Community banks have long been trusted for their personalized service and deep community roots. However, as technology reshapes consumer expectations and larger institutions dominate the digital and marketing landscape, community banks face increasing challenges in maintaining relevance. SLD conducted a consumer study to uncover perceptions of community banking, identify unmet needs, and reveal strategies that can help reposition these institutions for a sustainable and competitive future.
KEY INSIGHTS
1. Community Banks Have a Trust Advantage—But Poor Recall
Consumers describe community banks as trustworthy, friendly, and personalized, with 49% selecting “personalized service” as a defining feature. However, only 18% of respondents could name a community bank unaided, compared to 59% for national banks and 22% for credit unions.
2. Consumers Value Relationships—But They Expect More
While trust and personalized service rank as top emotional drivers for choosing a bank, consumers also expect modern services and competitive products. National banks scored higher in convenience, accessibility, and innovation, key areas where community banks are falling behind.
3. Digital Capabilities Are Falling Short
Many respondents, especially younger ones, perceive community banks as lacking digital features like mobile banking, AI-powered insights, and frictionless app interfaces. This gap significantly impacts their likelihood of switching or staying.
4. Emotional Connection is an Untapped Opportunity
Community banks are seen as stable and friendly, but lack the emotional storytelling and aspirational branding that drive strong consumer loyalty in younger segments. Consumers want to feel aligned with a brand’s purpose, not just its services.
Where Consumers and Bankers Align
- Shared Belief in Trust and Relationships:
Both groups rank trust, personal service, and knowing that the customer as the most important attributes of community banking. - Desire to Support the Community:
Community impact is a common priority. Bankers take pride in supporting local businesses and causes, while consumers say they want to align with socially responsible institutions. - Concern About Relevance:
Both recognize the need for change. Bankers admit that “we’re not great at telling our story,” and consumers acknowledge community banks feel “invisible” or “old-fashioned.”
Where Consumers and Bankers Differ
- Perception of Digital Readiness:
Many bankers believe their digital offerings are sufficient. Consumers, however, consistently rated community banks lower in convenience, mobile tools, and innovation
- Understanding of Brand Visibility:
Bankers often assume consumers recognize their value, but the data reveals low unaided brand awareness and confusion over what makes a community bank unique.
- Marketing and Communication Expectations:
Bankers see trust and long-term relationships as self-evident strengths. Consumers want those strengths to be actively communicated through storytelling, social media, and brand positioning.
STRATEGIC RECCOMENDATIONS
- Invest in Human-Centred Digital Experiences :
Modernize apps and online banking with a focus on intuitive design, then pair that with messaging about human support and accessibility.
- Revitalize Brand Awareness Through Storytelling:
Leverage emotionally resonant storytelling to communicate local impact, personal service, and values. Share real stories of how the bank supports its community and customers.
- Highlight Differentiators Clearly and Consistently
Community banks need to articulate what makes them different. Branding efforts should emphasize trust, local investment, and personalized relationships while clarifying their unique role in the financial ecosystem.
CONCLUSION
Community banks are well-positioned to thrive if they adapt. By embracing digital innovation, refining brand communication, and amplifying their authentic community roots, they can appeal to a broader demographic and secure long-term relevance. The opportunity lies in transforming legacy trust into modern loyalty, rooted in both technology and human connection.
About the authors
Jean-Pierre Lacroix
President of Shikatani Lacroix Design
