate and share ideas: Innovation rarely happens in isolation. Some of the best ideas for solving challenges or discovering new opportunities come from collaboration. Whether through peer networks, conferences, or working with industry consultants, opening your doors to fresh perspectives can be transformative.
Attending a treasury management forum or partnering with consultants can bring an outside view to streamline operations or implement best practices. Collaboration fosters creativity, ensures you stay ahead of industry trends, and helps your institution adapt to change more effectively.
Small, thoughtful steps can lead to meaningful progress.
Why This Matters
When community banks succeed, everyone wins. The businesses they fund grow. Local economies thrive. And that ripple effect keeps expanding.
So, whether you’re working at a community bank or just cheering one on from the sidelines, take a moment to appreciate their impact—and consider what’s possible when they’re fully supported.
Community banks and credit unions aren’t just financial institutions—they’re champions for their communities. Their success is our shared success. Let’s keep the ripple effect going.
